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Elvaton Towne Condominium Regime II, Inc. v. Rose

Court of Appeals of Maryland

June 23, 2017

ELVATON TOWNE CONDOMINIUM REGIME II, INC., ET AL.
v.
WILLIAM KEVIN ROSE, ET UX.

          Barbera, C.J. Greene Adkins McDonald Watts Hotten Getty, JJ.

          OPINION

          BARBERA, C.J.

         The principal issue for consideration in the present case is the extent to which, and upon what authority, a condominium association may impose restrictions on a unit owner's right of access to communally-held property. The parties are Petitioners/Cross-Respondents Elvaton Towne Condominiums in Glen Burnie, its condominium association, and its management firm (collectively, "Elvaton") and Respondents/Cross-Petitioners William and Dawn Rose ("the Roses").

         Elvaton's parking areas and the pool are general common elements, which, according to ¶ 7(C) of Elvaton's governing declaration, "shall be exclusively owned in common by all of the Unit Owners." Under the Maryland Condominium Act, Md. Code Ann., Real Prop. §§ 11-101(c), 11-107, a "general common element" is one over which every unit owner enjoys ownership rights. Unit owners are assessed an annual condominium fee, to be paid on a monthly basis, to cover, among other things, the maintenance of the common elements of the property, which include the parking lot and pool. As a means of enforcing collection of such debts, Elvaton's governing Board of Directors passed a "suspension-of-privileges" rule that prohibits unit owners who are delinquent in their payment of condominium fees from parking overnight within the complex and from using the pool, until such time as the delinquency is cured.

         The dispute at issue here has its genesis in Elvaton's claim that the Roses were delinquent in paying their condominium fees. In addition to recording a statement of lien against the Roses' condominium unit and filing suit in the District Court sitting in Anne Arundel County to recover the alleged debt, Elvaton notified the Roses that, pursuant to the "suspension-of-privileges" rule, they were prohibited from parking in the parking lot overnight or using the pool until such time as they paid their allegedly delinquent condominium fees. During the pendency of the District Court action, the Roses filed in the Circuit Court for Anne Arundel County a complaint seeking, among other relief, a declaratory judgment that (1) Elvaton did not possess the authority to prohibit them, on the basis of an alleged delinquency, from using the common elements of the Elvaton complex; and (2) the Roses did not owe a debt to Elvaton. The Roses also obtained a stay of the District Court proceedings during the pendency of the case in the circuit court.

         Before trial, the circuit court ruled in favor of Elvaton that the Roses were not entitled to have the court issue a declaratory judgment on the validity of the alleged debt given that the issue was pending review in the District Court. Later, following a trial on the merits of the remaining counts of the Roses' complaint, the circuit court found in favor of the Roses on the validity of the rule. The court explained that Elvaton did not have the authority to restrict the Roses' use of the parking lots and the pool as a means of collecting on the debt, because Elvaton was not authorized by the condominium's governing documents to do so for the alleged failure to pay association assessments. Both Elvaton and the Roses appealed their respective adverse judgments, and the Court of Special Appeals affirmed both judgments of the circuit court. Elvaton Towne Condo. Regime II, Inc. v. Rose, No. 1033, Sept. Term, 2014, slip op. at 25, 32-33 (Md. Ct. Spec. App. filed Apr. 21, 2016). Both parties sought, and we granted, further review in this Court.

         For the reasons that follow, we conclude that the Maryland Condominium Act, Md. Code Ann., Real Property § 11-101 et seq. (1982, 2015 Repl. Vol.)[1] allows access to communally-held property, that is, the "general common elements" of the condominium, to be restricted as a means to enforce payment of condominium fees. Such restrictions, however, must first be authorized by the unit owners through agreement in the condominium's declaration. In the present case, Elvaton did not include such a restriction in its declaration. We therefore affirm the judgment of the Court of Special Appeals that came to the same conclusion. We likewise affirm the Court of Special Appeals' judgment that the Roses were not entitled to have the validity of the debt resolved in the circuit court, given its pendency in the District Court.

         I

         Condominium Law, in a Nutshell

         "A condominium is a 'communal form of estate in property consisting of individually owned units which are supported by collectively held facilities and areas.'" Ridgely Condo. Ass'n v. Smyrnioudis, 343 Md. 357, 358 (1996) (quoting Andrews v. City of Greenbelt, 293 Md. 69, 71 (1982)). Owning property in common offers certain benefits to condominium owners, such as affordability and shared costs of property management, and in exchange condominium owners "agree to be bound by rules governing the administration, maintenance, and use of the property." Id. at 359 (footnote omitted). We have recognized that,

inherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization.

Id. at 359 (quoting Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180, 181-82 (Fla. Dist. Ct. App. 1975)).

         The Maryland Condominium Act (hereinafter, the "Act") "regulates the formation, management, and termination of condominiums in Maryland." Jurgensen v. New Phoenix Atlantic Condo. Council of Unit Owners, 380 Md. 106, 115 (2004). Under the Act, a condominium is established by recording a declaration, bylaws, and condominium plat among the land records of the county in which the property is located. § 11-102(a)(1).

         The declaration, among other provisions, names the condominium, defines the common elements of the condominium, and assigns the percentage interests in the common elements appurtenant to each unit and the number of votes appurtenant to each unit at any council of unit owners. § 11-103. Declarations may be amended only by the written consent of eighty percent of the unit owners listed on the current roster. § 11-103(c)(1). The percentage interest in common elements appurtenant to each unit, however, "shall have a permanent character and . . . may not be changed without the written consent of all of the unit owners and their mortgagees." § 11-107(c) (emphasis added).

         The Act further provides for the enactment of bylaws, which address the foundational aspects of the community's general management and operations. §11-104(a) ("The administration of every condominium shall be governed by bylaws which shall be recorded with the declaration."). The bylaws describe the council of unit owners-the governing body of a condominium-and its authority and the extent to which it may delegate its tasks to a board of directors or managers. § 11-104(b)(1). The bylaws also establish the method of voting by unit owners, including matters such as quorum and the method of calling for a gathering of unit owners. § 11-104(b)(3).

         Of particular relevance here, the bylaws describe the "manner of assessing against and collecting from unit owners their respective shares of the common expenses" and "also may contain any other provision regarding the management and operation of the condominium including any restriction on or requirement respecting the use and maintenance of the units and the common elements." § 11-104(b)(4), (c). The fundamental governance agreements established in the bylaws may be modified, but only by a minimum two-thirds vote of the unit owners. § 11-104(e)(2).[2]

         Condominiums also may "adopt and amend reasonable rules and regulations, " consistent with the two foundational governing documents described above, that address less fundamental administrative needs of the community. §§ 11-109(d)(2), 11-111. Such rules are passed or amended, after notice and the opportunity for public comment, by simple majority vote of the council of unit owners or its delegated management entity. § 11-111(a)(1). Rules "generally deal with the use and occupancy by owners of units and common areas, patios and other exterior areas, parking, trash disposal, pets, etc. They frequently prohibit conduct that could constitute a nuisance." Dulaney Towers Maintenance Corp. v. O'Brey, 46 Md.App. 464, 466 (1980).

         The Act clarifies the superiority of the declaration over the plat, bylaws, and any rules or regulations. Section 11-124(e) provides: "If there is any conflict among the provisions of this title, the declaration, condominium plat, bylaws, or rules adopted pursuant to § 11-111 of this title, the provisions of each shall control in the succession listed hereinbefore."

         "A condominium owner . . . holds a hybrid property interest consisting of an exclusive ownership of a particular unit or apartment and a tenancy in common with the other co-owners in the common elements." Ridgely, 343 Md. at 358-59; § 11-107(a); see also Andrews, 293 Md. 69, 73-74. The "common elements" of condominium property, as well as its subsets, are defined in § 11-101(c) of the Act:

(1) "Common elements" means all of the condominium except the units.
(2) "Limited common elements" means those common elements identified in the declaration or on the condominium plat as reserved for the exclusive use of one or more but less than all of the unit owners.
(3) "General common elements" means all the common elements except the limited common elements.

         Section 11-107(a) provides for communal ownership of common elements:

Each unit owner shall own an undivided percentage interest in the common elements equal to that set forth in the declaration. Except as specifically provided in this title, the common elements shall remain undivided.

         Section 11-107(c) describes the nature of percentage interests in the common elements as follows:

The percentage interest provided in subsections (a) and (b) of this section may be identical or may vary. The percentage interests shall have a permanent character and, except as specifically provided by this title, may not be changed without the written consent of all of the unit owners and their mortgagees. Any change shall be evidenced by an amendment to the declaration, recorded among the appropriate land records. The percentage interests may not be separated from the unit to which they appertain. Any instrument, matter, circumstance, action, occurrence, or proceeding in any manner affecting a unit also shall affect, in like manner, the percentage interests appurtenant to the unit.

         Section 11-108(a) in turn provides:

Subject to the provisions of subsection (c) of this section, the common elements may be used only for the purposes for which they were intended and, except as provided in the declaration, the common elements shall be subject to mutual rights of support, access, use, and enjoyment by all unit owners.

(Emphasis added).

         II

         Elvaton's Condominium Documents

         The "Declaration for Elvaton Towne Condominiums, Regime Two" (the "Declaration") was executed on May 27, 1975.[3] Paragraph 13 of the Declaration makes each unit owner a voting member of the Council of Unit Owners, but Article V, §§ 2-3 of the Elvaton Towne Condominiums, Regime Two By-Laws (the "By-Laws") delegates authority to a Board of Directors, tasking it with the general administration of the condominium, including, pertinent here, the promulgation of rules and regulations respecting the use of common elements.

         The Declaration provides that "all streets, curbs, sidewalks, . . . and parking areas, " are among the general common elements as to which each unit owner has a fractional ownership interest. ¶ 7(A). The Declaration at ¶ 7(B) further provides that there are "no limited common elements within the Regime created herein"; making clear that all common elements are "general common elements, " as defined in § 11-101(c)(3). In addition, the developer stated at ¶ 15 of the Declaration that "[i]t is the intention of Developer that each Unit Owner . . . shall have the right to use all of the recreational facilities for so long as same, including swimming pool and bath house, shall exist . . . . This right shall be a right appurtenant to each condominium unit."

         Paragraph 7(C) of the Declaration provides that "[t]he common elements shall be exclusively owned in common by all of the Unit Owners." Paragraph 7(F) further provides:

Each Unit Owner, in proportion to his Percentage Interest, shall contribute toward payment of the Common Expenses, and no Unit Owner shall be exempt from contributing toward said Common Expenses either by waiver of the use or enjoyment of the common elements, or any of them, or by the abandonment of his unit. The contribution of each Unit Owner toward Common Expenses shall be determined, levied and assessed as a lien, all in the manner set forth in the By-Laws which are being recorded among the Land Records of Anne Arundel County simultaneously herewith.

         The Elvaton By-Laws were executed the same day as the Declaration. Relevant here are Article V - Directors, Article IX - Condominium Fees/Assessments, and Article X - Use Restrictions.

         Section 3 of Article V is entitled Powers and Duties and provides in pertinent part that the "Board of Directors shall have all the powers and duties necessary for the administration of the affairs of the ...


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