Section 105 - Initial sale of lots in developments containing more than 12 lots. - Maryland Statutes

§ 11B-105. Initial sale of lots in developments containing more than 12 lots.
 

(a)  Contract.- A contract for the initial sale of a lot in a development containing more than 12 lots to a member of the public who intends to occupy or rent the lot for residential purposes is not enforceable by the vendor unless: 

(1) The purchaser is given, at or before the time a contract is entered into between the vendor and the purchaser, or within 7 calendar days of entering into the contract, the disclosures set forth in subsection (b) of this section; 

(2) The purchaser is given notice of any changes in mandatory fees and payments exceeding 10 percent of the amount previously stated to exist or any other substantial and material amendment to the disclosures after the same becomes known to the vendor; and 

(3) The contract of sale contains a notice in conspicuous type, which shall include bold and underscored type, in a form substantially the same as the following: 

"This sale is subject to the requirements of the Maryland Homeowners Association Act (the "Act"). The Act requires that the seller disclose to you at or before the time the contract is entered into, or within 7 calendar days of entering into the contract, certain information concerning the development in which the lot you are purchasing is located. The content of the information to be disclosed is set forth in § 11B-105(b) of the Act (the "MHAA information") as follows: (The notice shall include at this point the text of § 11B-105(b) in its entirety). 

If you have not received all of the MHAA information 5 calendar days or more before entering into the contract, you have 5 calendar days to cancel this contract after receiving all of the MHAA information. You must cancel the contract in writing, but you do not have to state a reason. The seller must also provide you with notice of any changes in mandatory fees exceeding 10% of the amount previously stated to exist and copies of any other substantial and material amendment to the information provided to you. You have 3 calendar days to cancel this contract after receiving notice of any changes in mandatory fees, or copies of any other substantial and material amendment to the MHAA information which adversely affects you. If you do cancel the contract you will be entitled to a refund of any deposit you made on account of the contract. However, unless you return the MHAA information to the seller when you cancel the contract, the seller may keep out of your deposit the cost of reproducing the MHAA information, or $100, whichever amount is less. 

By purchasing a lot within this development, you will automatically be subject to various rights, responsibilities, and obligations, including the obligation to pay certain assessments to the homeowners association within the development. The lot you are purchasing may have restrictions on: 

(1) Architectural changes, design, color, landscaping, or appearance; 

(2) Occupancy density; 

(3) Kind, number, or use of vehicles; 

(4) Renting, leasing, mortgaging, or conveying property; 

(5) Commercial activity; or 

(6) Other matters. 

You should review the MHAA information carefully to ascertain your rights, responsibilities, and obligations within the development." 

(b)  Information to be supplied by vendor.- The vendor shall provide the purchaser the following information in writing: 

(1) (i) The name, principal address, and telephone number of the vendor and of the declarant, if the declarant is not the vendor; or 

(ii) If the vendor is a corporation or partnership, the names and addresses of the principal officers of the corporation, or general partners of the partnership; 

(2) (i) The name, if any, of the homeowners association; and 

(ii) If incorporated, the state in which the homeowners association is incorporated and the name of the Maryland resident agent; 

(3) A description of: 

(i) The location and size of the development, including the minimum and maximum number of lots currently planned or permitted, if applicable, which may be contained within the development; and 

(ii) Any property owned by the declarant or the vendor contiguous to the development which is to be dedicated to public use; 

(4) If the development is or will be within or a part of another development, a general description of the other development; 

(5) If the declarant has reserved in the declaration the right to annex additional property to the development, a description of the size and location of the additional property and the approximate number of lots currently planned to be contained in the development, as well as any time limits within which the declarant may annex such property; 

(6) A copy of: 

(i) The articles of incorporation, the declaration, and all recorded covenants and restrictions of the primary development and of other related developments to the extent reasonably available, to which the purchaser shall become obligated on becoming an owner of the lot, including a statement that these obligations are enforceable against an owner and the owner's tenants, if applicable; and 

(ii) The bylaws and rules of the primary development and of other related developments to the extent reasonably available, to which the purchaser shall become obligated on becoming an owner of the lot, including a statement that these obligations are enforceable against an owner and the owner's tenants, if applicable; 

(7) A description or statement of any property which is currently planned to be owned, leased, or maintained by the homeowners association; 

(8) A copy of the estimated proposed or actual annual budget for the homeowners association for the current fiscal year, including a description of the replacement reserves for common area improvements, if any, and a copy of the current projected budget for the homeowners association based upon the development fully expanded in accordance with expansion rights contained in the declaration; 

(9) A statement of current or anticipated mandatory fees or assessments to be paid by owners of lots within the development for the use, maintenance, and operation of common areas and for other purposes related to the homeowners association and whether the declarant or vendor will be obligated to pay the fees in whole or in part; 

(10) (i) A brief description of zoning and other land use requirements affecting the development; or 

(ii) A written disclosure of where the information is available for inspection; 

(11) A statement regarding: 

(i) When mandatory homeowners association fees or assessments will first be levied against owners of lots; 

(ii) The procedure for increasing or decreasing such fees or assessments; 

(iii) How fees or assessments and delinquent charges will be collected; 

(iv) Whether unpaid fees or assessments are a personal obligation of owners of lots; 

(v) Whether unpaid fees or assessments bear interest and if so, the rate of interest; 

(vi) Whether unpaid fees or assessments may be enforced by imposing a lien on a lot under the terms of the Maryland Contract Lien Act; and 

(vii) Whether lot owners will be assessed late charges or attorneys' fees for collecting unpaid fees or assessments and any other consequences for the nonpayment of the fees or assessments; 

(12) If any sums of money are to be collected at settlement for contribution to the homeowners association other than prorated fees or assessments, a statement of the amount to be collected and the intended use of such funds; and 

(13) A description of special rights or exemptions reserved by or for the benefit of the declarant or the vendor, including: 

(i) The right to conduct construction activities within the development; 

(ii) The right to pay a reduced homeowners association fee or assessment; and 

(iii) Exemptions from use restrictions or architectural control provisions contained in the declaration or provisions by which the declarant or the vendor intends to maintain control over the homeowners association. 

(c)  Standard for compliance with subsection (b) - In general.- Except as provided in subsection (d) of this section, the requirements of subsection (b) of this section shall be deemed to have been fulfilled if the information required to be disclosed is provided to the purchaser in writing in a clear and concise manner. The disclosure may be summarized or produced in a collection of documents, including plats, the declaration, or the organizational documents of the homeowners association, provided those documents effectively convey the required information to the purchaser. 

(d)  Standard for compliance with subsection (b) - Exception.-  

(1) (i) Subject to the provisions of subparagraph (ii) of this paragraph, if any of the information required to be disclosed by subsection (b) of this section concerns property that is subjected to a declaration by a person who is not affiliated with the vendor, within 20 calendar days after receipt of a written request from the vendor of such property, and receipt of a reasonable fee therefor not to exceed the cost, if any, of reproduction, an unaffiliated declarant shall notify the vendor in writing of the information that is contained in the depository, and furnish the information necessary to enable the vendor to comply with subsection (b) of this section; and 

(ii) An unaffiliated declarant may not be required to furnish information regarding a homeowners association over which the unaffiliated declarant has no control, or with respect to any declaration which the unaffiliated declarant did not file. 

(2) A vendor is not liable to the purchaser for any erroneous information provided by an unaffiliated declarant, so long as the vendor provides the purchaser with a certificate stating the name of the person who provided the information along with an address and telephone number for contacting such person. 

(e)  Standard for compliance with subsection (b) - Information and disclosures contained in depository.-  

(1) In satisfying the requirements of subsection (b) of this section, the vendor shall be entitled to rely upon the disclosures contained in the depository after June 30, 1989. 

(2) In satisfying a vendor's request for any information described under subsection (b) of this section, a homeowners association: 

(i) Shall be entitled to direct the vendor to obtain such information from the depository for all disclosures contained in the depository after June 30, 1989; and 

(ii) May not be required to supply a vendor with any information which is contained in the depository. 

(f)  Requirements inapplicable to foreclosure sale.- The provisions of this section do not apply to a sale of a lot in an action to foreclose a mortgage or deed of trust. 
 

[1987, ch. 321; 1988, ch. 6, § 1; ch. 82; 1989, ch. 693; 1997, ch. 14, § 1.]