Relating to Real Estate
Relating to Real Estate - July 2021
IN THIS ISSUE:
The partial collapse of the Champlain Towers South condominium complex in Surfside, FL, on June 24, 2021, is a human tragedy on a scale not previously experienced for such a building failure in the United States.
Critical attention is being focused on the structural integrity of high-rise buildings in Florida and elsewhere to minimize the chances of another disaster. Already, there are stories of nearby buildings that appear shaky and in need of substantial repairs to restore them to the level of safety to which everyone is entitled.
In the wake of the building collapse, the Florida Bar Association has created a task force to investigate Florida’s condo laws and to recommend legal reforms to the governor’s office and state legislature aimed at preventing another disaster. The review is expected to examine all aspects of Florida condo law as well as construction, operations and maintenance laws. It is highly likely that similar studies will be undertaken elsewhere, and indeed, they should be.
Contact Searle E. Mitnick | 410-576-4107
On July 1, 2021, the Court of Special Appeals (CSA) held that in a sale of business assets that includes both real property and other types of property, the state recordation and transfer taxes, and the transfer taxes of Montgomery and Baltimore Counties, apply only to the value of the real property. The consideration paid for the other types of property are not subject to these taxes. Shelter Senior Living IV, LLC v. Baltimore County, Maryland, et al., --- Md. App. ---, No. 1276, Sept. Term 2019, 2021 WL 2708948 (July 1, 2021).
In reaching this conclusion, the CSA reversed the opinion of the Circuit Court for Baltimore County, which had affirmed a ruling of the Maryland Tax Court.
Contact Ed Levin | 410-576-1900
The Baltimore City Council recently passed three bills regarding landlord-tenant matters. Two of the bills have become law, while the other faced a mayoral veto:
- In an effort to protect low-income renters and to combat the negative impact COVID-19 has had on affordable housing, the Council enacted legislation titled Landlord-Tenant Lease Renewals that prohibits, on a temporary basis, landlords from declining lease renewals, except for “good cause.” The bill requires landlords to temporarily offer tenants an opportunity to renew their leases subject to “a reasonable, non-retaliatory increase in the rent or change in lease terms.” The renewal offer must be made between 75 and 100 days prior to the end of the lease term or periodic tenancy. Landlords may not decline to renew a lease unless one of the four good cause exceptions.
- The second bill passed by the Council, the law now titled Late Fees for Past Due Rent, prohibits landlords from charging late fees for past due rent without first allowing the tenant a 10-day grace period. Specifically, the law provides that “a residential lease shall include a provision that the landlord may not apply late fees to the rent until the tenant is more than 10 days past due with the rent.” The law also limits the amount a landlord may charge for a late fee to no more than 1% of the total monthly rental payment per day for each day the tenant’s rent payment is late, commencing with the 11th day of the rental period, not to exceed a total of 5% of the total monthly rental payment.
- On June 8, 2021, the Council sustained Mayor Brandon Scott’s veto of a security deposit bill that would have required residential leases to contain provisions permitting security deposit alternatives to renters. The bill, titled Security Deposit Alternatives, would have required landlords with 10 or more units who charge a security deposit of more than 60% of the monthly rent to offer prospective tenants one of two alternatives to paying a traditional security deposit: pay the deposit in three monthly installments or purchase “rental security insurance.”
Contact Tierra Dotson | 410-576-4242
In the case of In re Walker, 473 Md. 68 (2021), the Court of Appeals responded to a certified question of law by the U.S. Bankruptcy Court for the District of Maryland by stating that a lien under the Maryland Contract Lien Act (MCLA) cannot secure damages, costs of collection, late charges, and attorney’s fees that accrue subsequent to the recordation of the lien.
The Court of Appeal’s decision was based on the language of the MCLA, Real Property Article (RP) §§14-201 et seq., and the purpose of the MCLA. The Court found that the enumeration of items in RP §§14-202(b) and RP §§14-204(d)(2) for which a lien may attach only includes damages for already delinquent assessments, costs of collection, late charges, and costs and attorneys’ fees in filing the lien, and does not include damages to an association arising in the future.
Contact Ed Levin | 410-576-1900
Clark Office Buildings, LLC (Landlord) sued MCM Capital Partners, LLLP (Tenant) for breach of a commercial lease. Landlord also sued MCM Capital, LLC and Alta Realty Company, LLC (collectively, Occupants) for $188,951.34 as restitution for unjust enrichment on the ground that, without Landlord’s knowledge, Occupants had occupied the leased premises for part of the time that Tenant failed to pay rent. The Circuit Court for Montgomery County granted judgment to Landlord against Tenant for breach of lease in the amount of $748,914.31 plus $20,428.89 in attorneys’ fees, but it also entered judgment in favor of Occupants on Landlord’s unjust enrichment claim.
Landlord appealed the judgment in favor of Occupants to the Court of Special Appeals, which affirmed. Clark Office Bldg., LLC v. MCM Capital Partners, LLLP, 249 Md. App. 307 (2021).
Contact Ed Levin | 410-576-1900
In 2015, the Board of Appeals of Baltimore County (Board) approved a special exception to allow Riverwatch, LLC and Two Farms, Inc. (collectively, Royal Farms), to build a fuel service station, convenience store, and carry-out restaurant in Hereford. The Sparks-Glencoe Community Planning Council, Tom Graul, Ken Bullen, Jr., and Ruth Mascari, and the People’s Counsel for Baltimore County petitioned for judicial review of the Board’s decision by the Circuit Court for Baltimore County. Following a hearing, the court remanded the case to the Board for further proceedings to consider additional evidence.
Between the remand order and the next Board hearing, the Baltimore County Council enacted Bill 56-16, which changed the zoning classification of the subject property to prohibit the fuel service station. At the subsequent hearing, the Board held that the former zoning classification applied because Royal Farms had obtained vested development rights by recording a plat in accordance with the provisions of Baltimore County Code § 32-4-264(b)(2) (2009). On appeal, the Circuit Court for Baltimore County affirmed the decision of the Board, and on further appeal the Court of Special Appeals also affirmed. Graul v. Riverwatch, LLC, No. 978, Sept. Term 2018, 2020 WL 6623283 (Md. Ct. Spec. App. Nov. 12, 2020).