When does a Maryland home seller have to give homeowners association fee and rule disclosures to a buyer, and can a buyer waive that right?

Plain-English summary

In 1987, a Maryland state senator asked the Attorney General a series of detailed questions about the newly enacted Maryland Homeowners Association Act, which required sellers of homes in developments subject to homeowners association fees to give buyers specific written disclosures, including current and past-year fees, any delinquencies, contact information for the association's management agent, known judgments or claims against the association or the lot, and a copy of the governing declaration and covenants.

The Attorney General worked through each question in turn. On timing, the opinion concluded the disclosures had to reach the buyer while the buyer still had a genuine opportunity to decide whether to enter a binding contract, so a seller could satisfy the law by making the required disclosures part of a counteroffer addendum. If the seller did not already know a piece of required information, such as the exact dollar amount of a known assessment, the opinion concluded the seller still had a duty to go find it out and disclose it before the contract was formed, not supply it later as a "amendment." On rescission, the opinion concluded a buyer given a late amendment shortly before settlement had an implied right to postpone settlement for two days so the full three-day rescission window could run, and that a buyer's statutory right to rescind for a seller's total failure to disclose could not be waived by any contract clause, even one where the buyer purported to say they didn't want the information.

Currency note

This opinion was issued in 1987. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

As the opinion's own editor's note records, the General Assembly significantly amended the Homeowners Association Act the following year in Chapter 82 (House Bill 388) of the Laws of Maryland 1988, so specific provisions analyzed here may no longer reflect current law.

Common questions

When did a Maryland home seller have to give homeowners association disclosures to a buyer under this 1987 law?
The opinion concluded disclosures had to reach the buyer while the buyer still had the chance to decide whether to sign a binding contract, for example as part of a seller's counteroffer addendum, not after the contract was already formed.

Could a seller wait to disclose an HOA fee amount they didn't know yet?
No, according to the opinion. If the seller knew fees or assessments existed but not the exact amount, or knew rules and by-laws existed but didn't have copies, the seller had a duty to obtain that information and disclose it before the contract was formed, not supply it afterward as an amendment.

Could a Maryland home buyer waive their right to HOA disclosures in the contract?
No. The opinion concluded any contract clause purporting to waive the buyer's statutory right to receive the required disclosures was void, even if phrased as the buyer affirmatively stating they didn't want the information.

What happened if a buyer got a late disclosure amendment right before closing?
The opinion concluded the buyer had an implied right to postpone settlement by up to two days so the full three-day rescission period following the amendment could run, rather than losing that window simply because settlement was already scheduled.

Background and statutory framework

The Maryland Homeowners Association Act, enacted as Chapter 321 of the Laws of Maryland 1987 following two prior legislative attempts, required disclosure under RP §11B-106 for resales and small-development initial sales, with more extensive disclosure required for larger developments' first sales under RP §11B-105. RP §11B-106(b) listed the specific items a seller had to disclose in writing, including current and prior-year HOA fees, delinquency status, the management agent's contact information, known judgments or claims, and a copy of the governing declaration and covenants. RP §11B-107 gave a buyer whose seller failed to make required disclosures an unlimited right to rescind up to closing, and gave a buyer who received a late "substantial and material amendment" to the disclosures a three-day right to rescind, while RP §11B-107(c) barred any waiver of these rescission rights and cut off rescission entirely once the buyer proceeded to closing. RP §11B-108 separately gave a buyer a right of action against a seller for an untrue or misleading statement.

The opinion drew on the legislative history of the Act, including the Governor's Commission on Condominiums, Cooperatives, and Homeowners Associations' 1985 and 1986 reports describing the disclosures as "self-enforcing consumer protections," and on the Senate Judicial Proceedings Committee's 1987 report on the bill, to conclude that the seller's disclosure duty was tied to the buyer's practical opportunity to make an informed decision before being bound, not to some later point after the contract existed. The opinion distinguished the seller's duty to affirmatively obtain and disclose known categories of information (fees, contact information, declarations and covenants) from the narrower, actual-knowledge-only standard that RP §11B-106(b)(4) set specifically for disclosing pending judgments or claims, drawing an analogy to a real estate agent's duty "to ascertain" material facts under Article 56, §224(r) and COMAR 09.11.02.01D.

Citations

Statutes:

• RP §11B-101(d)(1) (defines property subject to the Act as property with a recorded instrument authorizing mandatory homeowners association fees)
• RP §11B-105 (more extensive disclosure duties for first sales in developments over twelve lots)
• RP §11B-106, §11B-106(a), §11B-106(b), §11B-106(b)(1)-(5) (disclosure duties for resales and small-development first sales, and the specific required disclosure items)
• RP §11B-107, §11B-107(a), §11B-107(b), §11B-107(c) (buyer's rescission rights for non-disclosure and for late material amendments, non-waivability, and termination of rescission rights at closing)
• RP §11B-108 (buyer's right of action for an untrue or misleading statement)
• Article 56, §224(r) and COMAR 09.11.02.01D (real estate agent's duty to ascertain and disclose material facts, cited by analogy)
• Chapter 321, Laws of Maryland 1987 (enacted the Homeowners Association Act's disclosure requirements)
• Chapter 82 (House Bill 388), Laws of Maryland 1988 (editor's note: significantly amended the Act the following year)

Cases: none cited in this opinion.

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1987/Volume72_1987.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

HOMEOWNERS ASSOCIATION ACT

Disclosure Requirements—Recission Rights—Waiver Prohibition.

August 14, 1987

The Honorable Laurence Levitan
Senate Of Maryland

You have requested our opinion on several questions related to the Maryland Homeowners Association Act, Chapter 321 of the Laws of Maryland 1987. In general, your questions relate to the disclosures that sellers must make to buyers of houses in a development subject to the fees and restrictions of a homeowners association.

Given the number and detail of your questions, we do not think it feasible to summarize our conclusions. After setting out the pertinent provisions of the Act, we shall state your questions and our response to each.

I
The Act's Disclosure Requirements

The overall purpose of the Maryland Homeowners Association Act, according to its title, is "the regulation of homeowners associations in this State." The Act applies to property subject to a recorded instrument "that creates the authority for a homeowners association to impose on lots, or on the owners or occupants of lots . . . any mandatory fee in connection with the provision of services or otherwise for the benefit of some or all of the lots, the owners or occupants of lots, or the common areas." §11B-101(d)(1) of the Real Property Article ("RP" Article).

The disclosure requirements that are the subject of your request are a principal form of regulation under the Act. RP §11B-106(a) provides as follows:

"A contract for the resale of a lot within a development, or for the initial sale of a lot within a development containing twelve or fewer 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, on or before entering into the contract for the sale of such lot, the disclosures set forth in subsection (b) of this section; and
(2) The purchaser is given any substantial and material amendment to the disclosures after they become known to the vendor."1

The disclosures, to be provided to the buyer in writing, concern matters like the fees imposed by the homeowners association and the nature of any restrictive covenants.2

RP §11B-107 gives a buyer certain rescission rights:

"(a) A person who signs a contract as a purchaser but who has not received the disclosures required by §11B-105 or §11B-106, as applicable, shall, prior to settlement, be entitled to rescind the contract and to the immediate return of deposits made on account of the contract.
(b) Any purchaser may within three days following receipt by the purchaser of a substantial and material amendment to the disclosures required by §11B-105 or §11B-106, as applicable, which adversely affects the purchaser, rescind in writing the contract without stating a reason and without liability on the part of the purchaser, and the purchaser shall be entitled to the return of deposits made on account of the contract.
(c) The rights of a purchaser under this section may not be waived in the contract and any attempted waiver is void. However, if any purchaser proceeds to closing the purchaser's right to rescind under this section is terminated."3

The Act was originally introduced two years ago at the request of the Governor's Commission on Condominiums, Cooperatives, and Homeowners Associations. That bill, Senate Bill 630 (1985 Session), contained substantially the same disclosure requirements and rescission rights as in the 1987 Act. Last year's bill, Senate Bill 475 (1986 Session), which failed of Senate passage at the eleventh hour, was identical. The Governor's Commission characterized the disclosure requirements as "self-enforcing consumer protections . . . " intended to "solve the problem of disclosure now faced by consumers." 1985 Final Report at 11.

II
Timing of Disclosures

Your first set of questions relates to the requirement that the purchaser be given, "on or before entering into the contract for the sale of [a] lot," the required disclosures. As you put it, "the threshold question is what is meant by 'on or before entering into the contract?'":

"Does this mean that the purchaser must be given all disclosures when the purchaser first signs the contract (before the seller signs) which is actually an offer to buy from the [purchaser] and does not become a contract presumably until it is accepted by the seller?"

Not necessarily. The evident intent of the provision is that a buyer be provided the facts that will allow the buyer to make a rational judgment about whether to contract for the particular house. This objective is satisfied so long as the buyer receives the required disclosures at a time when the buyer still has an opportunity to decide whether to enter a binding contract. The Act's legislative history supports this construction in a reference to the consequences of the seller's failure to provide the required information: "If the seller does not give the required disclosures before the contract of sale is entered into, the contract is unenforceable and the buyer may rescind the contract up to the time of closing and get his deposits back." Report of Senate Judicial Proceedings Committee on Senate Bill 96, at 1 (February 17, 1987) (emphasis added).

Your second question is related:

"Does the Act allow the seller, when receiving the offer and prior to the purchaser being given any disclosures, to accept the offer with a counter addendum which is the information required by [RP §11B-106(b)]?"

Yes. Under the sequence suggested, the seller's addendum will convey to the buyer the required disclosures before the buyer consummates the contract. That is, if the buyer does not sign the seller's proposed addendum, there is no contract. This sequence accords with the overall legislative purpose discussed above.

Your next question deals with the situation in which the seller does not have all of the required information:

"Does the Act require that all disclosures that are available (those that have been promulgated, disseminated and, where appropriate, recorded among the land records), whether or not in the possession of the seller, must be given to the purchaser on or before entering the contract or may they be given at a subsequent time pursuant to [RP §11B-106(a)(2)]? The scenario here would be that a seller knows that there are dues and knows that there are assessments; however, he does not know the exact dollar amount and leaves that disclosure blank with the intent to provide it later. Also, the seller knows that there are rules and regulations, rights of way and by-laws, but does not have them available and wants to provide them later. Can this be accomplished within the framework of [RP §11B-106(a)(2)] or is it too late because they are previously known by the sellers, just not available?" (Emphasis in original.)

In our view, the seller has a duty to obtain and disclose to the buyer, prior to the formation of the contract, all of the information described in RP §11B-106(b)(1), (2), (3), and (5). If the seller does not know the information, or does not have a copy of a document that is required to be disclosed, the seller has a duty to obtain the information or the document and provide it to the buyer prior to the consummation of the contract.

The duty to obtain the information, when it is not already known, follows not only from the flat command in the introductory phrase of RP §11B-106(b) but also from the implication of RP §11B-106(b)(4), which requires "a statement as to whether the owner has actual knowledge of" certain judgments and claims. Actual knowledge, then, is a component of the seller's duty to disclose only as to the information required by RP §11B-106(b)(4). It is not a limitation on the seller's duty to disclose the other information required by RP §11B-106(b). As the Governor's Commission observed, "since the owner can obtain certain information more easily than the purchaser, it was the Commission's belief that the owner should have the burden of providing at least a minimal amount of information concerning the Homeowners Association to the purchaser." 1986 Report at 9. Cf. Article 56, §224(r) of the Maryland Code and COMAR 09.11.02.01D (real estate agent's duty "to ascertain" and disclose material facts about property).

Thus, in your examples, if a seller knows that there are dues and knows that there are assessments, the seller is required to ascertain the exact dollar amount and may not leave the disclosure blank merely because he or she does not presently know the amounts. Similarly, a seller must obtain rules and regulations, rights of way, and by-laws and provide them to the buyer prior to the formation of a contract; the seller's failure to do so gives the buyer the right to rescind under RP §11B-107(a).

Your final question under this topic makes the point differently:

"The thrust of the above question is the following: Can substantial and material amendments to disclosures be validly given subsequent to entering into the contract when they were in fact known to the vendor at or prior to execution of the contract, but just not available to him at that time?" (Emphasis in original.)

No, for the reasons stated above.

III
Amended Disclosures

Your next question relates to the procedure under which the seller makes amendments to disclosures:

"Can the 'substantial and material amendment' be a unilateral giving from the seller to the purchaser without acknowledgment or receipt by the purchaser? There could very well be a time when the purchaser might refuse to sign the addendum containing the amendment thereby retaining the option to rescind under [RP §11B-107(a)]."

RP §11B-106 speaks of the seller's duty to "giv[e]" or to "provide" the buyer with the required information. RP §11B-107 is drafted in terms of the buyer's having "received" the disclosures. The intent, apparently, is that the seller deliver the disclosures into the buyer's actual possession. If actual delivery is made, the statutory requirement will have been satisfied even if the buyer refuses to acknowledge receipt. However, a prudent seller ought to have some proof of delivery.

If an amendment is embodied in a proposed contract addendum and is actually delivered to the buyer, the buyer will have the right to rescind within three days, under RP §11B-107(b). In our view, under these circumstances the buyer would not have an entitlement under RP §11B-107(a) to rescind without time limit, which is the remedy if the buyer "has not received the disclosures. . . ."

Your other questions related to an amendment contained in a contract addendum are as follows:

"a. Can a buyer refuse to accept the addendum and attachments in any manner? or
b. Can he accept the documents, but refuse to sign the addendum?
c. If yes to either a or b above, is the contract still rescindable by the buyer?"

As the discussion above indicates, while the buyer can choose to ignore an amendment actually delivered to the buyer by the seller, the buyer would no longer have the unlimited right to rescind under RP §11B-107(a). Nor would a buyer's refusal to sign an addendum containing the amendment itself invalidate the contract. Rather, the buyer would have the more limited right to rescind under RP §11B-107(b).

IV
Rescission

You next ask about a buyer's right to rescind a contract after receipt of an amendment:

"Does [RP §11B-107(b)] indicate a three day rescission for the purchaser after he receives a substantial and material amendment. Although this subsection indicates that the amendment information must adversely affect the purchaser to enable him to rescind, there is no standard by which to assess this; the section states that the purchaser may rescind 'without stating a reason.' How is the seller to ascertain whether or not the amendment 'adversely affects the purchaser?'"

RP §11B-107(b) states that the buyer may "rescind in writing the contract without stating a reason and without liability on the part of the purchaser . . . " Given this language, we see no way in which the seller can require an explanation of how the amendment "adversely affects" the buyer. Stated differently, this provision in practical effect allows the buyer to be the sole judge of whether an amendment "adversely affects" the buyer.

Your next question deals with the right of rescission and its relation to settlement:

"With regard to the same subsection, does the right to rescind automatically expire with completion of the settlement? In other words, the substantial and material amendment may be given to the purchaser one day before settlement and settlement occurs the next day. Does the purchaser then have two more days to rescind the contract and the settlement?"

RP §11B-107(c) provides that "if any purchaser proceeds to closing the purchaser's right to rescind under this section is terminated." Hence, we conclude that if a buyer proceeds with settlement, notwithstanding that the buyer has been given an amendment only the day before, the buyer's right to rescind under RP §11B-107(a) will have terminated at settlement.

On the other hand, the three day rescission period under RP §11B-107(b) is plainly intended to allow the buyer three days to consider the effect of the amendment on his or her buying decision. In the example that you give, where the amendment is provided to the buyer only a day before settlement, we believe that the buyer has an implied right under RP §11B-107(b) to postpone settlement for two days, to allow for the full three day period within which to rescind.

V
Waiver

Your final question deals with the prohibition on a buyer's waiver:

"[RP §11B-107(c)] states that a purchaser may not waive his rights in a contract. May a purchaser in the contract or in an appropriate addendum acknowledge receipt of certain information and disclosures, acknowledge that other information is required to be given to him and affirmatively state that he does not wish to see or obtain any additional information?"

No. A contract clause of this kind is nothing more than a waiver of the statutory right to receive the required disclosures and is void under RP §11B-107(c). Obviously, nothing in the Act prevents a buyer from ignoring the disclosures, if that is what the buyer wants to do. But a clause waiving entitlement to the information is prohibited.

J. Joseph Curran, Jr., Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

Editor's Note: In Chapter 82 (House Bill 388) of the Laws of Maryland 1988, the General Assembly significantly amended many provisions of the Homeowners Association Act.

1 The Act uses the term "purchaser" to denote the person buying a lot and the terms "vendor" and "owner" to denote the person selling a lot. In this opinion, we shall use the simpler terms "buyer" and "seller," respectively.

2 RP §11B-106(b) provides:

"The vendor shall provide the purchaser the following information in writing:
(1) A statement as to whether the lot is located within a development;
(2) (i) The current monthly fees or assessments imposed by the homeowners association upon the lot;
(ii) The total amount of fees, assessments, and other charges imposed by the homeowners association upon the lot during the prior fiscal year of the homeowners association; and
(iii) A statement of whether any of the fees, assessments, or other charges are delinquent;
(3) The name, address, and telephone number of the management agent of the homeowners association, or other officer or agent authorized by the homeowners association to provide to members of the public, information regarding the homeowners association and the development, or a statement that no agent or officer is presently so authorized by the homeowners association;
(4) A statement as to whether the owner has actual knowledge of:
(i) The existence of any unsatisfied judgments or pending lawsuits against the homeowners association; and
(ii) Any pending claims, covenant violations actions, or notices of default against the lot; and
(5) A copy of the declaration and all covenants, restrictions, rules, and regulations, if applicable, relating to the development and the homeowners association, to which the purchaser shall become obligated upon becoming the owner of the lot, including a statement that these obligations are enforceable against an owner and the owner's tenants, if applicable."

RP §11B-105 imposes far more extensive disclosure requirements on the first seller of a lot in a development containing more than 12 lots.

3 RP §11B-108 also gives the buyer a right of action against the seller if the seller has made "an untrue statement of a material fact" or has omitted "a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. . . ."