Can a Maryland county charge condominiums, co-ops, and HOAs a per-unit fee for a county dispute-resolution service?

Plain-English summary

Montgomery County's attorneys asked the Attorney General in 1990 whether the county could charge condominiums, cooperatives, and homeowners associations a per-unit fee to pay for county services aimed at those communities, chiefly a new dispute-resolution service under proposed Bill No. 44-89. The concern was a set of state statutes that forbid a local government from imposing a "burden or restriction" on a condominium, cooperative, or homeowners association that is not imposed on other "property of similar character."

The Attorney General concluded the per-unit fees were not preempted, though he called the question a close one. The analysis ran in two steps. First, was the fee a "burden"? A fee charged in exchange for a service, capped at the actual cost of that service, was a permissible user fee, not a burden. But a flat per-unit annual registration charge was a burden, because a community that never used the dispute-resolution service would still have to pay it, so the charge did not track the value of any service received. Second, even a "burden" is only forbidden if it discriminates, and here it did not: the bill treated condominiums, cooperatives, and homeowners associations the same, and apartment complexes, which the fee did not touch, were not "property of similar character" for this purpose. Because the burden was spread evenly across genuinely comparable properties, the state anti-discrimination provisions did not void it. The opinion's editor's note records that the Court of Appeals later cited this opinion approvingly.

Currency note

This opinion was issued in 1990. 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.

The opinion read the anti-discrimination provisions of the Maryland Condominium Act (RP §11-122(b)), the Maryland Cooperative Housing Corporation Act (CA §5-6B-19(a)(2)), and the Maryland Homeowners Association Act (RP §11B-104(b)(1)) as they stood in 1990, and it analyzed a bill that was then still pending. Its editor's note records that the opinion was cited approvingly by the Court of Appeals in Dumont Oaks Comm. Ass'n, Inc. v. Montgomery County in 1993. Section numbers and the current rules on local fees for common ownership communities may have changed; confirm the present statutes before relying on anything specific here.

Common questions

Could a Maryland county charge condos, co-ops, and HOAs a per-unit fee for a county service?
Under this 1990 opinion, yes. The Attorney General concluded that Montgomery County's proposed per-unit fees on common ownership communities were not preempted by state law, as long as the fee did not single out one kind of community over other property of similar character.

What state law limits fees a local government can put on condos and homeowners associations?
Three parallel provisions: the Maryland Condominium Act (RP §11-122(b)), the Maryland Cooperative Housing Corporation Act (CA §5-6B-19(a)(2)), and the Maryland Homeowners Association Act (RP §11B-104(b)(1)). Each bars a county, city, or other jurisdiction from imposing a "burden or restriction" on that kind of community that is not also imposed on other property of similar character.

Was the per-unit registration fee a "burden"?
The opinion said yes. A flat per-unit annual charge to renew registration was a "burden" because it was not proportional to any service: a community that never used the dispute-resolution service would still owe it. By contrast, a "fee for service" that did not exceed the actual cost of the service was treated as a permissible user fee, not a burden.

If the registration fee was a burden, why wasn't it preempted?
Because the statutes only void burdens that discriminate. The opinion read them, following Rockville Grosvenor, to turn on whether a law affects a common ownership community differently than other similar property. Bill No. 44-89 treated condominiums, cooperatives, and homeowners associations alike, and the opinion concluded apartment complexes were not "property of similar character," so there was no forbidden discrimination.

Did any court agree with this opinion?
Yes. The opinion's editor's note reports that the Court of Appeals cited it approvingly in Dumont Oaks Comm. Ass'n, Inc. v. Montgomery County, 333 Md. 202, 210 (1993).

Background and statutory framework

The question sat at the intersection of local finance and a set of state protections for "common ownership communities," a term the county's bill used to cover condominiums, cooperatives, and homeowners associations. Bill No. 44-89 would have created a Commission and an Office on Common Ownership Communities, required those communities to register annually, and set up a dispute-resolution process of mediation or binding arbitration for disputes arising under association documents. To pay for it, the bill let the County Executive set several fees: a per-unit annual charge to renew registration, fees for service capped at the actual cost of technical assistance and dispute resolution, and a per-unit charge on developers when documents were recorded.

The state-law hurdle came from three statutes enacted over the prior 16 years, each carrying nearly identical language. The original, part of the 1974 Maryland Condominium Act, is RP §11-122(b): a county, city, or other jurisdiction "may not enact any law, ordinance, or regulation which would impose a burden or restriction on a condominium that is not imposed on all other property of similar character," and any such law "is void." The 1986 Cooperative Housing Corporation Act added a matching provision (CA §5-6B-19(a)(2)), and the 1987 Homeowners Association Act added its own version (RP §11B-104(b)(1)). Under the Court of Appeals' reading in Rockville Grosvenor, Inc. v. Montgomery County, 289 Md. 74 (1980), the only test is the law's impact: whether it burdens the protected community as compared to its impact on similar property. In effect, the General Assembly reserved to itself the decision whether owners of this form of property should bear costs other, similarly situated owners do not.

Applying that framework, the opinion first sorted the fees into "burden" and "not a burden." Drawing on the ordinary meaning of the word and on the distinction courts use between a tax and a user fee, it treated a "fee for service" that did not exceed the service's actual cost as a permissible user fee, citing Emerson College v. City of Boston and, by analogy, federal Commerce Clause cases on charges that fairly approximate the value of what the payer receives (Evansville-Vanderburgh Airport Authority District v. Delta Airlines and American Trucking Associations v. Scheiner). But a flat per-unit registration charge, and the developer recording charge, were "burdens," because they did not track any service the payer received; Rockville Grosvenor and Nordheimer v. Montgomery County confirmed that costs and taxes imposed on these communities can be burdens within the statutes.

The decisive step was discrimination. The statutes void only burdens that fall unequally on the protected community as against similar property. Because Bill No. 44-89 did not distinguish among condominiums, cooperatives, and homeowners associations, and because the opinion concluded that apartment complexes, with their landlord-tenant disputes, were different enough not to count as "property of similar character," the fee did not discriminate. That some communities would use the dispute-resolution service more than others did not matter, since the service was equally available to all and, by analogy to Commerce Clause cases like Commonwealth Edison Co. v. Montana, a charge is not discriminatory merely because some payers use the funded service less. The opinion therefore concluded the per-unit fees were not preempted by RP §11-122(b), CA §5-6B-19(a)(2), or RP §11B-104(b)(1). Its editor's note records that the Court of Appeals cited the opinion approvingly three years later in Dumont Oaks.

Citations and references

Statutes:

• RP §11-122(b), the Maryland Condominium Act's bar on discriminatory local burdens or restrictions on condominiums
• CA §5-6B-19(a)(2), the parallel bar in the Maryland Cooperative Housing Corporation Act
• RP §11B-104(b)(1), the parallel bar in the Maryland Homeowners Association Act
• Article 14 of the Maryland Declaration of Rights, quoted for the obsolete variant "burthen"

Cases:

• Rockville Grosvenor, Inc. v. Montgomery County, 289 Md. 74, 89, 422 A.2d 353 (1980), setting the impact-based test and holding a tenant-relocation charge was a burden
• Nordheimer v. Montgomery County, 307 Md. 85, 512 A.2d 379 (1986), holding a tax is a "burden" for purposes of RP §11-122(b)
• Emerson College v. City of Boston, 391 Mass. 415, 462 N.E.2d 1098, 1105 (1984), distinguishing a user fee from a tax
• Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc., 405 U.S. 707, 717 (1972); American Trucking Associations, Inc. v. Scheiner, 483 U.S. 266, 290; and Commonwealth Edison Co. v. Montana, 453 U.S. 609 (1981), federal Commerce Clause cases used by analogy on fees, flat taxes, and proportionality
• Eastern Diversified Properties, Inc. v. Montgomery County, 570 A.2d 850 (1990), cited on the burden analysis
• Dumont Oaks Comm. Ass'n, Inc. v. Montgomery County, 333 Md. 202, 210 (1993), the Court of Appeals decision that later cited this opinion approvingly (per the editor's note)

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/1990/Volume75_1990.pdf (this opinion appears at printed pages 103-109 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

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

CONDOMINIUMS

"Common Ownership Communities" — Local Government — Ordinance Imposing Per-Unit Fees for County Services on Condominiums, Cooperatives, and Homeowners' Associations Not Preempted By State Law

June 20, 1990

Clyde H. Sorrell, Esquire
County Attorney

Marc P. Hansen, Esquire
Senior Assistant County Attorney

Richard H. Melnick, Esquire
Assistant County Attorney

 You have requested our opinion concerning the authority of Montgomery County to impose certain fees on common ownership communities. The fees, which would be authorized by legislation currently under consideration, would be used to fund various county services to these communities, in particular a dispute resolution service. Specifically, your question is whether a fee assessed by the county on a per-unit basis is preempted by provisions of State law prohibiting local jurisdictions from imposing "a burden or restriction" on a common ownership community that is not imposed on other "property of similar character."

 Although the matter is not free from doubt, for the reasons stated below, we conclude that the proposed per-unit charge is not preempted by State law.1

I

Proposed Montgomery County Ordinance

 Bill No. 44-89, "Common Ownership Communities; Dispute Resolution," is currently pending before the Montgomery County Council. The bill applies to all "common ownership communities," defined to include condominiums, cooperatives, and homeowners associations. Section 10B-2(b).2

 The bill proposes to create a new Commission on Common Ownership Communities, an oversight and policymaking body intended to examine and make recommendations concerning conditions in common ownership communities. §§10B-1 and 10B-6. All such communities are to register annually with the Commission. §10B-7(a)(1). The bill would also create an Office of Common Ownership Communities, which would function under the supervision of the Commission. Among the duties of the Office is to "operate a dispute resolution process to furnish mediation and administrative hearings." §10B-5(i).

 The bill's dispute resolution procedures, in brief, vest in the Commission the power to "hear any dispute between or among parties arising under any association document." §10B-9(a).3 Parties to a dispute would choose between mediation or an administrative hearing before an arbitration panel. §10B-11(a). The decision of the arbitration panel is to be binding on the parties, subject to judicial review procedures set out in the bill. §10B-13(e).

 The bill authorizes the County Executive to establish fees to pay for the activities of the Commission and Office. Specifically, the County Executive "may establish reasonable fees in amounts sufficient to fund the provision of dispute resolution and technical assistance by the Commission and the Office" through the following methods:

        (1) a per unit annual charge to common ownership communities to renew registration;

          (2) fees for service, that do not exceed the actual cost of the service, for technical assistance and dispute resolution; and

         (3) a per unit charge to developers when documents are recorded.

Section 10B-7(b). See also §10B-15(b).

II

State Anti-Discrimination Provisions

A. Statutory Language

 The statutes regarding condominiums, cooperatives, and homeowners associations each contain parallel language regarding the imposition of differential "burdens and restrictions." The original provision was enacted in 1974 as part of the Maryland Condominium Act and now appears in §11-122(b) of the Real Property Article ("RP" Article): "Except as otherwise provided in this title, a county, city, or other jurisdiction may not enact any law, ordinance, or regulation which would impose a burden or restriction on a condominium that is not imposed on all other property of similar character not subjected to a condominium regime. Any such law, ordinance, or regulation, is void."

 In 1986, the General Assembly enacted a virtually identical provision in the Maryland Cooperative Housing Corporation Act: "Except as provided in this subtitle, a county, city, or other jurisdiction may not enact any law, ordinance, or regulation which would impose a burden or restriction on a cooperative housing corporation that is not imposed on all other property of similar character not a cooperative housing corporation. Any such law, ordinance, or regulation is preempted by the subject and material of this title and is void." §5-6B-19(a)(2) of the Corporations and Associations Article ("CA" Article).

 Finally, the Maryland Homeowners Association Act, enacted in 1987, contains the following version of the same prohibition: "A local government may not enact any law, ordinance, or regulation which would ... [i]mpose a burden or restriction on property which is part of a development because it is part of a development." RP §11B-104(b)(1).

 Thus, a local law is prohibited by these provisions if it imposes a "burden or restriction" on a common ownership community and the "burden or restriction" is discriminatory because it is not imposed on similar property. "The only criterion in [RP §11-122(b)] for identifying a law proscribed by it is the impact of that law, by way of a burden or restriction on a condominium, as compared to its impact, or lack thereof, on similar property." Rockville Grosvenor, Inc. v. Montgomery County, 289 Md. 74, 89, 422 A.2d 353 (1980). In other words, the General Assembly has reserved to itself the power to decide whether, in pursuit of some policy objective, the developers or owners of property in a condominium, cooperative, or homeowners association are to bear costs that other, similarly situated property owners do not.

B. Burden

 Under RP §§11-122(b) and 11B-104(b)(1) and CA §5-6B-19(a)(2), a county would impose a "burden" if it charged common ownership communities an annual fee for the privilege of maintaining that form of property ownership. Even a small fee per unit would not be insignificant when multiplied by the number of units and a number of years. Such a fee would be a "burden" in the common usage of the term. A "burden" is "[t]hat which is borne or carried; a load," Webster's New International Dictionary 357 (2d ed. 1953); "that which is carried; load," Random House Dictionary of the English Language 279 (2d ed. 1987); "[a] weight or impediment; something to be borne," Leff, The Leff Dictionary of Law: A Fragment, 94 Yale L.J. 1855, 2221 (1985).4

 The pertinent cases do not suggest any construction of "burden" other than its usual one. In Rockville Grosvenor, the Court of Appeals held that a county ordinance which required those converting rental housing into condominiums to pay each displaced tenant up to $750 for relocation expenses was a "burden," within the meaning of the provision. 289 Md. at 95. In addition, Nordheimer v. Montgomery County, 307 Md. 85, 512 A.2d 379 (1986), makes clear that a tax is a "burden" for purposes of RP §11-122(b). See 307 Md. at 100.5

 We doubt, however, that the term "burden" extends to user fees, paid in exchange for government services of roughly proportional value. Compare Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc., 405 U.S. 707, 717 (1972) (no federal Commerce Clause violation where "charges reflect a fair, if imperfect, approximation of the use of facilities for whose benefit they are imposed") with American Trucking Associations, Inc., v. Scheiner, 483 U.S. 266, 290 (Commerce Clause violation where flat taxes "do not even purport to approximate fairly the cost or value of the use of [state] roads").

 In our view, one of the alternatives open to the County Executive under Bill No. 44-89 - "fees for service, that do not exceed the actual cost of the service, for technical assistance and dispute resolution," §10B-7(b)(2) - is a permissible user fee and therefore is not a "burden," within the meaning of the State preemptive provisions. This fee is "paid by choice, in that the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge ... and the charges are collected not to raise revenues but to compensate the governmental entity providing the services for its expenses." Emerson College v. City of Boston, 391 Mass. 415, 462 N.E.2d 1098, 1105 (1984) (distinguishing user fee from tax).

 We cannot reach the same conclusion about the "per unit annual charge to common ownership communities to renew registration." Although we are told that the charge would likely be low (about $3.00 per unit), it would not be insignificant if a common ownership community had many units. More importantly, the charge would not be proportional to governmental services rendered. Communities that never used the dispute resolution service would nonetheless be required to pay the charge and would thereby be "burdened." Cf. American Trucking Associations v. Scheiner, 483 U.S. at 290; Eastern Diversified Properties, Inc. v. Montgomery County, 570 A.2d 850 (1990).

 The third alternative fee source — "a per unit charge to developers when documents are recorded" - also is a "burden," in our view. The fee bears no relation to developers' use of the services of the Commission and Office.

C. Discrimination

 Under the provisions in question, "burdens" are not impermissible unless they are discriminatory. "Because only those local laws which adversely affect condominiums differently than other similar property are voided by [RP §11-122(b)], there are conceivably many non-discriminatory local laws which could apply to condominiums." Rockville Grosvenor, 289 Md. at 92.

 As the Court of Appeals pointed out in Rockville Grosvenor, if common ownership property presents a problem, but so too do other comparable forms of property, a local jurisdiction may not impose the cost of a solution on the particular common ownership property alone. Thus, Montgomery County could not make those converting apartments into condominiums pay tenant relocation costs when "[n]o relocation reimbursement is required if the owner of an apartment house or apartment complex refuses to renew leases of tenants who desire to continue to rent, because the owner plans to convert the facility to a cooperative apartment ... [or] plan[s] to raze a rental facility and convert to business or commercial use." 289 Md. at 95.

 Here, by contrast, Bill No. 44-89 does not distinguish among types of community ownership properties. Condominiums, cooperatives, and homeowners associations are treated alike. To be sure, the dispute resolution mechanism and associated fees will not apply to apartment complexes, which certainly have their share of disputes. But, in our view, the County Council is not precluded by State law from the legislative judgment that landlord-tenant disputes are so different in kind from disputes in a common ownership community that, for this purpose, rental facilities are not "property of similar character."

 Nor is it determinative that some common ownership communities will actually use the dispute resolution service more than others. The service will be equally available to all, and the very prospect of recourse to the service might lead to the informal resolution of problems within communities. We note, by analogy to federal Commerce Clause cases, that a state tax borne largely by businesses outside that state is neither discriminatory nor unconstitutionally disproportionate merely because those businesses might not avail themselves of state services to the same extent as in-state businesses. Commonwealth Edison Co. v. Montana, 453 U.S. 609 (1981).6

III

Conclusion

 In summary, it is our opinion that the per-unit fees contemplated by Montgomery County Council bill No. 44-89 are not preempted by RP §11-122(b) (condominiums) CA §5-6B-19(a)(2) (cooperatives), or RP §11B-104(b)(1) (homeowners associations).

                                             J. Joseph Curran, Jr.
                                             Attorney General

                                             Jack Schwartz
                                             Chief Counsel
                                               Opinions and Advice

Editor's Note:

 This opinion was cited approvingly by the Court of Appeals in Dumont Oaks Comm. Ass'n, Inc. v. Montgomery County, 333 Md. 202, 210 (1993).

1
We have not been asked, and therefore do not address, any other legal question that might arise about the proposed legislation.

2
Citations are to the chapter of the Montgomery County Code that would be added by Bill No. 44-89.

3
The term "party" includes "an owner," "a governing body," and "an occupant of a dwelling unit in a common ownership community." §10B-8(b)(7). A party may file a dispute with the Commission only after "a good faith attempt to exhaust all procedures or remedies provided in the association documents." §10B-9(b).

4
The obsolete variant "burthen" appears in Article 14 of the Maryland Declaration of Rights: "That no aid, charge, tax, burthen or fees ought to be rated or levied, under any pretense, without the consent of the Legislature." No case elaborates on the meaning of the term in this context.

5
In Nordheimer, the Court of Appeals held that a Montgomery County condominium transfer tax authorized by a public local law was not in conflict with RP §11-122(b), because "[t]he provision has utterly no application to laws enacted by the General Assembly which impose unequal burdens." 307 Md. at 100 (emphasis added).

6
A per unit charge (i.e., the larger the community, the higher the fee), as distinct from a flat charge per community, would roughly approximate the likely use of the Commission's services. The number of disputes in a community will likely be directly proportional to the size of the community. Therefore, a per-unit charge is arguably a "proxy for value obtained from the State," or at least potential value. American Trucking Associations v. Scheiner, 483 U.S. at 284.