G en. 35] 35
C O N D O MI N I U MS
R I GHT OF R ESI DENTI AL U NI T O WNERS TO T ERMI NATE C ONTRACTS E NT E RE D I NT O B Y D E VEL OPE R ON B E HAL F OF C OND OMI NI UM

February4, 2005

The H onor abl e Je an W

. R oes s er Secr etar y of A gi ng Y ou have r eques t ed o u ropi ni on conce r ni ng a pr opos ed c o n tin u in g c a re re tirem e n t co m m u n ity(“ C C R C ” ) p rojec t th a t w o u ld be s t ru c tu r e d a s a r e s i d e n t i a l c o n d o mi n i u m w i t h i n a ma s t er condomi ni um
. Sect i on 11- 133 of t he R eal Pr oper t yA r t i cl e ( “R P”) o f th e A n n o tat ed C o d e o f M ary land all o w s a c o u n cil o f u n ito w n ers o f a re sid e n tial c o n d o m in iu m to ter m in a te a g re e m e n ts e n te re d in to byt he devel oper of t he condomi ni um , i f t he counc i l act s dur i ng t he t h r e e - y e a r p e r i o d a f

t e r u n i t o wn e r s g a i n c o n t r o l o f t h e c o n d o mi n i u m. Y o u n o te th a t, un d e r th e p ro p o se d stru c tu re , the C C R C re sid e n ts w oul d contr ol onl yt he r es i dent i al condomi ni um and thatent i t i es r el ated to the deve l opercoul d per m anent l ycontr ol t he counc i l of u nitow ners of t he m ast er cond om i nium and t herefore keyl eases, ma n a g e me n tc on t r a c t s , a n d o t h e rc o n t r a c t s r e l a t e d t o t h e CCRC pr oj ect

. Y ou as k w hether t he condomi ni um - w i t hi n- a- condomi ni um s t ructur e w oul d vi ol at e R P §11- 133.
I n ouropi ni on, t he pr opos ed s t ructur e, as des cr i bed i n y our l et t er , does notviolat e R P §11- 133. H ow ever , y ourconce r n i s not w ith o u t som e jus ti fica ti o n , an d the stru cture w o u ld af fe ct t h e n ature and ext entof di s cl os ur e r equi r ed a s a p rer equi s i t e t o t he s al e of r e s i d e n t i a l u n i t s i n t h e CCRC.
I Backg r ound
A
. Co n do min i u ms A c o n d o m in iu m is a “c o m m u n a l f o rm o f e sta te in p r o p e rty co n s i s t i n g o f i n d i v i d u a l l y o wne d u n i t s whi c h a r e s u p p o r t ed by col l ect i vel yhel d fac i l i t i es and ar eas
. ” A n dre w s v . C ity o f G re e n b e lt , 293 M d. 69, 71, 441 A

. 2d 1064 ( 1982)

. A condomi ni um uni tow ner th u s h a s a h yb rid p ro p e rty in ter e st c o n sis tin g o f e x c lu siv e o w n e rsh ip3 6 [9 0 O p
. A tt ’y

Common e le me nts that are re se rv e d f or thee xclu siv e us e of

so me 1 units, but notothers, are known a s “limited common elements.” RP §11- 101(c)

. of a u nitand t enan cy i n com m on i n the co m m on el em ents

. R id g e ly 1 C o n d o m in iu m A ss ’n , In c . v. Smy rn io u d is , 343 M d. 357, 358- 59, 681 A .2 d 4 9 4 (1 9 9 6 ). “I n e x c h a n g e f o r th e b e n e f

its o f o w n in g p ro p e rty i n comm o n, condomi ni um ow ner s agr ee t o be bound byrul es g o v e rn in g th e a d m in is tr a tio n , m a in te n a n c e , a n d u s e o f th e p ro p e rt y .” I d. at 35 9 (fo o tno te om itted).
T he M ary l and C ondom i ni um A ct es t abl i s hes gr ound rul es for t he cr eat i on, i ni t i al s al e, m anage m ent , and t erm i nat i on of c o n d o m in iu m re g im e s
. See R P §11- 101 ets eq. T he A ctal so p ro v id e s f

o r a h ie r a r c h y o f

leg a l in stru m e n ts a n d re g u latio n s to govern a part i cul arcondomi ni um r egi m e, i ncl udi ng a condomi ni um d e c la ra tio n , p l a t, b y la w s , a n d ru le s
. See R P §11- 124( c)

- ( e) ( pri n ci pl es forcons t rui ng var i ous l egal i ns t rum ent s and rul es g o v e rn in g c o n d o m in iu m ). A c o n d o m in iu m is g o v e rn e d b y a c o u n c il o f u n it o w n e rs c o m p rise d o f a ll u n it o w n e rs, w h ich m a yd e leg a te its pow er s t o a boar d of di r ect or s orm anagi ng agent

. R P §11- 109.
T h e M ary l and C ondom i ni um A ct r equi r es r egi s t r at i on of a publ i c off

er i ng s t at em en t tha tful l ydi s cl os es cert ai n as pect s of a r es i dent i al condomi ni um befor e t he i ni t i al s al e of a uni t

. R P §§11- 126, 11- 127. T he l aw al s o r equi r es that a s el l erm ake s peci fi ed di s cl os ur es as a condi t i on of t he re s al e of a re s i dent i al uni t

. R P §11- 135. I n addi t i on t o t he di s cl os ur e r equi r ement s, the A ctcont ai ns cert ai n ot herpr ot ect i ons foruni tow ner s
. For exampl e, t he A ct r e g u l a t e s t h e c r e a t i o n a n d e l e c t i o n o f a b o a r d o f

d i r e c t o r s b y a cou ncil of u nitow ners, e stab l i shes groun d rul es for m eet i ng s, i ncludi ng an o pen m eet i ng s r equ i rem ent an d a l i m i t at i on on t he u se of cl os ed s es sion s , cr eat es pr ocedur es forr es ol ut i on of al l eged vi ol at i ons of condomi ni um rules, and gr ant s uni tow ner s a r i ghtof acc es s t o condomi ni um r ecor ds

. R P §§11- 109( c) , 11- 109. 1, 11- 113, 11- 116( c)

. A l s o, dur i ng a sp ec ifi ed per i od of t i m e, t he counc i l of uni tow ner s m aydi s avow contr act s ent er ed i nt o on behal f of the condomi ni um byt he deve l oper
. R P § 1 1 -133. T hats ect i on i s t he f o c u s o f yo u ri n q u i r y. B
. R P§11- 133
S ect i on 11 -133 p rovi des as foll ow s:G en. 35] 37

The provision wa s orig inally codified as RP § 1 1-125. L ater 2 amendments c larified thestatutory languag e, create d exceptions for nonresidential c ondominiums and contracts with go v ernment ag encie s or public utilit ies, and re co d i fi ed the statute a s RP §11-133. Chapter 681, L aws of Maryland 1980; Chapter 246, L aws of Ma ryland 1981; Chapter 572, L aws of Ma

ryland 1986. ( a) W i t hi n t hr ee y ear s fol l ow i ng t he dat e on w hi ch uni t s have be en gran t ed byt he devel opert o uni t ow ner s havi ng a maj or i t yof t he vot es i n t he counc i l of uni t ow ner s , any lea se , and any m anag em ent cont ract, e m p lo y m e n t co n tra c t, or o th e r c o n tr a c t to w h ich th e c o u n c il o f

u n it o w n e r s is a p a rty e n te r e d in to b e tw e e n th e d a te th e p ro p e rty s ubj ectt o t he condomi ni um reg i m e w as gr ant ed t o t he deve l operand the dat e on w hi ch u n its h a v e b e e n g ra n ted b y th e d e v e lo p e r to uni tow ners h av i ng a maj or i t yof vot es i n t he counci l of uni tow ner s m aybe t er m i nat ed by a m ajorit yv o te of

the c o u n cil o f u n ito w n e rs w i t houtl i abi l i t yfort he t er m i nat i on. T he t er m i nat i on s hal l become eff ect i ve upon 30 day s ’ w r it te n not i ce of

t he t er m i nat i on fr om t he co un ci l of u nitow ners. ( b) T he pr ovi s i ons of t hi s s ect i on d o not a p p lyto : ( 1) A nycontr acto rgr antbetw een the counci l of uni t ow ner s and anygovernm ent al ag en cyo r pu b li c u ti li ty ; or ( 2) A condomi ni um t hat i s occupi ed and used solel yfor no nresi den t i al pu rposes. T h e p re d e c e ss o r o f

R P § 1 1 -1 3 3 w a s a d d e d to th e S tate condomi ni um l aw i n 1974, as partof a c om pr ehens i ve r evi s i on of t hatl aw
. C hapt er641, L aw s of M ary l and 1974. T hatr evi s i on w as 2 t he r es ul tof r ecomm endat i ons b y t he C ondom i ni um R evi s i on C om m i t t ee of t he R eal Pr oper t y , Pl anni ng and Zoni ng Sect i on of t he M a ry lan d S tate B a r A ss o c iatio n , w h ich su b m itt e d a f o rm a l re p o rt to t he G ener al A s s embl y
. T he C om m i t t ee r epor t and i t s comm ent s on t he r evi s ed s ect i ons w er e r epr i nt ed i n t he A nn o tat ed C ode of M a ryla n d

. See E di t or ’ s N ot e t o T i t l e 11, R eal Pr oper t y A r t i cl e ( 19743 8 [9 0 O p
. A tt ’y
C um
. Supp. )

. T he r epor ti ndi cat ed that the re vi s ed l aw pr ovi ded cons um er pr ot ect i on t hr ough a compre hens i ve di s cl os ur e and ant i fr aud pr ovi s i on and that , i n addi t i on, “[a ] ffi r m at i ve r egul at i on overa deve l oper ’ s abi l it y t o contr ol a pr oj ectovera l ong t er m has been a dded by[R P § 1 1 -13 3 ]. ” Id ., p. 20. I n a l at ercomm ent el abor at i ng t he s t atut or ypr ovi s i on, t he C om m i t t ee e xpl ai ned:

[Sect i on 11- 133] cont ai ns ent i r el ynew m at er i al r el at i ng t o t he pr ot ect i on of t he cons um er
. T hi s se ct i on gi ves t he c o u n c il o f

u n it o w n e rs, b ya m a

jo rity vo t e, t he po w er t o term i nate anyl ease and anym an agementand s i m i l ar contr act s w hi ch the counc i l m ayhave en tered into w h il e the “d ev elop er” c o n tro lled th e c o u n c il. T h is p o w e r to t er m i nat e expi r es t hr ee y ear s fol l ow i ng the d ate u p o n w h ich th e “ d ev elop er” l as thad a maj or i t yof t he vot es i n t he c o u n c il.
I d. , p. 42. T hus , t he evi dent purpos e of thi s s ect i on i s t o per m i tt he pur chas er s of r es i dent i al condomi ni um un it s t o fr ee the condomi ni um of unfavor abl e l ong- t erm contr act s bes t ow ed on them byt he condom i ni um ’ s devel oper as l ong as t hey act w i t hi n a thr eey ea r w ind o w af

ter th eyo b tai n ef

fe cti v e c o n tr o l from the d ev elop er. II
P ropos ed C C R C C ondom i ni um St ruct ure T he p rop os ed C C R C pr oj ectw oul d be s i m i l ari n m any res pects t o o t her C C R C s. In one lar ge b uil ding i tw ou l d en com pass r es i dence s fort he m ember s of t he comm uni t y , comm uni t yfac i l i t i es s uch as di ni ng hal l s , r ecr eat i onal ar eas , and s i m i l ar ameni t ies, and as s i s t ed l i vi ng an d sk i l l ed nur s i ng fac i l i t i es
. H ow ever , t he pr oj ect w oul d have a l egal s t ructur e uni que for a C C R C i n M ary l and. T he r es i dent i al uni t s w oul d al l be par t of a condomi ni um t hatw oul d be one uni tof a thr ee- uni t m ast ercondomi ni um r egi m e. For t he s ake of cl ar i t y , w e w i l l r efe rt o t he s ubor di nat e r es i dent i al condomi ni um as t he “ Su b

- Con d o mi n i u m” a n d t o t h e t h r e e - u n i tma s t er c o n d o m in iu m a s th e “ M a s te r C o n d o m in iu m .”G en. 35] 39

T h e Maryland CondominiumAct def ines “unit owner” as “ the 3 person, or combination of per sons, who hold leg al title to a unit.” RP §11- 101(r) . The unit owner s of the Sub-Condominium, as the “combination of per sons” holding le g al title to the Residential Unit of the Master Condomini um, would toge ther have the rights of the “unit owner” of the Re sid e nti a l Un it. Th e c ounc il of un it owne rs of theSub -C on do min ium , which would be a leg al entity designated by

statute as its g overningbody (RP §1 1- 10 9( a)) , w ou ld n ot i tse lf ho ld l e g a l ti tleto the R e sid e nti a l Unit of theMa ster C on do min ium, alt ho ugh th e un it o wn e rs c ou ld c ho os e to have it ac t on their behalf with respe ct t o the Master Condomini um. The residential unit owner s would thus have the right t o inspect the Maste r Con do min ium ’s re c ords and , in c e rt a in c irc ums tanc e s, to re qu ir e an a udit (continued...) A. The Sub

- Condom ini um T he Sub- C ondom i ni um w oul d i ncl ude appr oxi m at el y240 r e s i d e n t i a l u n i t s t h a t wo u l d b e o f f e r e d f o rs a l e t o p r o s p e c t i v e CCRC re sid e n ts. T h e S u b -C o n d o m in iu m w o u ld b e g o v e rn e d b ya c o u n c il of u nitow ners consi st i ng of the ow ners of t he 2 40 res i den t i al un i t s. H ow ever , t he r es pon sibi l i t i es of t he Sub- C ondom i ni um counci l of uni tow ner s w oul d b e li m i t ed. T he Sub- C ondom i ni um w oul d not contr ol t he c o m m u n ityfac i l i t i es ort he hea l t h car e fa ci l i t i es
. N or w o u ld it co n tro l th e e x ter io r w a lls o r ro o f o f th e b u ild in g . T h e o n ly comm on el ement s of t he Sub- C ondom i ni u m w oul d be the i nt er i or h a llw a y s o f

th e re s id e n tia l a re a s
. T he r es i dent i al uni t ow ner s w oul d be obl i gat ed under bot h a cont i nui ng car e agr eement and the condomi ni um document s t o pay m andat or ycondomi ni um as s es s m ent s fort hos e s er vi ces pr ovi ded t hr ough t he Sub- C ondom i ni um – e .g
. , m ai nt ai ni ng t he ca rpeti n t he h a l l wa y s – a n d t h o s e p r o v i d e d t h r o u g h t h e M a s t e rCo n d o mi n i u m – e .g
. , m eal s , r ecr eat i on, and ac ces s t o heal t h car e. B. The Mas te rCondom ini um T h e M a ste r C o n d o m in iu m w o u ld in c lu d e th re e u n its: a R es i dent i al U ni t , a H eal t h C ar e U ni t , and an A m eni t ies U n it

. T he t hr ee M as ter Condom i ni um uni tow ner s w oul d j oi nt l yow n and contr ol t he ext er i orof t he bui l di ng, as w el l as t he s t ructura l and ut i l i t ycomponent s
. I t i s ant i ci pat ed t hatt he M as t erC ondom i ni um counci l of un it o w n er s w oul d del egat e r es pons i bi l i t i es t o a thr eem e m b e r b o a rd o f

d ir e c to rs
. T he R es i dent ial U ni tw oul d cons i s tof t he 240- uni tSubC o n d o m in iu m
. T h e A m e n iti e s U n it w o u ld in c lu d e th e d in in g h a ll 34 0 [9 0 O p
. A tt ’y

(...continued) 3 of theMa ster C on do min ium ’s bo ok s. RP §1 1- 11 6. In a dditi on , in mos t ins tanc e s, thec on se nt o f re sid e nti a l un it o wn e rs wou ldbere qu ir e d to amend the c ondominium declaration. RP §11-103. a n d o th e r f

a c ili ties su c h a s a lib ra rya n d c r a f ts ro o m a n d w o u ld pr ovi de hos pi t al i t ys er vi ces t o t he C C R C r es i dent s , w ho w oul d pay a mandat or yfee r egar dl es s of w hethert heyus ed t hos e servi ces
. T he H eal t h C ar e U ni tw oul d i ncl ude ass i s t ed l i vi ng and compr ehens i ve n u r s i n g c a r e f

a c i l i t i e s t o whi c h t h e CCR C r e s i d e n t s wou l d be as s ur ed pr i or i t yacc es s
. H ow ever , a C C R C r es i dentw oul d onl ypay foras s i s t ed l i vi ng orcompre hens i ve ca r e s er vi ces i f t he r es i dent elec t ed t o us e thos e s er vi ces
. T he r es i dentw oul d ent eri nt o a s epar at e agr eementfort hos e s er vices w it h t he H eal t h C ar e U ni tat th e tim e th e re s id e n t b e g a n to re c e iv e th e s e rv ic e s
. T he deve l operpl ans t o s el l t he H eal t h C ar e U ni tand the A m e n itie s U n it to a s in g le e n tity (o r tw o e n titie s c o n tr o lle d b y a s i ngl e ent i t y ) , al t hough i t m i ght s el l t hos e uni t s t o s eparate e n ti t i es notundercomm on contr ol

. I n anyevent , i ti s cont empl at ed thatt he ent i t i es t hatow n t he non- r es i dent i al uni t s w il l be or gani zed a s lim ited liab ili tyc o m p a n ies (“ L L C s” ). T h e d e v e lo p e r o r a n a f f ili a te pl ans t o h av e a m i nor i t yi nt er es ti n, and t o be the managerof, t he L L C s
. T he M as t erC ondo m inium counci l of uni tow ner s w oul d be res po nsi ble for providi ng con t i nu i ng care t o the r esi den t s in acc or dance w i t h A nnot at ed C ode of M ary l and, A r t i cl e 70B , §§7 th ro u g h 2 3 . T h e M a ste r C o n d o m in iu m c o u n c il o f u n it o w n e rs w o u ld pr ovi de thi s car e i n l ar ge partt hr ough i t s l egal r el at i ons hi ps w i t h t he th re e M a ste r C o n d o m in iu m u n its a n d th e ir o w n e r s . T h a t co u n c il wou l d c o n t r a c t f

r o m t i me t o t i me wi t h t h e o wne r o r o wne r s of t he A m eni t i es U ni tand the H eal t h C ar e U ni t t o pr ovi de: ( 1) t he s er vi ces th e c o u n c il p ro m ise d th e re sid e n ts, a n d (2 ) th e g u a ra n tee d p rio rity a c c e ss to th e H e a lth C a re U n it. T h e o w n e rs o f th e re sid e n tial u n its w o u ld no t co n tr o l th e M aster C o n d o m inium co u n cil o f u n ito w n ers and, acc or di ngl y , w oul d have l i t t l e pow er over contr act s devi s ed at th e M a s te r C o n d o m in iu m le v e l.
III
A n a ly sis
Yo u h a v e a s ke d wh e t h e rt h e c o n t e mp l a t e d c o n d o mi n i u mw i t hi n- a- condomi ni um s t ructur e w oul d vi ol at e R P §11- 1 3 3 “byG en. 35] 41

I f the de veloper

continu edto control the other two units of the 4 Master Condominium, the authority to terminate c ontrac ts under RP §11- 133 would not yet be e ffe ctive. RP §11-133 c an only be invoked a fter the (continued...) al l ow i ng t he d eveloper t o p erm anen t l ycon t ro l th e l eases, m a n a g e m e n t, a n d o th e r c o n tr a c ts ” o f th e M a s te r C o n d o m in iu m
. A n i ni t i al ques t i on i s w hetherR P §11- 133 w oul d appl yt o one or both of the con do m i nium regi m es descri bed abo ve. B y i t s t erm s, t he s t atut e does not ap p l yt o a condomi ni um t hati s “occ upi ed and u sed so lel yfo r no n reside n ti al p u rpo ses.” R P § 1 1 -13 3 (b)(2 ). B eca us e the pr opos ed Sub- C ondom i ni um w oul d cons i s tof r es i dent i al uni t s and the pr opos ed M as t er C ondom i ni um w oul d have one uni tdevot ed t o r es i dent i al purpos es , nei t hercondomi ni um w oul d be us ed “s ol el y ” fornonr es i dent i al purpos es
. T h u s , t he exce pt i on w oul d notper t ai n atei t hert he M as t er C o n dom i ni um or th e S u b -C o n d o m in iu m lev e l. T h e re f o re , R P § 1 1 -1 3 3 w o u ld a p p ly t o b oth cond om i nium s. T he pr oces s forappl y i ng R P §11- 133 att he SubC ondom i ni um leve l is s t r ai ght for w ar d. O nce a m aj or i t yof t he re sid e n tial u n its h a v e b e e n tra n sf e rre d b y th e d e v e lo p e r, th e c o u n c il o f u n it o w n e rs f

o r th e S u b -C o n d o m in iu m m a y e x e rc ise its rig h t to t er m i nat e contr act s fora per i od of t hr ee y ear s
. H ow ever , undert he p r o po s e d s t ru c tu r e t h e mo s ts i g n i f i c a n tc o n t r a c t s , f

r o m a CCRC r es i dent ’ s per s pect i ve, w i l l be thos e en ter ed i nt o att he M as t er C ondom i ni um l evel

. A l t hough t he M as t er C ondom i ni um counci l of u n i to wn e r s wi l l b e a b l e t o e x e r c i s e t h e t e r mi n a t i o n r i g h tu n d e rRP § 1 1 -1 3 3 o n c e th e d e v e lo p e r ha s p a ss e d c o n tro l o f tw o o f th e u n its to i ndi vi dual s orent i t i es not contr ol l ed by t he devel oper , t he r es i dent i al u n it o w n e rs w ill n o t c o n tro l th e M a ste r C o n d o m in iu m c o u n c il. W ith onl y one- t hi r d of t he vot es on t he M as t erC ondom i ni um counci l of uni tow ner s , t he r es i dent i al uni tow ner s m aynotbe abl e t o el ecteven on e m em ber of the boa rd of d i rect ors. I ts houl d be not ed thatt he pr opos ed C C R C s t ructur e does not con t em plat e t hat t he dev el op er w i l l perm anen t l y con t rol t he leas es, ma n a g e me n ta n d o t h e rc o nt r a c t s o f t h e M a s t e rCo n d o mi n i u m. U n d e r th e p ro p o se d stru c tu re , a s w e u n d e rsta n d it, th e d e v e lo p e r w ill o w n a m ino ri tyinterest i n the A m e n itie s U n itan d the H ea lth C are U n it

. T he author i t yt o t er m i nat e contr act s att he M as t er C ondom i ni um l evel underR P §11- 13 3 w i l l notbecome eff ect i ve u n til th e d e v e lo p e r h a s tra n sf e rre d c o n tro l o f

a t lea st tw o o f

th e u n its o f t h e M a s t e rCo n d o mi n i u m. 44 2 [9 0 O p
. A tt ’y

(...continued) 4 develope r ce des control of the council of unit owners – an e vent for which the statute sets no dea dline.
B e c a us e theMa ster C on do minium c ounc il o f u

nit owne rs is 5 g overne d by Maryland corporation l aw, it would be subject to restrictions o n a p p r o v a l o f “ inter e s te d d ire c to r tran s a c ti o ns.” SeeRP§11-109(d) (counc il “is subject to thos e p ro v i s i o ns of Title 5, Subtit le 2 of the Corporations and

A s s ociations Article...” ); Annotated Code of Mary land, Corporations and Ass o c ia ti o n s Ar tic le (“ CA”), §5- 201 (Mar yland General Corporation L aw g enerally applies to nonstock cor

porations); CA §2-419 (conditions for a

pproval of interested dire ctor tra nsactions). Th i s s t ru c tu r e c o u l d wo r k t o t h e di s a d v a n t a g e o f CCRC r esid en ts w ho become uni tow ner s of t he Sub- C ondom i ni um
. For e x a m p le, in th e o ry , a d e v e lo p e r o f su c h a stru c tu re m ig h t e n ter in to c o n tra c ts o n b e h a lf

o f th e M a ste r C o n d o m in iu m th a t th e re sid e n ts p e rc e iv e a s u n f

a v o ra b le. If

th e re sid e n ts la ter so u g h t to ter m in a te th o se a g re e m e n ts, th e o w n e rs o f th e A m e n iti e s U n it a n d th e H e a lth C a re U n it, in w h ich th e d e v e lo p e r w o u ld h a v e a n in ter e st, c o u ld th w a rt th a t ef

f o r t. M o r e o v e r, ev e n if th e d e v e lo p e r te rm in a ted its r el at i ons hi p w i t h t he pr oj ect ent i r el y , t he ow ner s of t h e A m eni t i es U ni tand H eal t h C ar e U ni tcoul d j oi ntl y co nt r ol t he M as t er C o n d o m in iu m c o u n c il o f u n it o w n e rs, w h ich w o u ld n e g o tiate contr act s for t he s er vi ces pr ovi ded by t hos e uni t s t o r es i den ts. In ot herw or ds , t he contr ol l i ng m ember s of t he M as t erC ondom i ni um counci l of uni tow ner s coul d be negot i at i ng w i t h r el at ed ent i t i es over th e p ric e s th a t th e c o n tin u in g c a re re sid e n ts w o u ld p a yf o r th e ir s er vi ces
. T her e i s s om e r i s k t hatchar ges and m andat oryfee s under t hes e contr act s coul d exce ed the fa i r m ar ket val ue of the s er vi ces and t herebyerode t he eq uityof the res i den t s i n thei r uni t s. 5
T hi s r ai s es t he ques t i on w hether t he condomi ni um - w i t hi n- acon do m i nium m od el un de rm in es t he co nsum er pr otect i on pu rpose of R P §11- 133 – i

. e. , t o l i m i t a devel oper ’ s abi l i t yt o contr ol , t hr ough l ong t er m contr act s , the oper at i on of a r es i dent i al condomi ni um proj ectaft er a m aj ori t yof the un i t s have b een tr ansferr ed to ot hers.
W hi l e thi s conce r n i s under s t andabl e, i tcoul d ar i s e i n any m i xed- us e condomi ni um w h ere t he r es i dent i al uni t s have be en a l l o c a t e d a mi n o r i t yo f

t h e v o t e s o n t h e c o u n c i l o f u n i to wn e r s
. Of cour s e, t he i ssu e m i ghtnotbe as m uch of a conce r n i n a typi cal m i xed- us e condomi ni um w her e r es i d en ts ar e notobl i gat ed t o pay m an d atorys er vi ce f

ees t o anotheruni t , r egar dl es s of w hethert hey us e the s er vi ces a vai l abl e i n t hatuni t

. N evert hel es s , t he M ary l andG en. 35] 43

We do n ot me an to sug g e st that a dev e lop e r c ou ld c irc umv e nt RP 6 §11-133 by

artificially

designatingcommon eleme n t s of a property as sepa rateun its or

a llo c atin gvo tin gri ghts amon gun its in a mann e r that di d no t have so mere a so na

bleba sis . A s w e un de rs tand it, theprop os e d H e a lth Care Unit a

nd Amenities Unit w ill ea ch occupy considera ble spacein the building and w ill function as substantial businesses offe ringhealth ca re and other signific ant servic es. C o n d o m in iu m A c t d o e s n o t a p p e a r t o p re c lu d e su c h a n a rra n g e m e n t. R ather , t he A ct appea r s t o r el yon m ar ketfor ces t o pr eventabus es by r equi r i ng ful l and ef

fec t i ve di s cl os ur e. 6
U n d ert he A ct , t he Secr et aryof St at e r evi ew s a pr opos ed p u b li c o ff

ering stat em en t fo r co m p li an ce w ith th e A ct’s disclosu re r equi r ement s , as a c o n di t i on of r egi s t r at i on of t he condomi ni um r egi m e and, ul t i m at el y , t he s al e of i t s uni t s
. R P §11- 127. T he A ct r equi r es t hatt he vendorof a r es ide nt i al condomi ni um uni tpr ovi de ext ens i ve d i s c l o s u r e a b o u tth e c o n d o mi ni um , i ncl udi ng, among ot her t hi ngs , i t s governi ng document s , i t s component s , i t s fi nanci al s t atus and pol i ci es , and i t s pl ans forfutur e expa ns i on. Per t i nentt o t he i s s ue y ou have r ai s ed, t he s t atut e r equi r es t hatt he publ i c off er i ng s t at ement for t he condom i ni um i ncl ude anypr opos ed management contr act s and othercontr act s aff ect i ng t he us e of, m ai nt enanc e of, a n d a c c e ss to th e c o n d o m in iu m to w h ich th e u n it o w n e rs o r c o u n c il of uni t ow ner s w i l l be a par t y , as w el l as a s t at ement conce r ni ng t he rig ht of t he co un ci l of u nitow ners und er R P §1 1-133 t o term i na te s uch contr act s
. R P §11- 126( b) ( 4)

. I n addi t i on, t he publ i c off er i ng sta tem e n t m u st a lso d e sc rib e p ro v isio n s o f th e g o v e rn in g d o c u m e n ts t hataff ectt he dur at i on of deve l opercontr ol ort he comm ence m ent of uni tow nerpar t i ci pat i on. R P §11- 126( b) ( 14)

. I n pr ovi di ng s uch i nfor m at i on, as w el l as t he ot her i nfor m at i on r equi r ed byt he s t atut e, t he vendorm us tnotm ake a nyunt rue s t at ement of m at erial f ac tor om i ta mat er i al fac tt hat i s nece s s ary t o avoi d m i s l eadi ng pr os pect i ve p u rch ase rs. R P § 1 1 -12 6 (f).
G i ven thos e r equi r ement s , t he vendorof a r es ide nt i al condomi ni um - w i t hi n- a- condomi ni um w oul d have t o pr ovi de a det ai l ed and c om pr ehens i bl e di s cus s i on of t he i m pactof t hat s t ructur e on uni tow ner s of t he r es i dent ial co ndom i ni um
. For e x a m p le, a sta tem e n t co n c e rn in g th e rig h t o f th e c o u n c il o f

u n it ow ner s t o t er m i n at e contr act s underR P §11- 133, w i t houta cl ear di s c u s s i o n o f t h e i mpa c t o f t h e M a s t e r Con d o mi n i u m s t ru c tu r e on th a t rig h t, w o u ld b e m isle a d in g . S im ilarly , a s u g g e stio n th a t a C C R C stru c tu re d a s a c o n d o m in iu m w o u ld p e rm it a re sid e n t to benef itfr om anyi ncr eas e i n t he uni t ’ s val ue w oul d be mi s l eadi ng4 4 [9 0 O p
. A tt ’y

w ith o u t som e e x p lana ti o n o f h o w the M ast erC ondom i ni um s tructure c o u ld a f f e c t a n d p e rh a p s d im in is h th a t e q u ity.
O f cour s e, t he cont empl at ed deve l o p m ent w oul d al s o be su b jec t to th e sta tu tes g o v e rn in g c o n tin u in g c a re , w h ich h a v e th e ir o w n d is c lo s u re s ta n d a rd s
. See A r t i cl e 70B , §§7 t hr ough 23. Si m i l ar or add i t i o n a l d i s c l o s u r e s c o u l d b e r e q u i r e d b y t h e Dep a r t me nt of Ag i n g i n t h e d i s c l o s u r e s t a t e me n tf u r n i s h e d t o p r o s p e c t i v e CCRC re s id e n ts

. I

d. , §11C ( c) ( 22) ( di s cl os ur e s tat em ent m us ti ncl ude “mat er i al i nfor m at i on conce r ni ng t he fa ci l i t yort he pr ovi deras t he D e p a rt m e n t r e q u ir e s ...” ).
IV
C oncl usi on In o u r op inion , the p rop o sed M aster C o n d o m inium stru cture w oul d notvi ol at e R P §11- 133. H ow ever , t he vendorm us tpr ovi de enhanc ed di s cl os ur e conc erni ng t he i m pacto f that s t ructur e on the pow er s of t he counc i l of uni tow ner s of t he R es i dent i al U ni t and on t he equi t yi nt er es tof t he r es i dent i al uni tow ner s
. T he G en er al A s s embl ym ayw i s h t o cons i dert he des i r abi l i t yof amendi ng t he C o n d o m in iu m A c t to in c re a se th e p ro tec tio n o f re sid e n tial u n it ow ner s i n a condomi ni um pr oj ectcompri s ed o f a mi xtur e of res i den t i al and no nresi den t i al un i t s. J. Jo sep h C u rran , Jr. A t t or ney G ener al
Jef fre yH

. M y ers A s s is t antA t t or ney G ener al
G eor ge H ughes A s s is t antA t t or ney G ener al
R o b e rt N . M c D o n a ld C hi ef C ouns el O pi ni ons and A dvi ce