#815-O, Konig v. The Whitehall Condominium (June 15, 2006) (Panel: Stevens, Gramzinski, Kivitz)
The homeowner (HO) complained that her condominium association (CA) had improperly voted to buy a residential unit and to convert it into an office and exercise area for members of the CA.Specifically, the HO claimed that the CA's decision violated Section 11-103(c)(1)(iii) of the Maryland Condominium Act, which states the following:
Except to the extent expressly permitted by the declaration, an amendment to the declaration may not change residential units to nonresidential units or change nonresidential units to residential units without the written consent of every unit owner and mortgagee.
The facts produced at the public hearing showed that the CA's board of directors purchased a residential unit in April, 2005.In June, 2005, the CA called a general meeting of its unit owners to vote on an amendment to the CA's bylaws which specifically provided that the board could use any CA-owned property "for the benefit of the community as a whole" and that such uses could include "office space, community space, library and/or exercise facility for use by Unit owners and Residents."This bylaw amendment was approved by 69.6% of the members, which is more than the 2/3rd minimum necessary under the bylaws.
The hearing panel noted that the State law governing the conversion does not require a unanimous vote if the CAs declaration provides otherwise.Article VIII, Section 5(f)(x) of the CA's declaration states that the CA cannot take any action to convert a "Unit" into a "Common Element" or a "Common Element" into a "Unit" without the consent of at least 67% of the membership.In addition, Article III, Section 1 of the declaration states that "General Common Elements" includes "all Units which may hereafter be acquired and held by the Council of Unit Owners on behalf of all Unit owners."This clause is consistent with Section 11-109(d) of the Maryland Condominium Act, which allows a condominium association to purchase "any property, real or personal
wherever located."Finally, the panel noted that the State law did not define the term "residential unit", and the CA's declaration only defined such units in terms of where they were located, but not in terms of how they were to be used.The facts also showed that the CA had purchased other residential units and used them for storage and for housing the maintenance worker.
The hearing panel found that the proposed use was "residential" in that it was for the benefit of all the members, as opposed to "commercial", in which a unit might be used for private gain.The hearing panel further found that the CA's action complied with the declaration, and that the vote of 69.6% was sufficient under both the bylaws, the declaration, and the Maryland Condominium Act to allow the unit to be used as management offices and an exercise room.The panel found in favor of the CA and denied the relief requested by the HO.
[Editor's note: this decision was reversed in part and affirmed in part by the Circuit Court in Civil #273135 (January 17, 2007).The Circuit Judge (Joseph Dugan) held that the conversion of the unit into a fitness center was not a "residential" purpose. He further held that the members could amend the bylaws by a 2/3rds majority instead of by a unanimous vote; however, the members could not delegate to the board the right to decide if a residential unit could be converted to a non-residential use.Instead, the members must vote on the proposed conversion themselves, and adopt it by a 2/3rds majority.]