BALTIMORE (Nov. 30, 2009) — Adelberg, Rudow, Dorf & Hendler LLC (ARD&H) has earned a victory for its client, convincing the Circuit Court for Howard County to dismiss a case by the Columbia Association to collect over 35 years of unpaid homeowners association dues.
In Columbia Association vs. Poteet, it was alleged that the landowner had not paid fees assessed between 1973 and 2006, and owed over $45,000. Andrew Radding, Oren Saltzman and Jeffrey Kinstler of ARD&H's Howard County and downtown Baltimore offices defended the landowner.
The Court found that over 35 years of inaction on the part of the Columbia Association, culminating with the filing of a lawsuit more than three years after the last CPRA fees (Columbia taxes) were assessed to the landowner before he sold the property, exceeded the Statue of Limitations period.
"This case demonstrates that by waiting to collect fees for an extended period of time, the Columbia Association has done so at its peril," Radding said. "By dismissing the suit, the judge suggested that the Columbia Association should have filed its suit in the early 1970s."
In the early days of Columbia, the Howard Research and Development Company, the forerunner of the Columbia Association, identified a particular tract of land as necessary for its vision of one of Columbia's villages.
Howard Research approached the landowner in 1969, and exchanged a tract of land outside the then existing village for the desired property. Subsequently, the landowner built a home on the new land without any contact from, or mention of, the provisions of the Columbia Association Declarations and Covenants that apply to Columbia landowners.
Four years after the land trade, the Columbia Association sent the landowner a bill for the 1973 CPRA assessment. The landowner protested and refused to pay, despite a court ruling that the covenants applied to his property, asserting that the property was not in Columbia, and not subject to the CPRA. The Columbia Association continued to bill the landowner for the CPRA annually, but never took any additional action to collect the fees alleged to be owed. The landowner continued to own the property and continued to assert that the Columbia Association had no right to assess his land until the day he sold it in 2006. Title was transferred to a new owner in April 2006.
In December 2008, the Columbia Association filed suit, claiming the right to collect the 33 years assessments from 1973 through 2006. ARD&H took the position that the Columbia Association had no right to assess the property in question, and even if it had the right, its failure to act in a timely manner barred the action.
The Columbia Association claimed that as the Columbia Association Declarations document was a legal document containing the signature and seal of its creators, the Columbia Association was entitled to a longer, 12-year period in which to bring suit, which would have at least saved the most recent nine year's assessments. It also noted that it was corporate policy to not file suit, preferring to wait until properties are sold and collect unpaid assessments after a title search at closing.
The landowner countered that because he did not create the Declarations document and his seal was not present on the Declarations document (as it was created long before he took title to the land), the Columbia Association had only three years in which to file suit as to any liability he may have had.
Additionally, the landowner argued that the Columbia Association Declarations recorded as to the land in question were likely not under seal as to anyone, due to a lack of seal on the signature of James Rouse. As to the policy of Columbia Association to wait, no lien was found as part of the title search when the property was sold, and there was no collection at that time.
The Court dismissed the suit, telling the Columbia Association that it had notice from the beginning that the landowner contested his right to collect the CPRA assessments, and noting that Columbia Association should have filed suit in 1973 and thereafter to collect its fee. The decision to wait and do nothing from 1973 through 2008 rendered the Columbia Association's claim time barred.
"This dismissal suggests limitations on an HOA's ability to rely on an unrecorded lien or to take action on what it perceives to be dues owed it at its leisure," Radding added. "It also is very significant in the overall concept of homeowners' association taxation and relationships with its members."