Conversion to Condominium Ownership

The Maryland Condominium Act regulates the conversion of multi-unit dwellings to condominium ownership, where each unit is separately owned.

Notice of Conversion Required

The landlord must give the tenant a notice in the form specified in Md. Code, Real Property, Section 11-102.1(f). The notice (and the purchase offer) must be hand delivered to the tenant or mailed, certified mail, return receipt requested, postage prepaid, to the tenant's last-known address. Any new tenant leasing a unit after notice of conversion has been given must be informed of the conversion at or before signing the lease or taking possession, whichever occurs first.

A copy of the notice, together with a list of each tenant to whom the notice was given, must be given to the Secretary of State at the time the notice is given to each tenant.

A tenant, upon receiving the above notice, may terminate his lease without penalty upon at least 30 days' written notice to his landlord. Tenants must be given at least 180 days’ notice before having to vacate the premises, except for:

  1. Breach of lease occurring before or after the notice;
  2. Nonpayment of rent occurring before or after the notice; or
  3. Failure to vacate as promised if tenant exercises his right to terminate the lease.

NOTE: Because a tenant may not be required to leave sooner than 180 days, for any lease terms that would ordinarily terminate during the 180-day period, the lease must be extended until the expiration of the 180-day period, and the extended term must be at the same rent and on the same terms and conditions as the expiring lease. Read the Law: MD Code, Real Prop. § 11-102.1
An owner who violates these notice provisions will have his application to convert the units to condominiums rejected or revoked. Read the Law: MD code, Real Prop. § 11-102.2

Offer for Tenant to Purchase Unit Required

An owner required to give notice of conversion described above must offer in writing to each tenant the right to purchase that portion of the property occupied by the tenant as his residence. The offer must be at a price and on terms and conditions at least as favorable as the price, terms, and conditions offered for that portion of the property to any other person during the 180-day period following the conversion notice.

The offer to each tenant must be made at the same time and as a part of the conversion notice and must state at least the following:

  1. That the offer will terminate upon the termination of the lease by the tenant or 60 days after delivery, whichever occurs earlier;
  2. That acceptance of the offer by a tenant who meets the criteria for an extended lease is contingent upon the tenant not receiving an extended lease;
  3. That settlement cannot be required any earlier than 120 days after acceptance by the tenant; and
  4. That the household is entitled to reimbursement for moving expenses as provided below.    

If this offer to purchase is not included with the notice of conversion, the 180-day period during which the tenant is entitled to remain in the tenant's residence does not begin until the tenant receives the offer.
   
Even though an owner has offered the tenant the right to purchase the unit, the owner may still make changes to that unit.

If the tenant wishes to purchase his unit, he must accept the offer in writing; otherwise, the offer terminates, without further act, upon termination of the lease or 60 days after the offer, whichever occurs sooner. Read the Law: MD Code, Real Prop. § 11-136

Payment of Tenant's Moving Expenses

If the tenant does not accept the purchase offer and the tenant’s household qualifies as low income, the developer must pay the household $375 when the household vacates the unit and reimburse the household for moving expenses in excess of $375 up to $750, that are actually and reasonably incurred.

If the household does not qualify as low income, the developer must reimburse the household for moving expenses up to $750 that are actually and reasonably incurred.

The household must make a written request for moving expense reimbursement to the developer, accompanied by reasonable evidence of the expenses, within 30 days following moving, and the developer must then reimburse the household within 30 days following receipt of the request.  Read the Law: MD Code, Real Prop. § 11-136

Units Leased by the Disabledf and the Elderly

This provision applies to “rental facilities,” which are properties with 10 or more dwelling units.

Definition and Rights

A "designated household" is a household that includes a senior citizen or an individual with a disability who has been a member of the household for at least 12 months prior to the conversion notice.

A developer must offer a tenant of a unit occupied by a “designated household” a lease extension for a period of at least 3 years from giving the conversion notice required above, if the household meets the following criteria:

  1. Had an annual income* that did not exceed the income eligibility figure provided under Section 11-137(n);  
  2. Is current in its rent payment and has not violated any other material term of the lease; or
  3. Has provided the developer, within 60 days after the conversion notice, an affidavit under penalty of perjury stating that the household is applying for an extended lease, setting forth the household's annual income for the preceding calendar year and facts showing that a member of the household is either an individual with a disability or a senior citizen, along with the signed extended lease. Read the Law: MD Code, Real Prop. § 11-137

Notice Required

The developer must deliver the following to each tenant entitled to receive the conversion notice at the same time as the conversion notice:

  1. An extended lease application;
  2. An extended lease, indicating that the lease will be effective only if the tenant executes and returns the lease within 60 days of the conversion notice and the household is allocated 1 unit based on its ranking*
  3. A notice setting forth the rights and obligations of the tenants in designated households; and
  4. A copy of the proposed condominium’s public offering statement that is registered with the Secretary of State.

Within 75 days after the notice of conversion, the developer must notify each household that applies for and submits a signed extended lease whether they meet the criteria of a designated household and whether the extended lease has become effective.

Terms of Extended Lease

The extended lease must be for no less than 3 years, and must contain the same terms and conditions as the lease in effect before the extended lease except that the rental fee for the unit on extended lease may be increased annually. Any annual increase in rent cannot exceed the annual rent for the preceding year times the percentage increase for the rent component of the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers, for the most recent 12-month period. Read the Law: MD Code, Real Prop. § 11-137

Opportunity to Buy

A designated household that exercises its extended lease rights may not be denied an opportunity to buy a unit at a later date, if one is available.

Extended Lease Termination

A designated household may terminate its extended lease at any time, with notice to the developer as follows :

  1. At least a 1-month notice in writing must be given when less than 12 months remain on the lease; and
  2. At least a 3-month notice in writing must be given when 12 months or more remain on the lease.

The extended tenancy also ceases upon the occurrence of any of the following:

  1. 90 days after the death or moving out of the last surviving senior citizen or individual with a disability residing in the unit;
  2. Eviction for failure to pay rent due in a timely fashion or violation of a material term of the lease. Read the Law: MD Code, Real Prop. § 11-137

Relocation of Designated Households

If a conversion to condominium involves substantial rehabilitation or construction that would be a danger to the health and safety of the tenants, then any designated household executing an extended lease may be required to vacate their unit and relocate at the expense of the developer to a comparable unit in the rental facility.

If there is no comparable unit available, then the designated household may be required to vacate the rental facility. When the work is completed, the developer must notify the household of its completion and the household has 30 days from the date of that notice to return to their original or comparable rental unit. The term of the extended lease of that household will begin upon the household’s return to the rental unit.

For any relocation of designated households, the developer must give 180 days' notice prior to the date that units must be vacated. The developer must pay moving expenses. The developer must also pay compensation equivalent to 3 months' rent within 15 days of moving. Read the Law: MD Code, Real Prop. § 11-137

Source: 

Baltimore Neighborhoods, Inc.
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