HOA Breach of Contract

I live in a HOA community in Maryland where the covenants were incorporated in 1997. The HOA covenants state that there are to be no home based businesses and that daycares are specifically mentioned as not being allowed. A daycare has been in operation for more than eight years. I have been trying to have the HOA Board close it down. I have received a variety of excuses from: “you’re the only one to complain so we aren’t going after them”, “it’s too costly to enforce” or the 2003 Maryland Homeowners Act allows for home based businesses”. In reading the act regarding home based business and day cares, I feel they are still not allowed based upon the following from Maryland Title 11B-111.1 :

“2) The provisions of this section relating to no-impact home-based businesses do not apply to a
homeowners association that has adopted, prior to July 1, 1999, procedures in accordance with its covenants, declaration, or bylaws for the prohibition or regulation of no-impact home-based businesses.”

Can I terminate my contract with the HOA for breach of contract? I would still pay the HOA dues for the upkeep of the common areas, etc. but I would like to be released from the HOA contract because I don’t want to be liable when a parent sues the daycare because it isn’t properly licensed, inspected or insured.

Ron:
I believe your interpretation of the Maryland HOA Act is correct. Your bylaw date would make a family day care business prohibited. However, the spirit of this law is to allow them for all new HOAs built after 1999 and your board could be reacting to the future trend. There is no way you can withdraw from your HOA but you could get a copy of the insurance policy or speak to the HOA's insurance agent and see if the day care is covered. My guess is it is covered.
Jeanne

Check your association documents carefully. In a lot of cases you as the unit owner retain the right to sue other members to enforce the covenants. Granted that's expensive and it's sure to start a really bad rift with the neighbors but it may be an option. If nothing else threatening to sue might force the board to take action out of concern that it could become a co-defendant.* By threatening to sue I don't mean going in to the next board meeting and making a scene. I mean spending a couple bucks to sit down with a competent attorney, reviewing the facts and having him/her draft a letter to the board putting it on notice of your intent to sue if the covenant is not enforced.

* Actually suing your HOA is usually not a good idea because you only wind up suing yourself. If the HOA loses, the board will have to turn around and assess everyone for the legal fees. If the HOA wins the board will go after you for the entirety of its fees.