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The County Council, sitting as a District Council for the Maryland-Washington Regional District within the County, to assist in providing moderately priced housing has enacted zoning standards in Chapter 59, establishing in certain zones optional density bonus provisions which increase the allowable residential density above the maximum base density of the zoning classification and permit alternative dwelling unit types other than those allowed under the standard method of development. Land upon which the applicant must build MPDUs may, at the applicant’s election, be subject to optional zoning provisions. If the applicant elects the optional density provisions, permitting the construction of an increased number of dwelling units or increased percentage of residential floor area, the MPDU requirement must apply to the total number of dwelling units or percentage of residential floor area as increased by application of the optional density provisions or by the approval of a special exception that increases the density above the otherwise permitted density of the zoning classification in which the property is situated. (1974 L.M.C., ch. 17, § 1; 1976 L.M.C., ch. 35, § 4; 1978 L.M.C., ch. 31, § 4; 1979 L.M.C., ch. 21, § 4; 1980 L.M.C., ch. 28, § 1; 1982 L.M.C., ch. 6, § 1; 1989 L.M.C., ch. 27, § 1; 1996 L.M.C., ch. 13, § 1; 1996 L.M.C., ch. 20, § 1; 1998 L.M.C., ch. 12, § 1; 2001 L.M.C., ch. 14, § 1; 2002 L.M.C., ch. 16, § 2; 2018 L.M.C., ch. 20, § 1.)
Editor's note—Section 25A-6, formerly § 25A-5, was renumbered and amended pursuant to 1989 L.M.C., ch. 27, § 1.
MPDUs must not be sold or rented at prices or rents that exceed the maximum prices or rents established under this Section.
(a) Sales.
(1) The sale price of any MPDU, including closing costs and brokerage fees, must not exceed an applicable maximum sale price established from time to time by the County Executive in regulations adopted under method (1).
(2) The regulations adopted to implement this Section must allow the Director to:
(A) restrict those conditions of the design, construction, pricing, or amenity package of an MPDU project that will impose excessive mandatory homeowner or condominium fees or other costs that reduce the affordability of the MPDUs; and
(B) approve an increase of up to 10 percent over the base sale price of an MPDU upon a finding that the increase is justified to cover the cost of a modification of the external design of the MPDU necessary to reduce excessive marketing impact of the MPDU on the market rate units in the subdivision.
(b) Rents. The rent, including surface parking but excluding utilities when they are paid by the tenant, for any MPDU must not exceed a maximum rent for the MPDU set by Executive regulations. Different rents must be set for MPDUs when utility costs are paid by the owner and included in the rent. Different rents may be set for age-restricted MPDUs. Different rents also may be set for high-rise rental MPDUs. (1989 L.M.C., ch. 27, § 1; 2004 L.M.C., ch. 29, § 1; 2005 L.M.C., ch. 4, § 1; 2018 L.M.C., ch. 20, § 1.)
Editor’s note—2018 L.M.C., ch. 20, § 2, states: Regulations. The County Executive must submit the regulations required by Sections 25A-5, 25A-7, 25A-8, and 25A-9, as amended by this Act, to the Council for approval not later than October 15, 2018.
2004 L.M.C., ch. 29, § 2, states in part: "The amendments to Chapter 25A made by Section 1 of this Act which extend the control period for sale and rental MPDUs do not apply to any MPDU for which a sale contract or rental agreement was signed before April 1, 2005."
(a) Sale or rental to government agencies or designated agencies.
(1) The Department, the Commission, or any other government agency or designated agency may buy or lease, for its own programs or programs administered by it, up to 40 percent of all MPDUs which are not sold or rented under any other federal, state, or local program.
(2) The Department or Commission may buy or lease up to 33.3 percent of the MPDUs not sold or rented under any other federal, state, or local program.
(3) Any other government agency or designated agency may buy or lease:
(A) any MPDU in the first 33.3 percent that the Department or Commission has not bought or leased; and
(B) the remainder of the 40 percent specified in subsection (a)(1).
This option may be assigned to households that are clients of the Department of Health and Human Services or to low or moderate-income households who are eligible for assistance under any federal, state, or local program identified in Executive regulation.
(4) The Executive must, by regulation, adopt standards and priorities to approve designated agencies under this subsection. These standards must require the agency to demonstrate its ability to operate and maintain MPDUs satisfactorily on a long-term basis.
(5) The Department must notify the Commission, other government agency, or designated agency promptly after receiving notice from the applicant under subsection (b) of the availability of MPDUs. If the Department, the Commission, or any other designated agency exercises its option, it must submit to the applicant, within 21 calendar days after the Department notifies the Commission under this subsection, a notice of intent to exercise its option for specific MPDUs covered by this option. Any MPDUs not bought or leased under this subsection must be sold or rented only to eligible households under subsection (b) during the priority marketing period for eligible households to buy or lease.
(6) In exercising this option, the Department, the Commission, and any government agency or designated agency must reserve the MPDU by reference to number, type, size and amenities of the units selected if the designation does not result in any type of unit exceeding by more than 40 percent the total units of that type which are sold or rented under this Section, unless the Department and the applicant agree to a different selection. The notice required under subsection (a)(5) must state which MPDUs are to be offered for sale and which are to be offered for rent, and the Department, the Commission, and any government agency or designated agency may buy only units which are offered for sale and may lease only units which are offered for rent. The Department, the Commission, and any government agency or designated agency must decide whether it will exercise its option within 45 days of the date of the notice provided under subsection (a)(5).
(7) If more than one government agency or designated agency files a notice of intent under subsection (a)(5) with respect to a particular MPDU:
(A) the Department prevails over any other buyer or renter;
(B) The Commission prevails over any buyer or renter other than the Department;
(C) any other government agency prevails over any designated agency;
(D) the first government agency to file a notice prevails over any later agency; and
(E) the first designated agency to file a notice prevails over any later designated agency.
(8) Any MPDU purchased by the Commission, a government agency, or a designated agency under this subsection that is offered for resale within five years after original purchase must first be offered for sale to the Department at the purchase price paid by the Commission, government agency, or designated agency in accordance with Executive regulation. The Department may assign its right to purchase the MPDU to an eligible household or to a designated agency.
(b) Sale or rental to eligible households.
(1) Every MPDU unit required under this Chapter must be offered to eligible households for sale or rental to a good-faith purchaser or renter to be used for his or her own residence, except MPDUs sold or rented under subsection (a) or offered for sale or rent with the assistance of, and subject to the conditions of, a subsidy under a federal, state or local government program, identified in Executive regulation, whose purpose is to provide housing for low or moderate income households.
(2) Before offering any MPDUs for sale or rent, the applicant must submit and receive approval of an agreement notifying the Department of the proposed offering and the date on which the applicant will be ready to begin the marketing to eligible households. The agreement must set forth the number of MPDUs offered, the bedroom mix, the floor area for each MPDU type, a description of the amenities offered in each MPDU and a statement of the availability of each MPDU for sale or rent, including information regarding any mortgage financing available to buyers of the designated MPDU. The applicant must also give the Department a vicinity map of the offering, a copy of the approved development, subdivision or site plan, as appropriate, and such other information or documents as the Director finds necessary. The Department must maintain a list of eligible households for sale MPDUs and, in accordance with procedures established by the County Executive, must notify eligible households of sale or rental offerings.
(3) After approving the offering agreement, the Department must notify the Commission of the offering. The Department must notify the applicant of the method by which the MPDUs will be offered and when the 90-day priority marketing period for the MPDUs may begin.
(4) The Executive may by regulation establish a buyer and renter selection system which considers household size, County residency, employment in the County, and length of time since the household was certified for the MPDU program. Eligible households will be notified when MPDUs are available for sale or rent and will be given an opportunity to buy or rent an MPDU during the priority marketing period in the order of their selection priority ranking.
(5) The priority marketing period for new MPDUs ends not less than 90 days after the initial offering date approved by the Department. The priority marketing period for resold or rerented MPDUs ends not less than 60 days after the Department notifies the seller of the approved resale price or vacancy of the rental unit. The Department may extend a priority marketing period when eligible households are interested in buying or renting a unit, or may reduce the priority marketing period for resold MPDUs for good cause.
(6) Applicants must make a good-faith effort to enter into contracts with eligible households during the priority marketing period and for an additional period necessary to negotiate with eligible households who indicate a desire to buy or rent an MPDU during that period.
(7) Every buyer or renter of an MPDU must occupy the MPDU as his or her primary residence during the control period. Each buyer and renter must certify before taking occupancy that he or she will occupy the MPDU as his or her primary residence during the control period. The Director may require an owner who does not occupy the MPDU as his or her primary residence to offer the MPDU for resale to an eligible household under the resale provisions of Section 25A-9.
(8) An owner of an MPDU, except the Commission or a government agency or designated agency, must not rent the MPDU to another party unless the Director finds sufficient cause to allow temporary rental of the MPDU under applicable regulations, which may include maximum rental levels.
(9) Any rent obtained for an MPDU that is rented without the Director’s authorization must be paid into the Housing Initiative Fund by the owner within 90 days after the Director notifies the owner of the rental violation. Any amount unpaid after 90 days is grounds for a lien against the MPDU. The Director may obtain a judgment and record the lien or may reduce the resale price of the MPDU by the amount owed to the Housing Initiative Fund, or pursue other remedies provided by law.
(10) An applicant must not sell or lease any MPDU without first obtaining a certificate of eligibility from the prospective buyer or verifying the eligibility of the prospective lessee. For sale MPDUs, a copy of each certificate must be furnished to the Department and maintained on file by the Department. Before the sale by an applicant or by the Commission, a government agency, or a designated agency to any buyer of any MPDU who does not possess a certificate of eligibility, the applicant, the Commission, or the agency, must determine whether the proposed buyer had previously owned another MPDU. The proposed buyer must not participate in the MPDU program a second time unless the proposed buyer meets the household income criteria and no longer owns an MPDU, and there is no first-time buyer qualified to buy that MPDU. The Director may waive this restriction for good cause.
(11) If an MPDU owner dies, at least one heir, legatee, or other person taking title by will or by operation of law must occupy the MPDU during the control period under this Section, or the owner of record must sell the MPDU as provided in Section 25A-9. (1974 L.M.C., ch. 17, § 1; 1976 L.M.C., ch. 35, § 4; 1978 L.M.C., ch. 31, § 4; 1979 L.M.C., ch. 21, § 4; 1980 L.M.C., ch. 28, § 1; 1982 L.M.C., ch. 6, § 1; 1984 L.M.C., ch. 24, § 28; 1989 L.M.C., ch. 27, § 1; 1994 L.M.C., ch. 29, 2001 L.M.C., ch. 25, § 1; 2002 L.M.C., ch. 27, § 1; 2004 L.M.C., ch. 29, § 1; 2018 L.M.C., ch. 20, §1; 2019 L.M.C., ch. 23, §1.)
Editor’s note—2018 L.M.C., ch. 20, § 2, states: Regulations. The County Executive must submit the regulations required by Sections 25A-5, 25A-7, 25A-8, and 25A-9, as amended by this Act, to the Council for approval not later than October 15, 2018.
2004 L.M.C., ch. 29, § 2, states in part: "The amendments to Chapter 25A made by Section 1 of this Act which extend the control period for sale and rental MPDUs do not apply to any MPDU for which a sale contract or rental agreement was signed before April 1, 2005."
2002 L.M.C., ch. 27, § 2, states: Applicability. The requirements of Chapter 25A, as amended by Section 1 of this Act, do not apply to any subdivision with more than 34 but fewer than 50 units at one location if the applicant applied for a preliminary plan of subdivision before this Act took effect [January 9, 2003], unless the applicant agrees that the requirements of Chapter 25A as amended should apply to that subdivision.
Section 25A-8, formerly § 25A-6, was renumbered and amended pursuant to 1989 L.M.C., ch. 27, § 1.
(a) Resale price and terms. Except for foreclosure proceedings, any MPDU constructed or offered for sale or rent under this Chapter must not be resold or refinanced during the control period for a price greater than the original selling price plus:
(1) a percentage of the MPDU’s original selling price equal to the increase in the cost of living since the MPDU was first sold, as determined by the Consumer Price Index or other index as identified in Executive regulation;
(2) an allowance for capital improvements made to the MPDU between the date of original sale and the date of resale;
(3) if approved by the Director, an allowance for closing costs which were not paid by the original seller, but which will be paid by the original buyer for the benefit of the later buyer; and
(4) a reasonable sales commission.
In determining the amount of the allowance for improvements under paragraph (2), the Director may disallow the value of costs attributable solely to the maintenance and upkeep of the MPDU, or for luxury items. The resale price of an MPDU may be reduced if the physical condition of the unit reflects abnormal wear and tear because of neglect, abuse, or insufficient maintenance. Any personal property transferred in connection with the resale of an MPDU must not be included in the resale price of the MPDU. The Executive must establish procedures for calculating the allowable resale price of an MPDU under this subsection by method (1) regulation.
(b) Resale requirements during the control period.
(1) Any MPDU offered for resale during the control period must first be offered exclusively for up to 60 days to the Department and the Commission, in that order. The Department or the Commission may buy an MPDU when funds are available. The Department may buy an MPDU, or may assign its right to buy an MPDU to a designated agency, when the Director finds that the Department’s or a designated agency’s buying and reselling the MPDU will increase opportunities for eligible households to buy the MPDU. If the Department or the Commission does not buy the MPDU, the Department must notify eligible households of the availability of a resale MPDU. The MPDU may be sold through either of the following methods:
(A) The Department may establish a priority order under which eligible households who express interest in buying the MPDU may buy it at the approved resale price.
(B) The Department may notify the MPDU owner that the owner may sell the MPDU directly to any eligible household under the resale provisions of this Chapter.
(2) The Commission may purchase resale MPDUs in a particular development only if it did not previously purchase its full allotment of units at the initial offering. In no case may the Commission own more than 33.3 percent of the MPDUs in a particular development.
(3) A resale MPDU may be offered for sale to non-eligible households only after:
(A) the priority marketing period expires; and
(B) all eligible households who express an interest in buying it have been given an opportunity to do so.
(4) The Executive by regulation may adopt requirements for reselling MPDUs. The regulations may require a seller to submit to the Department for approval:
(A) a copy of the proposed sales contract;
(B) a signed copy of the settlement sheet; and
(C) an affidavit signed by the seller and buyer attesting to the accuracy of all documents and conditions of the sale.
(5) A transfer of an MPDU does not comply with this Chapter until all required documents and affidavits have been submitted to and approved by the Department.
(c) Payments to HIF during the control period. During the control period, if the Department determines that the design of the MPDU offered for resale would no longer comply with requirements for construction of a new MPDU or that the allowable resale price and fees associated with a multi-family condominium offered for resale would result in a monthly payment that is estimated to be at least 20% more than would be affordable to the maximum size MPDU household, the Director may permit the owner of the MPDU to sell the MPDU at market price, and the procedures for resale, including termination of the MPDU controls and release of restrictive covenants will be the same as for resale of an MPDU after the control period, as described in subsection (d).
(d) First sale after control period ends.
(1) If an MPDU originally offered for sale or rent after March 21, 1989, is sold or resold after its control period ends, upon the first sale of the MPDU the seller must pay to the Housing Initiative Fund one-half of the excess of the total resale price over the sum of the following:
(A) the original selling price;
(B) a percentage of the MPDU’s original selling price equal to the increase in the cost of living since the MPDU was first sold, as determined by the Consumer Price Index or other index as identified in Executive Regulation;
(C) an allowance for capital improvements made to the MPDU between the date of original sale and the date of resale; and
(D) a reasonable sales commission.
The Director must adjust the amount paid into the fund in each case so that the seller retains at least $10,000 of the excess of the resale price over the sum of the items in (A)--(D).
(2) The Director must find that the price and terms of a sale covered by subsection (d)(1) are bona fide and accurately reflect the entire transaction between the parties so that the full amount required under subsection (d)(1) is paid to the fund. When the Director finds that the amount due the fund is accurate and the Department of Finance receives the amount due, the Department must terminate the MPDU controls and execute a release of the restrictive covenants.
(3) The Department and the Commission, in that order, may buy an MPDU at any time during the control period, and may resell the MPDU to an eligible household. A resale by the Department or Commission starts a new control period.
(e) Original and later rent controls. Unless previously sold under subsection (d)(1), MPDUs built or offered for rent under this Chapter must not be rented for 99 years after the original rental at a rent greater than that established by Executive regulations. Procedures for original rentals of MPDUs are described in Section 25A-8. After the original rental, any MPDU (other than those built, sold, or rented under any federal, state, or local program offered by the Commission) offered for rent during the control period must be offered exclusively for 60 days to one or more eligible households, as determined by the Department, for use as that household’s residence. After the original rental, the Commission may lease MPDUs in a particular development only if it did not previously lease its full allotment of MPDUs at the initial offering. In no case may the Commission lease more than 33.3 percent of the MPDUs in a particular development. The Commission may assign its right to rent such MPDUs to low or moderate income households who are eligible for assistance under any federal, state, or local program identified in Executive regulations.
(f) Foreclosure or other court-ordered sales. If an MPDU is sold through a foreclosure or other court-ordered sale, all MPDU covenants must be released, and a payment must be made to the Housing Initiative Fund as follows:
(1) If the sale occurs during the control period, any amount of the foreclosure sale price which exceeds the total of the approved resale price under subsection (a), reasonable foreclosure costs, and liens recorded against the MPDU among the land records, must be paid to the Housing Initiative Fund.
(2) If the sale occurs after the control period, and the MPDU was originally offered for sale or rent after March 20, 1989, the payment to the Fund must be calculated under subsection (d), less reasonable foreclosure costs and liens recorded against the MPDU among the land records.
(3) If the MPDU is a rental unit, the resale price under subsections (a) and (d) must be calculated as provided in regulation.
(g) Waivers. The Director may waive the restrictions on the resale and re-rental prices for MPDUs if the Director finds that the restrictions conflict with regulations of federal or state housing programs and thus prevent eligible households from buying or renting MPDUs.
(h) Bulk transfers. This section does not prohibit the bulk transfer or sale of all or some of the sale or rental MPDUs in a subdivision within 30 years after the original rental or offering for sale if the buyer is bound by all covenants and controls on the MPDUs.
(i) Compliance. The County Executive must adopt regulations to promote compliance with this section and prevent practices that evade controls on rents and sales of MPDUs. (1974 L.M.C., ch. 17, § 1; 1978 L.M.C., ch. 31, § 5; 1979 L.M.C., ch. 21, § 5; 1982 L.M.C., ch. 6, § 1; 1984 L.M.C., ch. 24, § 28; 1989 L.M.C., ch. 27, § 1; 1990 L.M.C., ch. 46, § 1; 1994 L.M.C., ch. 29; 2001 L.M.C., ch. 25, § 1; 2004 L.M.C., ch. 29, § 1; 2018 L.M.C., ch. 20, § 1.)
Editor’s note—2018 L.M.C., ch. 20, § 2, states: Regulations. The County Executive must submit the regulations required by Sections 25A-5, 25A-7, 25A-8, and 25A-9, as amended by this Act, to the Council for approval not later than October 15, 2018.
2004 L.M.C., ch. 29, § 2, states in part: "The amendments to Chapter 25A made by Section 1 of this Act which extend the control period for sale and rental MPDUs do not apply to any MPDU for which a sale contract or rental agreement was signed before April 1, 2005."
Section 25A-9(e) is interpreted in May Department Stores v. Montgomery County, 118 Md.App. 441, 702 A.2d 988 (1977), affirmed, 352 Md. 183, 721 A.2d 249 (1998), wherein this section is declared to be preempted by State law due to a conflict; the State provides for the priority of liens and the County may not change that priority.
Section 25A-9, formerly § 25A-7, was renumbered, retitled and amended pursuant to 1989 L.M.C., ch. 27, § 1.
(a) The Department must maintain a list of all moderately priced dwelling units constructed, sold or rented under this Chapter; and the County Executive may, from time to time, adopt regulations under method (1) necessary to administer this Chapter.
(b) This Chapter applies to all agents, successors and assigns of an applicant. A building permit must not be issued, and a preliminary plan of subdivision, development plan, floating zone plan, or site plan must not be approved unless it meets the requirements of this Chapter. The Director of Permitting Services may deny, suspend or revoke any building or occupancy permit upon finding a violation of this Chapter. Any prior approval of a preliminary plan of subdivision, development plan, floating zone plan, or site plan may be suspended or revoked upon the failure to meet any requirement of this Chapter. An occupancy permit must not be issued for any building to any applicant, or a successor or assign of any applicant, for any construction which does not comply with this Chapter.
(c) Any violation of this Chapter or regulations adopted under it is a class A violation.
(d) The Director may take legal action to stop or cancel any transfer of an MPDU if any party to the transfer does not comply with all requirements of this Chapter. The Director may recover any funds improperly obtained from any sale or rental of an MPDU in violation of this Chapter, plus costs and interest at the rate prescribed by law from the date a violation occurred.
(e) In addition to or instead of any other available remedy, the Director may take legal action to:
(1) enjoin an MPDU owner who violates this Chapter, or any covenant signed or order issued under this Chapter, from continuing the violation; or
(2) require an owner to sell an MPDU owned or occupied in violation of this Chapter to the County, the Commission, or an eligible person. (1974 L.M.C., ch. 17, § 1; 1980 L.M.C., ch. 28, § 1; 1983 L.M.C., ch. 22, § 30; 1984 L.M.C., ch. 24, § 28; 1989 L.M.C., ch. 27, § 1; 1994 L.M.C., ch. 29; 1996 L.M.C., ch. 20, § 1 1998 L.M.C., ch. 12, § 1; 2001 L.M.C., ch. 14, § 1; 2002 L.M.C., ch. 16, § 2; 2004 L.M.C., ch. 29, § 1; 2016 L.M.C., ch. 8, § 1; 2017 L.M.C., ch. 12, §1.)
Editor's note—2004 L.M.C., ch. 29, § 2, states in part: "The amendments to Chapter 25A made by Section 1 of this Act which extend the control period for sale and rental MPDUs do not apply to any MPDU for which a sale contract or rental agreement was signed before April 1, 2005."
Section 25A-10, formerly § 25A-8, was renumbered and amended pursuant to 1989 L.M.C., ch. 27, § 1.
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