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Lipitz v. Hurwitz

Court of Appeals of Maryland
77 A.3d 1088, 435 Md. 273 (2013)
ELI5:

Rule of Law:

A buyer who already owns property within a homeowners association is still a 'member of the public' entitled to mandatory disclosures under the Maryland Homeowners Association Act. However, the common law doctrine of equitable estoppel may bar such a buyer from canceling the contract for non-receipt of disclosures if the buyer's own conduct induced the seller's non-compliance.


Facts:

  • William A. Hurwitz owned two other homes within the Caves Valley Golf Club Development.
  • On August 6, 2009, Hurwitz contracted with Flora E. and Roger C. Lipitz to purchase a third home in the same development for approximately $4 million.
  • During contract negotiations, the parties struck out addenda related to the Maryland Homeowners Association Act disclosures.
  • The Lipitzes alleged they made attempts to provide Hurwitz with the required HOA information, but Hurwitz declined, stating that he already possessed the materials.
  • Hurwitz was given access to the property before the closing date to take measurements and consult with designers.
  • On November 1, 2009, the day before the scheduled closing, Hurwitz's agent informed the Lipitzes that Hurwitz would not complete the purchase.
  • On November 12, 2009, Hurwitz's attorney formally notified the Lipitzes that Hurwitz was canceling the contract due to their failure to provide the mandatory HOA disclosures.

Procedural Posture:

  • The sellers, Flora E. and Roger C. Lipitz, filed a complaint for breach of contract against the buyer, William A. Hurwitz, in the Circuit Court for Baltimore County, a state trial court.
  • Hurwitz filed a motion to dismiss the sellers' amended complaint, and the sellers filed a cross-motion for summary judgment.
  • The Circuit Court granted Hurwitz's motion to dismiss.
  • The Lipitzes, as appellants, appealed to the Court of Special Appeals of Maryland, an intermediate appellate court.
  • The Court of Special Appeals affirmed the trial court's judgment.
  • The Lipitzes, as petitioners, were granted a writ of certiorari by the Court of Appeals of Maryland, the state's highest court.

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Issue:

Does the doctrine of equitable estoppel prevent a buyer from exercising a statutory right to cancel a real estate contract for non-receipt of mandatory homeowners association disclosures, when the buyer affirmatively rejected the seller's offers to provide those disclosures?


Opinions:

Majority - McAuliffe, J.

Yes, the doctrine of equitable estoppel may prevent a buyer from canceling a contract under these circumstances. First, the court determined that a buyer who already owns property in a homeowners association is still a 'member of the public' under the plain language and legislative history of the Maryland Homeowners Association Act, and is therefore entitled to the mandatory disclosures. The legislative intent was to distinguish individual residential buyers from developers, not to create an exception for existing homeowners. Second, while the Act contains anti-waiver provisions, these provisions do not preclude the separate common law doctrine of equitable estoppel. Waiver involves the intentional relinquishment of a known right, whereas estoppel prevents a party from asserting a right where their own conduct has caused another party to rely on that conduct to their detriment. Because the sellers alleged that Hurwitz declined their attempts to provide the disclosures and that they relied on his representations, they have stated a valid claim for equitable estoppel that should not have been dismissed.



Analysis:

This decision clarifies that the Maryland HOA Act's disclosure requirements apply broadly to all non-developer residential buyers, even those with pre-existing ownership in the community. More significantly, the ruling establishes that statutory anti-waiver provisions do not automatically bar the defense of equitable estoppel. This prevents a party from using a consumer protection statute as a 'sword' to escape a contract when their own conduct induced the other party's technical non-compliance. The case sets a precedent that allows courts to look beyond the strict letter of a statute to prevent an inequitable result, requiring a fact-specific inquiry into the parties' conduct.

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