by Raymond Daniel Burke | May 13, 2025
Since the collapse of the Champlain Towers South Condominium in Surfside, Florida during 2021, adequate funding for building reserves has become a much-discussed topic. Under Section 11-109.4 of the Maryland Condominium Act, condominiums have been required to have reserve studies performed at least every five years. However, the law has only required that the reserve study be available for inspection by the unit owners; that the reserve study be “reviewed” by the board or other governing body in connection with preparation of the annual budget; and that a summary of the reserve study be provided to the unit owners with the proposed budget. However, legislation passed by both chambers of the Maryland General Assembly during the 2025 session (HB 0292 and SB 0063) amends the annual budget provisions of Section 11-109.2 to require that the budget include funding in accordance with the reserve study, and mandates that condominiums “develop a funding plan to determine how to fund” the amounts recommended in the reserve study. Under this legislation, it is required that a condominium’s annual budget under Section 11-109.2 include (a) the establishment of reserves in accordance with an adopted funding plan; (b) that the funds recommended in the most recent reserve study be funded as part of the budget; and (c) that those funds be deposited in the reserve account on or before the last day of each fiscal year. Under proposed new Section 11-109.4(f)(3), the funding plan, which must be developed in consultation with the author of the reserve study, is required to “prioritize adequate amounts for repair and replacement of common elements of the condominium that are necessary for (i) the health safety and well-being of the occupants; (ii) ensuring structural integrity such as roofing replacements and maintaining structural systems; (iii) essential functioning such as plumbing, sewer, heating and cooling and electrical infrastructure; and (iv) any other essential or critical purpose, as determined by the governing body.”
The new legislation makes provision for financial hardship that makes full funding of reserve amounts not possible. It provides that, by a two-thirds vote of the unit owners, it may be determined that “the condominium and the unit owners are experiencing a financial hardship that limits the ability to fund reserves that are required.” In that event, the condominium “may reasonably deviate from the reserve funding requirement,” and the “funding level under that requirement shall be at least the funding amount necessary for the purposes specified under Section 11-109.4(f)(3),” the requirements of which are described above. Moreover, deviation from the reserve study budget requirements may only be implemented for one fiscal year, unless it is extended for an additional fiscal year by another two-thirds vote of the unit owners. The board or other governing body is also required to make “good faith efforts” to resolve the financial hardship and resume funding reserves as required by the reserve study, and must “maintain detailed documentation of the good faith efforts,” such documentation to be made available for inspection a part of the condominium’s books and records.
The new legislation contains similar provisions that are applicable to homeowner associations and cooperatives. It is presently awaiting the Governor’s signature.
by Raymond Daniel Burke | Apr 8, 2024
I will be speaking at the Community Associations Institute’s Delmarva Breakfast Conference on Friday, April 12, 2024 at the Atlantic Sands Hotel in Rehoboth, Delaware. My primary topic will be condominium and homeowner association resale disclosure requirements.
by Raymond Daniel Burke | Mar 4, 2024
Proposed legislation pending in the Maryland General Assembly would reduce the percentage of approval votes required to amend a condominium declaration from 80 percent to 66 2/3 percent. House Bill 1496, which was cross-filed with Senate Bill 665, would change the amendment process in Section 11-103(c) of the Maryland Condominium Act to provide for the lower percentage requirement. However, the reduced percentage would not apply in the event that any units are still owned by the developer, in which case the 80 percent requirement would still be effective. As is the case under current law, the percentage requirement would not apply to a purely corrective amendment of a typographical error under Section 11-103.1, which can be accomplished by the condominium’s board of directors.
by Raymond Daniel Burke | Jan 22, 2024
Legislation introduced in the current session of the Maryland General Assembly would include electric bicycles within the requirements for electric charging stations at condominiums. House
Bill 159 would amend Section 11-111.4 of the Condominium Act to expressly include electric bicycles along with motor vehicles subject to the Section’s requirements. Section 11-111.4 provides that condominiums cannot prohibit or unreasonably restrict the installation or use of electrical vehicle charging equipment. If approval is required for the installation or use, the condominium is required to review the application as it would any submission for approval of an architectural modification. It may not willfully avoid or delay review, and, if the condominium does not deny the application in writing within 60 days, it is deemed to have been approved, unless the delay is caused by a reasonable request for additional information. The Bill is pending before the House Environmental and Transportation Committee.
by Raymond Daniel Burke | Aug 11, 2023
House Bill 98, making changes to condominium insurance requirements, was passed during this year’s legislative session and signed into law by Governor Moore. It amends Section 11-=114 of the Condominium Act concerning the mandatory insurance that is required to be maintained by the Council of Unit Owners. These changes, which will take effect on October 1, 2023, differentiate between “attached” and “detached” units for insurance purposes. The new law changes subsection (a)(1), which presently provides that the Council is required to maintain “[p]roperty insurance on the common elements and units, exclusive of improvements and betterments installed in units by unit owners other than the developer, insuring against those risks of direct physical loss commonly insured against, in amounts determined by the council of unit owners but not less than any amounts specified in the declaration or bylaws.” The amended provision establishes that the Council is only required to maintain insurance on “attached” units. Where units are detached, the Council is only required to maintain insurance on the common elements and not any portion of the units. Similarly, subsection (d), which provides that insurance proceeds are first to be disbursed to repair the common elements and then the units, is amended to provide that the distribution of insurance proceeds for units is only to be made in the case of “attached” units. A new subsection (e)(2) is also added, which expressly requires that “and owner of a residential detached unit shall carry homeowners coverage on the entirety of the unit.”
by Raymond Daniel Burke | Jul 15, 2022
As previously reported, during the 2022 legislative session, the Maryland General Assembly passed new legislation requiring all condominiums, homeowner associations, and housing cooperatives to undertake regular reserve studies of common area components. The Governor did not sign the bill, but it became law under Art. II, Sec. 17(c) of the Maryland Constitution, which provides that a bill send to the Governor becomes law if the Governor does not veto the bill with 30 days of its presentment. Under the new law, which takes effect on October 1, 2022, a community that has had a reserve study conducted on or after October 1, 2018 must have that reserve study updated within five years from the date to that study, and every five years thereafter. A community that has not had a reserve study on or after October 1, 2018, must undertake one no later than October 1, 2023, and that study must also be updated every five years thereafter.
