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Mandatory Requirements for Adoption of an Annual Budget

The Maryland Condominium Act, at Section 11‑109.2, makes mandatory an annual budget, and requires that the proposed budget be submitted to the unit owner membership at least 30 days before it is adopted.  It is also required that the budget contain seven specific line items.  These line items — income, administration, maintenance, utilities, general expenses, reserves, and capital items — must be set forth in the budget without exception and without to regard to any other line items that may be included.  The adoption of the budget is required to take place at an open meeting of the owners.  Here is the complete test of Section 11-109.2:

(a)        Preparation and submission.—The council of unit owners shall cause to be prepared and submitted to the unit owners an annual proposed budget at least 30 days before its adoption.

(b)        Items required to be included. – The annual budget shall provide for at least the following items:

(1)  Income;

(2)  Administration;

(3)  Maintenance;

(4)  Utilities;

(5)  General expenses;

(6)  Reserves; and

(7)  Capitol items.

(c)        Adoption. – The budget shall be adopted at an open meeting of the council of unit owners or any other body to which the council of unit owners delegates responsibility for preparing and adopting the budget. 

(d)       Certain expenditures in excess of 15 percent of budgeted amount to be approved by amendment.  – Any expenditure other than those made because of additions which, if not corrected, could reasonably result in a threat to the health or safety of the unit owners for a significant risk of damage to the condominium, that would result in an increase in an amount of assessments for the current fiscal year of the condominium in excess of 15 percent of the budgeted amount previously adopted, shall be approved by an amendment to the budget adopted at a special meeting, upon not less than 10 days written notice to the council of unit owners.

(e)        Authority of counsel to obligate itself for certain expenditures unimpaired. – The adoption of a budget shall not impair the authority of the council of unit owners to obligate the council of unit owners for expenditures for any purpose consistent with any provision of this title.

(f)        Applicability to condominiums occupied and used solely for nonresidential purposes. – The provisions of this section do not apply to a condominium that is occupied and used solely for nonresidential purposes.