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Proposed Legislation Would Reduce Percentage Required For Declaration Amendments

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.

Changes to Condominium Insurance Requirements For “Detached” Units

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.”

House Bill Would Authorize Local Governments To Create An Infrastructure Fund

House Bill 55, now pending in the Maryland General Assembly, would authorize a county or municipality to “establish a local trust fund or other appropriate fund for the purpose of repairing or rehabilitating infrastructure with communities that are subject to the requirements of the Maryland Condominium Act or the Maryland Homeowners Association Act.”  The bill, which would add new Section 1-1318 to the Local Government Article, is expressly intended to address circumstances in communities in which the original developer designated roads and other infrastructure a private components to be owned and maintained by the condominium associations or homeowners associations.  The Bill’s preamble notes that owners living in such communities “are burdened by paying for repairs and services for the types of infrastructure that would otherwise be paid for by local governments, as well as paying property taxes that support this type of infrastructure in other condominium associations and homeowners associations with publicly managed infrastructure.”  Any fund created pursuant to this proposed legislation could be used to repair “infrastructure that is traditionally maintained by the county or a municipality for the benefit of the public, including roads and storm management facilities,” but may not be used to repair recreational facilities used exclusively by homeowners and guests.  Any such fund would be financed from property taxes paid by the members of the affected condominium or homeowners association.  A county or municipality could establish eligibility requirements, but must prioritize those associations the exhibit the greatest need for repair or rehabilitation.

All Condos and HOAs Are Now Required To Undertake Regular Reserve Studies

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.

Maryland General Assembly Passes Bill Requiring Reserve Studies

The Maryland General Assembly has passed new legislation requiring all condominiums, homeowner associations, and housing cooperatives to undertake regular reserve studies of common area components.  Under House Bill 107, the reserve study requirement, which was previously applicable to only Prince George’s and Montgomery Counties, is applicable statewide.  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.  The bill has been sent to the Governor for signature into law.