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.
House Bill Would Make Changes In Condominium Governance, Particularly During The Period of Developer Control
House Bill 140, now pending in the Maryland General Assembly, would make several amendments to the Maryland Condominium Act relating to governance during the period of developer control and, in all condominiums, would expand unit owner participation in meetings of the board of directors. In proposed new provisions to Section 11-109(c)(8) of the Maryland Condominium Act, the Bill would require a developer in control of a condominium to appoint a unit owner to the board of directors. Where a developer controlled condominium has a board of directors and 25% of the units have been sold, the developer would be required to appoint at least one unit owner, not affiliated with the developer, to the board. Where there is no board of directors, once 25% of the units are sold, the developer would be required to establish a board of directors, including at least one unit owner, not affiliated with the developer.
The Bill would also require and additional open agenda board meeting per year that provides an opportunity for unit owner comment. Section 11-109(c) presently requires that condominium boards hold at least one such meeting each year. House Bill 140 would amend this provision to require a board of directors to hold two such open agenda meetings per year. This requirement would also apply to board meetings during the period when the developer is still in control of the condominium.
Additionally, the Bill would add a new provision to Section 11-116 requiring that, during the period of developer control, the condominium’s books and records be maintained “separate and apart from the developer or of any other person.”
The Bill proposes to add similar provisions to the Maryland Homeowner Association Act. Please watch this blog for further developments on this legislative proposal.
The tragic collapse of the Champlain Towers Condominium in Surfside Florida, and the horrific consequences to residents and their families, will, no doubt, continue to be the subject of multiple news reports and long-term investigations. And it will be some time before we learn the true cause of the disaster, and how it might have been prevented. But the fundamental issue — deteriorated building conditions — is something about which all condominium unit owners and property managers need to be especially conscientious. Previously, I have written about the high importance of regular building evaluations by competent consultants. As a practical matter, these studies are necessary in order for an association to have information needed to develop accurate budgets for maintenance and reserves. Of equal importance to conducting a building survey, however, is properly allocating funds to address any conditions that the report identifies. The fact that the Maryland Condominium Act requires that condominiums adopt annual budgets that specifically include reserves and capital items indicates that the association must have a detailed understanding of its buildings if the specified budget items are to present a meaningful picture of building maintenance issues. The fact that the Condominium Act, and most condominium governing documents, makes the council of unit owners responsible for maintenance, repair and replacement of the common elements creates potential liability where due diligence as to building conditions is not properly undertaken. Most often, the consequences of failing to adhere to good maintenance practices are financial — resulting in expensive repair projects and burdensome special assessments. But as Champlain Towers demonstrates, some building conditions can lead to far more dreadful results.
House Bill 352 Proposes New Requirements During the Period that the Condominium Is Under the Control of the Developer
A bill proposed in the Maryland House of Delegates would make significant changes to the Maryland Condominium Act that relate to the period during which the developer is in control of the council of unit owners. House Bill 352 would require that the developer hold at least two meeting per year, rather than the current one annual meeting, and that the unit owners have an opportunity to comment on condominium matters during those meetings. Additionally the bill would require that, if the condominium has a board of directors, within 30 days after 25% of the units have been titled to unit owners, the developer must appoint a board member who is a unit owner and not otherwise affiliated with the developer; and that, if there is no board at that time, a board must then be established The bill would further require the developer to disclose any governmental bonds affecting the project, and provide notice in advance of requesting release of any such bonds. Also, it would be required that the maintenance of the condominium’s books and records begin on the date that the council of unit owners is established, and that the condominium’s books and records be kept separate and apart from those of the developer. The bill proposes similar changes to the Maryland Homeowner Association Act.
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We are pleased to announce that Mr. Burke has completed mediation and conflict resolution skills training requirements, and been certified as a mediator, including qualification as a court-designated mediator for alternative dispute resolution procedures in all Maryland Courts. He may be retained for mediation services, as well as for representation in construction, condominium and homeowner association matters, through Baker Donelson, 100 Light Street, 19th Floor, Baltimore, Maryland 21202, 410-862-1192, firstname.lastname@example.org.