2022 Maryland Condominium and HOA Laws Enacted

The Maryland Legislature considered various bills regarding the management and operation of condominiums, homeowners associations and housing cooperatives in 2022.  Although most were not approved, several significant new laws took effect October 1, 2022.

            Reserve Studies Statewide (HB 107).  Most Maryland condos, HOAs and coops will now be required to obtain a reserve study of the association common property at least every 5 years to determine the remaining useful life of each major component of the common property and the estimated cost for long-term repair and replacement. The reserve study must also state the estimated annual reserve amount necessary to accomplish any identified future repair or replacement. This extends statewide the reserve study requirements previously enacted for communities in Prince George’s and Montgomery County.

            Where a reserve study is required, the recommended annual reserve amount must be included in the annual budget.  However, if the most recent reserve study is an initial reserve study, up to 3 years is allowed to attain the annual reserve funding recommendation level.

             No reserve study is required for homeowner associations where the initial purchase and installation costs of components which require periodic repair and replacement is less than $10,000. The reserve study law amends the Maryland Condominium Act, Maryland Homeowners Association Act, and Maryland Cooperative Housing Corporation Act.

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HUD Proposes to Restore Discriminatory Effects Rule for Housing Discrimination Claims

Although the Fair Housing Act does not specifically mention the housing practices, policies and services of condominiums, homeowners associations, and housing cooperatives, the courts and United Stated Department of Housing and Urban Development (HUD) have long-recognized that the Fair Housing Act applies to prohibit discrimination with respect to owners and residents of such communities. The federal fair housing law prohibits discrimination based on race, color, national origin, religion, sex, disability, and familial status. Community association boards are also required to affirmatively take action to prevent harassment and a hostile housing environment caused by the conduct of owners, residents and managers.

In the final months of the Trump Administration, HUD issued a rule which made it more difficult to establish a violation of the Fair Housing Act based on the discriminatory effects, or disparate impact, of a facially-neutral housing policy or practice.  The 2020 rule would have superseded a 2013 HUD rule regarding the proof necessary for such a fair housing violation. However, the 2020 rule never went into effect due to a federal court ruling that the rule was not consistent with a 2015 U.S Supreme Court decision, Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., which recognized housing discrimination claims based on discriminatory effects even if a policy or practice was not intended to be discriminatory.

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Maryland Condominium Repair Reserve Fund Law Enacted for Montgomery and Prince George’s Counties

The sudden collapse of the 12-story Champlain Tower South Condominium in Surfside, Florida has focused attention on the need for all condominiums to determine and fund the long-term needs for repair and replacement of structural common components such as roofs, foundations, and walls, as well as the common plumbing, electrical and mechanical systems.

A prudent condo board should periodically obtain information regarding the estimated remaining life of each common property component and the estimated cost for future repair and replacement. Known as a “reserve study”, this evaluation should be performed by an independent construction professional. Based on the future estimated repair costs, the board should accumulate “reserve funds” as part of the annual owner assessment to pay for repairs when needed.

Recent changes in Maryland law now require all condos, housing cooperatives and homeowner associations in Montgomery County and Prince George’s County to obtain a reserve study every 5 years and to include funds for recommended repairs in the annual association budget. Prince George’s County and Montgomery County, bordering Washington D.C., are the 2 most populous Maryland counties with nearly 2 million total residents.

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Maryland General Assembly Wraps Up Virtual 2021 Legislative Session

By Scott Silverman, Esq.

Maryland’s General Assembly recently concluded its 2021 legislative session which was mostly held by virtual video teleconference due to COVID-19 pandemic concerns. Several new laws regarding community association governance were enacted, and take effect October 1, 2021.

Common Property Replacement and Repairs. Reserve studies were again a top issue regarding condominiums, homeowner associations, and housing cooperatives.   In 2020, a new law was enacted to require condos, coops and HOAs in Prince George’s County, Maryland to obtain a study of the association needs for future major replacement and repair of common property, and require the annual budget of condos and coops to provide funds for future repair work. Although statewide reserve legislation was considered in 2020 and 2021, it was not passed.

But, HB 567, a bill like the one applicable to Prince George’s County associations, was passed this year with respect to associations in Montgomery County, Maryland.  Under the new law, condominiums, cooperatives and homeowner associations in Montgomery County will be required to obtain reserve studies and to have them updated at least every five years. And, condominium, HOA, and housing cooperative boards must include reserve funds in the annual budget for future major replacement and repair of common property.

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HUD to Enforce Fair Housing Act Based on Sexual Orientation and Gender Identity Discrimination

The United States Department of Housing and Urban Development (HUD) recently announced that it will administer and enforce the Fair Housing Act to prohibit discrimination on the basis of sexual orientation and gender identity. The HUD announcement implements President Biden’s January 20, 2021 Executive Order instructing that all statutes which prohibit sex discrimination should be applied to discrimination based on sexual orientation and gender identity, so long as the statute does not contain sufficient indications to the contrary.

In explaining its February, 2021 interpretation of the Fair Housing Act, HUD relied on the 2020 decision of the United Supreme Court in Bostock v. Clayton County which ruled that discrimination in the workplace based on sexual orientation or gender identity violates Title VII of the Civil Rights Act of 1964 which prohibits discrimination “because of…sex”.

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Fair Housing Is A Top Priority for Biden Administration

President Joe Biden has directed the United States Department of Housing and Urban Development (HUD) to re-examine the the 2020 Trump-era rule which limited the role of the federal government in encouraging local government to affirmatively further the goals of the Fair Housing Act to prevent housing discrimination. Also, under review is the 2020 HUD rule regarding implementation of the “disparate impact” standard of the Fair Housing Act.

Although the Fair Housing Act does not specifically mention the housing practices, policies and services of condominiums, homeowners associations, and housing cooperatives, the courts and HUD have long- recognized that the Fair Housing Act applies to prohibit discrimination with respect to owners and residents of such communities. The federal fair housing law prohibits discrimination based on race, color, national origin, religion, sex, disability, and familial status. Community association boards are also required to affirmatively take action to prevent harassment and a hostile housing environment caused by the conduct of owners, residents and managers.

In a memorandum issued on January 26, 2021, President Biden explained that the housing policies and practices of the federal government during much of the 20th century “systematically supported discrimination and exclusion in housing and mortgage lending”.

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