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.
Dispute Settlement Procedures (HB 615). The statutory procedures for enforcing condominium rules and covenants were modified to facilitate delivery of notice of an alleged violation, allow at least 15 days (instead of 10 days) to correct a continuing violation without further sanction, and allow the alleged violator an opportunity to request a hearing before the board of directors instead of requiring a hearing for all alleged violations.
The long-established condominium dispute settlement procedures, as modified in this year’s legislation, will now also apply to homeowner association actions to enforce HOA rules and covenants. Before imposing a fine, suspend voting or infringe on any other right of a homeowner or other occupant for violations, there must be notice of the alleged violation, a statement of the action required to abate the violations and at least 15 days to correct a continuing violation.
The new law also extends to homeowners associations the statutory court-enforcement provisions already applicable to condominiums. This includes allowing suit to be filed by the association or any homeowner for both monetary damages and injunctions to stop the violation. The prevailing party in a court suit is entitled to attorney’s fees as determined by the court.
The new dispute settlement law makes changes to the Maryland Condominium Act and the Maryland Homeowners Association Act.
Condominium Disclosures to Owners and Purchasers (HB 40). The closed meeting provisions of the Maryland Condominium Act have been amended to provide that the statutory authority of the board of directors to hold a closed meeting for reasons specified in the statute may not be interpreted to authorize the board to withhold are agree to withhold from the unit owner the terms of any legal agreement to which the condominium is a party.
Additionally, a board must disclose to the unit owners any agreement for the purpose of settling a disputed common element warranty at least 21 days before execution of the agreement. And, the contract for initial sale of a unit and the resale disclosure statement must state whether the condominium has entered into any agreement that settles or releases the condominium claims related to statutory common element construction warranties.
Posted by Thomas Schild Law Group, LLC which represents condominiums, homeowner associations, and housing cooperatives throughout Maryland (including Montgomery County, Prince George’s County, Howard County, Frederick County, and Baltimore) and Washington, D.C.