A reserve study to determine the funding needed for future major repairs and replacement of common property in condominiums, homeowner associations and housing cooperatives in Prince George’s County, Maryland will now be required by a new Maryland law, effective October 1, 2020.
The replacement reserve study must be prepared by a qualified professional and identify each structural, mechanical, electrical and plumbing component of the common property and any other components that are the responsibility of the condo, HOA or coop to repair and replace. It must also state the normal useful life and estimated remaining useful life of each component; state the estimated cost of repair or replacement; and state the estimated annual reserve amount necessary to accomplish any future repair or replacement.
The Maryland Condominium Act has been amended to increase from $5,000 to $10,000 the amount which a unit owner may be required to pay where the cause of fire, water or other casualty damage to units or the common elements originates in that owner’s condominium unit, beginning October 1, 2020.
In recent years, it is has become common that the insurance deductible amount for property damage claims is at least $10,000. Some condo associations are not able to purchase insurance with a lower deductible due to its claims history. Others choose to have a deductible of $10,000 or more to obtain lower insurance premium costs.
For condos which have a deductible of at least $10,000, an owner will be responsible for the first $10,000 of repair costs to the owner’s units, other units and the common elements if the cause of damage originates in the owner’s water or sewer pipes, kitchen or other parts of the unit. If the insurance deductible is less than $10,000, a unit owner will be responsible for the lower deductible amount. The condominium association will be responsible for the repair cost in excess of the deductible amount.
When Coronavirus Disease (COVID-19) was declared a pandemic in mid-March, 2020, state and local governments in Maryland and Washington, D.C. ordered that most everyone stay home to limit the spread of the coronavirus. After several months of staying home and restrictions on gathering in public places, business and social activity in Maryland and the District of Columbia stated Phase 2 re-opening in late June, 2020.
While the duration and impact of COVID-19 locally and throughout the United States is still unknown, it is certain that condominiums, homeowner associations, and housing cooperatives must continue to adapt their practices and procedures to the ongoing health crisis. With most offices in the Washington region likely to remain closed until September, 2020 or longer, many residents are still staying home and working at home. Schools may not fully open until 2021, which means school-age children and their parents will continue to be home.
Although we defer to medical and health professionals on how to best protect against the spread of COVID-19, we offer a few practical tips on how community association boards, managers, and residents can adapt the management and operation of their community to limit the risk of illness…and legal liability.
The United States Supreme Court, during its recently-ended 2018 Term, declined to review the decision of a federal appeals court that a condominium owner is not personally responsible for payment of assessments which become due after the owner files a Chapter 13 bankruptcy petition when the owner makes all payments under a bankruptcy payment plan approved by the Bankruptcy Court. Continue reading →
Condominium insurance, replacement reserves and dispute resolution procedures were among the condominium and homeowners association topics which were considered during the 2019 Maryland legislative session. However, virtually no new laws affecting community governance were enacted this year.
Looking ahead to 2020, legislation concerning insurance, reserves and dispute resolution is likely to introduced again.
Condominium Insurance Deductibles
Where damage to condominium units and common elements is caused by fire, water or other perils covered by the master property damage insurance, the Maryland Condominium Act requires a unit owner to pay up to the first $5,000 of repair expenses when the cause of the damage originates in that owner’s condominium unit. While some condos choose a higher deductible, others can only obtain insurance with a deductible of $10,000 or more. This leaves the condominium association responsible for repair expenses between $5,000 and the amount covered by insurance. Continue reading →
More than two years after new fair housing rules regarding discriminatory actions of residents which create a hostile housing environmentfor other residents were adopted by the United States Department of Housing and Urban Development (HUD) in October 2016, it remains uncertain what community association boards and managers must do to avoid liability for not ending the discriminatory conduct of owners and other residents of condominiums, homeowner associations, and housing cooperatives.
The HUD rules establish nationwide standards which HUD will apply in enforcing the federal Fair Housing Act with respect to alleged harassment based on race, religion, national origin, sex, familial status or disability. In addition to liability for a person’s own conduct and the conduct of that person’s agents and employees, the 2016 fair housing rules also make a community association liable for failing to take prompt action to end a discriminatory housing practiceby residents where the person knew, or should have known, of the discriminatory conduct and had the power to correct it. The HUD rule does not require that the housing provider have a discriminatory intent in not intervening to stop the resident’s discriminatory conduct. Continue reading →