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.
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 →
Where a condominium unit in Baltimore County, Maryland was damaged by steam escaping from the heating system when a unit owner hired a plumber to remove heat radiators in the unit and was negligent by not requesting the contractor to re-install the radiators after the unit was painted, the condo insurance carrier may not recover the cost to repair the unit from the plumbing contractor, a federal trial court in Maryland recently ruled.
The radiators were removed in July when the central heating system was not operating, and the unit owner did not request the contractor to re-install the radiators until November after the heating system had been tuned on. The cost of more than $120,000 to repair the damage to the unit was covered by the condominium’s property damage insurance. The insurance company paid the condominium association which then paid the unit owner who hired a contractor to make the repairs to the unit.
The insurance carrier filed suit against the plumbing contractor to recover the amount it paid to the condominium. The contractor contended that the claim should not be allowed because the unit owner was an insured under the condo master insurance policy and was negligent in not contacting the contractor to re-install the radiators. Continue reading →
Short term daily and weekly rentals are now allowed in all residential areas of Montgomery County, Maryland, beginning July 1, 2018.
Previously, no residential rentals were permitted in Montgomery County for less than 30 days. Faced with widespread illegal daily and weekly rentals, the County Council passed legislation in October, 2017 to allow these rentals where the property is the primary residence of the owner or owner-authorized resident of the rental property. However, condominiums, homeowner associations and housing cooperatives are still allowed to ban or restrict short term rentals. Continue reading →