MarylandSB 00632025 Regular SessionSenate

Cooperative Housing Corporations, Condominiums, and Homeowners Associations – Funding of Reserve Accounts and Preparation of Funding Plans

Sponsored By: C. Anthony Muse (Democratic)

Signed by Governor

Real PropertyCorporations and AssociationsArchitectsBudgets -see also- Capital BudgetsBuilding Maintenance and RepairCondominiumsContracts -see also- ProcurementEngineersHealth -see also- COVID19; EnvHlth; MedCon; etc.Heating and CoolingHomeowners AssociationsMeetings -see also- Hearings; Open GovernmentNoticesPlumbingPrices -see also- Consumer Price IndexRecords -see also- Land Records; Vital RecordsResidential Property -see also- Apartments; CondominiumsSafety -see also- Occupational SafetySewageStandards and Best PracticesStudies -see also- Commitees & Commissions; ReportsTimeUtilities -see also- Recycl; Refuse; Sewage; Teleph; WaterVoting -see also- Absentee and Mail-In Voting

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 1 benefits, 1 costs, 6 mixed.

Housing associations gain temporary hardship relief

Maryland cooperative, residential condominium, and covered homeowners association boards can approve reasonable reserve-funding changes for financial hardship by a two-thirds vote. Each approval lasts up to one fiscal year, and each one-year renewal requires another two-thirds vote. Funding must still cover the funding plan’s required purposes, including its priority purposes for homeowners associations. Owners must receive reasonable advance notice of a vote at a regular or special meeting. Boards must document good-faith efforts to resolve hardship and keep records owners can inspect and copy; homeowners association rules begin October 1, 2025.

Housing associations get longer reserve deadlines

Maryland cooperatives, residential condominiums, and covered homeowners associations must fund repair reserves using their latest study and funding plan. Required deposits are due by the last day of each fiscal year. After an initial study, they have 5 fiscal years following its completion year—not 3—to reach the recommended yearly funding level. Boards must review reserves and their latest study each year; this review alone does not require another study. The homeowners association rules begin October 1, 2025; required contributions can affect owners’ dues.

Housing boards must plan repair funding

Maryland cooperatives, condominiums, and covered homeowners associations must create reserve funding plans with help from a qualified person. Plans must prioritize health, safety, structural strength, essential systems, and other critical needs chosen by the board. Boards must choose component, cash flow, baseline, or threshold cash flow funding, or another method consistent with generally accepted accounting principles. Boards must review progress at each annual meeting and repay reserves used outside the plan within 5 years. The condominium and homeowners association plan rules begin October 1, 2025.

Cooperative members get fuller cost reporting

When a Maryland cooperative’s reserve study calls for reserve funding, its budget must report each capital item’s current estimated replacement cost. The former $10,000 reporting threshold no longer applies. Members get more complete information about future replacement costs.

Condo reserve budget reporting rule removed

Maryland condominium budgets no longer have a separate requirement to report replacement costs over $10,000 with the reserve budget item. Removing this specific reporting rule does not itself change required reserve deposits. It also does not remove the law’s separate reserve-study and budget disclosure duties.

Cooperatives and condos need detailed studies

Maryland cooperative and residential condominium reserve studies must list covered repair items and each item’s size or quantity. Any board-set minimum cost for including items must reasonably reflect the association’s expenses. Beginning October 1, 2025, condominium studies can leave out minor expenses covered by the budget. Updated condominium studies must revise cost and useful-life estimates, review completed work and spending, and identify maintenance contracts. These details improve owners’ repair-cost information but can add study and paperwork costs.

Cooperatives need qualified reserve study updates

Maryland cooperative reserve-study updates must meet the same preparer qualification rules as initial studies. A preparer qualifies through personally preparing at least 30 studies in the last 3 calendar years. Alternatively, the person qualifies through participation in at least 30 studies while employed by a firm in the prior 3 years. A Maryland architect or professional engineer license, or a recognized professional reserve specialist or reserve analyst designation, also qualifies. These standards support reliable planning but can affect the cooperative’s study costs.

Homeowners associations face revised study coverage

Beginning October 1, 2025, Maryland homeowners association reserve-study coverage uses repair or replacement costs, rather than purchase and installation costs. Coverage requires responsibility under the declaration for common-area maintenance and repairs, with identified components totaling at least $10,000. Associations issuing bonds for capital expenses are exempt. Studies must list covered items and their size or quantity; boards can set reasonable minimum costs and exclude minor budgeted expenses. Updated studies must revise cost and life estimates, review work and spending, and identify maintenance contracts, adding planning information and possible costs.

Sponsors & Cosponsors

Sponsor

C. Anthony Muse
Democratic • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 138 • No: 42

House vote • 4/1/2025

Third Reading Passed

Yes: 100 • No: 36

Senate vote • 3/14/2025