The Maryland General Assembly has passed new legislation effective October 1, 2022, requiring all condominiums, homeowner associations, and housing cooperatives to undertake regular reserve studies of common area components. Under House Bill 107, the reserve study requirement is now applicable statewide, whereas previously it was only applicable to only Prince George’s and Montgomery Counties.
A community that has not had a reserve study on or after October 1, 2018, must undertake one no later than October 1, 2023, and that study must also be updated every five years thereafter. This October 1, 2023 deadline is fast approaching as most reserve studies take 2-4 months to complete. A community that has had a reserve study conducted on or after October 1, 2018 must have that reserve study updated within five years from the date of that study, and every five years thereafter.
“Reserve study” means a study of the reserves required for future major repairs and replacement of the common elements of a cooperative or condominium, or the common areas of an HOA, that:
· identifies each structural, mechanical, electrical, and plumbing component of the common elements or common areas and any other components that are the responsibility of the cooperative, condominium, or HOA to repair and replace;
· states the normal useful life (for cooperatives and condominiums) and the estimated remaining useful life of each identified component;
· states the estimated cost of repair or replacement of each identified component; and
· states the estimated annual reserve amount necessary to accomplish any identified future repair or replacement.
The new law requires associations to annually fund the reserve account consistent with the estimated reserve amount called for in the reserve study and to make the reserve study available for inspection to any unit owner. The bill requires the governing body of a cooperative, condominium, or HOA, if the most recent reserve study was an initial reserve study, to attain the annual reserve funding level recommended by the reserve study within three fiscal years following the fiscal year in which the initial reserve study was completed.
There are no exemptions based on size of association or number of units.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.