In last week’s article, we reviewed the Maryland General Assembly new legislation requiring all condominiums, homeowner associations, and housing cooperatives to undertake regular reserve studies of common area components, under House Bill 107.
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.
Some important additional information regarding this bill is that the law’s provisions do not apply to an HOA that issues bonds to meet capital expenditures and are only applicable to an HOA that has responsibility under its declaration for maintaining and repairing common areas. In addition, the bill specifies that the provisions regarding reserve studies only apply to HOAs for which initial purchase and installation costs for all components identified under existing statutory provisions total at least $10,000.
Other provisions related to reserve funding are that thegoverning body of a cooperative housing corporation, condominium, or HOA must provide funds to the reserve in accordance with the most recent reserve study, must review the reserve study annually, and has the authority to increase an assessment levied to cover the reserve funding amount required – despite any provision of the articles of incorporation, declaration, bylaws, or proprietary lease, as applicable, restricting assessment increases or capping the assessment that may be levied in a fiscal year.
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.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
