EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb1015*
SENATE BILL 1015
N1, C4 4lr2963
CF 4lr2869
By: Senator Charles
Introduced and read first time: February 2, 2024
Assigned to: Judicial Proceedings
A BILL ENTITLED
AN ACT concerning 1
Condominiums – Mandatory Insurance Coverage – Detached Units 2
FOR the purpose of altering the types of elements and units for which a council of unit 3
owners is required to maintain certain property insurance; limiting instances when 4
an owner of a detached unit within a condominium is required to carry homeowners 5
insurance on the entirety of the unit; and generally relating to mandatory insurance 6
coverage for condominiums. 7
BY repealing and reenacting, with amendments, 8
Article – Real Property 9
Section 11–114 10
Annotated Code of Maryland 11
(2023 Replacement Volume) 12
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
That the Laws of Maryland read as follows: 14
Article – Real Property 15
11–114. 16
(a) Commencing not later than the time of the first conveyance of a unit to a 17
person other than the developer, the council of unit owners shall maintain, to the extent 18
reasonably available: 19
(1) Property insurance against risks of direct physical loss commonly 20
insured against in amounts determined by the council of unit owners, but not less than any 21
amounts specified in the declaration or bylaws: 22
(i) For attached [or] UNITS, multifamily dwelling units, OR 23 2 SENATE BILL 1015
DETACHED UNITS LOCAT ED WITHIN A CONDOMIN IUM NOT COMPOSED ENT IRELY OF 1
SIMILAR DETACHED UNI TS, on the common elements and units, exclusive of 2
improvements and betterments installed in units by unit owners other than the developer; 3
and 4
(ii) For detached units LOCATED WITHIN A CON DOMINIUM 5
COMPOSED ENTIRELY OF SIMILAR DETACHED UNITS , on the common elements; and 6
(2) Comprehensive general liability insurance, including medical 7
payments insurance, in an amount determined by the council of unit owners, but not less 8
than any amount specified in the declaration or bylaws, covering occurrences commonly 9
insured against for death, bodily injury, and property damage arising out of or in connection 10
with the use, ownership, or maintenance of the common elements. 11
(b) The council of unit owners shall give notice to all unit owners of the 12
termination of any insurance policy within 10 days of termination. The declaration or 13
bylaws may require the council of unit owners to carry any other insurance, and the council 14
of unit owners in any event may carry any other insurance it deems appropriate to protect 15
the council of unit owners or the unit owners. 16
(c) Insurance policies carried pursuant to subsection (a) of this section shall 17
provide that: 18
(1) Subject to the applicable coverage specified under subsection (a)(1) of 19
this section, each unit owner is an insured person under the policy with respect to liability 20
arising out of the unit owner’s ownership of an undivided interest in the common elements 21
or membership in the council of unit owners for property and casualty losses to the common 22
elements and the units, exclusive of improvements and betterments installed in the units 23
by unit owners other than the developer; 24
(2) The insurer waives its right to subrogation under the policy against any 25
unit owner of the condominium or members of his household; 26
(3) An act or omission by any unit owner, unless acting within the scope of 27
his authority on behalf of the council of unit owners, does not void the policy and is not a 28
condition to recovery under the policy; and 29
(4) If, at the time of a loss under the policy, there is other insurance in the 30
name of a unit owner covering the same property covered by the policy, the policy is primary 31
insurance not contributing with the other insurance. 32
(d) (1) Subject to the applicable coverage specified under subsection (a)(1) of 33
this section, any loss covered by the property policy shall be adjusted with the council of 34
unit owners, but the insurance proceeds for that loss shall be payable to any insurance 35
trustee designated for that purpose, or otherwise to the council of unit owners, and not to 36
any mortgagee. 37
SENATE BILL 1015 3
(2) The insurance trustee or the council of unit owners shall hold any 1
insurance proceeds in trust for unit owners and lien holders as their interests may appear. 2
(3) (i) Subject to the provisions of subsection (g) of this section, the 3
proceeds shall be disbursed first for the repair or restoration of the damaged common 4
elements and, for condominiums with attached [or] UNITS, multifamily units, OR 5
DETACHED UNITS LOCAT ED WITHIN A CONDOMINIUM NOT COMP OSED ENTIRELY OF 6
SIMILAR DETACHED UNI TS that must maintain a property insurance policy on the units, 7
the damaged units. 8
(ii) Unit owners and lien holders are not entitled to receive payment 9
of any portion of the proceeds unless: 10
1. There is a surplus of proceeds after the common elements 11
and, for condominiums with attached [or] UNITS, multifamily units, OR DETACHED UNITS 12
LOCATED WITHIN A CON DOMINIUM NOT COMPOSE D ENTIRELY OF SIMILA R 13
DETACHED UNITS that must maintain a property insurance policy on the units, the units 14
have been completely repaired or restored; or 15
2. The condominium is terminated. 16
(e) (1) An insurance policy issued to the council of unit owners does not 17
prevent a unit owner from obtaining insurance for his own benefit. 18
(2) An owner of a residential, detached unit, LOCATED WITHIN A 19
CONDOMINIUM COMPOSED ENTIRELY OF SIMILAR DETACHED UNITS , shall carry 20
homeowners insurance coverage on the entirety of the unit. 21
(f) (1) An insurer that has issued an insurance policy under this section shall 22
issue certificates or memoranda of insurance to the council of unit owners and, upon 23
request, to any unit owner, mortgagee, or beneficiary under a deed of trust. 24
(2) An insurer may cancel an insurance policy issued under this section in 25
accordance with § 27–603 of the Insurance Article. 26
(g) (1) Subject to the applicable coverage specified under subsection (a)(1) of 27
this section, any portion of the common elements and the units, exclusive of improvements 28
and betterments installed in the units by unit owners other than the developer, damaged 29
or destroyed shall be repaired or replaced promptly by the council of unit owners unless: 30
(i) The condominium is terminated; 31
(ii) Repair or replacement would be illegal under any State or local 32
health or safety statute or ordinance; or 33
(iii) 80 percent of the unit owners, including every owner of a unit or 34 4 SENATE BILL 1015
assigned limited common element which will not be rebuilt, vote not to rebuild. 1
(2) (i) 1. The cost of repair or replacement in excess of insurance 2
proceeds and reserves is a common expense. 3
2. A property insurance deductible is not a cost of repair or 4
replacement in excess of insurance proceeds. 5
(ii) If the cause of any damage to or destruction of any portion of the 6
condominium originates from the common elements or an event outside of the condominium 7
units and common elements, the council of unit owners’ property insurance deductible is a 8
common expense. 9
(iii) 1. If the cause of any damage to or destruction of any portion 10
of the condominium originates from a unit, the owner of the unit where the cause of the 11
damage or destruction originated is responsible for the council of unit owners’ property 12
insurance deductible not to exceed $10,000. 13
2. The council of unit owners shall inform each unit owner 14
annually in writing of: 15
A. The unit owner’s responsibility for the council of unit 16
owners’ property insurance deductible; and 17
B. The amount of the deductible. 18
3. The council of unit owners’ property insurance deductible 19
amount exceeding the $10,000 responsibility of the unit owner is a common expense. 20
(iv) In the same manner as provided under § 11–110 of this title, the 21
council of unit owners may make an annual assessment against the unit owner responsible 22
under subparagraph (iii) of this paragraph. 23
(3) If the damaged or destroyed portion of the condominium is not repaired 24
or replaced: 25
(i) The insurance proceeds attributable to the damaged common 26
elements shall be used to restore the damaged area to a condition compatible with the 27
remainder of the condominium; 28
(ii) The insurance proceeds attributable to units and limited 29
common elements which are not rebuilt shall be distributed to the owners of those units 30
and the owners of the units to which those limited common elements were assigned; and 31
(iii) The remainder of the proceeds shall be distributed to all the unit 32
owners in proportion to their percentage interest in the common elements. 33
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(4) (i) If the unit owners vote not to rebuild any unit, that unit’s entire 1
common element interest, votes in the council of unit owners, and common expense liability 2
are automatically reallocated upon the vote as if the unit had been condemned under § 3
11–112 of this title, and the council of unit owners promptly shall prepare, execute, and 4
record an amendment to the declaration reflecting the reallocations. 5
(ii) Notwithstanding the provisions of this subsection, § 11–123 of 6
this title governs the distribution of insurance proceeds if the condominium is terminated. 7
(h) The council of unit owners shall maintain and make available for inspection a 8
copy of all insurance policies maintained by the council of unit owners. 9
(i) The provisions of this section do not apply to a condominium all of whose units 10
are intended for nonresidential use. 11
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 12
October 1, 2024. 13