EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb1015*
SENATE BILL 1015
N1, C4 4lr2963
CF HB 1227
By: Senator Charles
Introduced and read first time: February 2, 2024
Assigned to: Judicial Proceedings
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 24, 2024
CHAPTER ______
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; requiring the council of 4
unit owners to notify owners of detached units within a condominium of certain 5
property insurance coverage obligations; limiting instances when an owner of a 6
detached unit within a condominium is required to carry homeowners insurance on 7
the entirety of the unit; authorizing a council of unit owners to carry homeowners 8
insurance on the entirety of all units located within a certain condominium; and 9
generally relating to mandatory insurance coverage for condominiums. 10
BY repealing and reenacting, with amendments, 11
Article – Real Property 12
Section 11–114 13
Annotated Code of Maryland 14
(2023 Replacement Volume) 15
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 16
That the Laws of Maryland read as follows: 17
Article – Real Property 18
11–114. 19
(a) Commencing not later than the time of the first conveyance of a unit to a 20 2 SENATE BILL 1015
person other than the developer, the council of unit owners shall maintain, to the extent 1
reasonably available: 2
(1) Property insurance against risks of direct physical loss commonly 3
insured against in amounts determined by the council of unit owners, but not less than any 4
amounts specified in the declaration or bylaws: 5
(i) For attached [or] UNITS, multifamily dwelling units, OR 6
DETACHED UNITS LOCAT ED WITHIN A CONDOMIN IUM NOT COMPOSED ENT IRELY OF 7
SIMILAR DETACHED UNI TS, on the common elements and units, exclusive of 8
improvements and betterments installed in units by unit owners other than the developer; 9
and 10
(ii) For detached units LOCATED WITHIN A CON DOMINIUM 11
COMPOSED ENTIRELY OF SIMILAR DETACHED UNI TS, on the common elements; and 12
(2) Comprehensive general liability insurance, including medical 13
payments insurance, in an amount determined by the council of unit owners, but not less 14
than any amount specified in the declaration or bylaws, covering occurrences commonly 15
insured against for death, bodily injury, and property damage arising out of or in connection 16
with the use, ownership, or maintenance of the common elements. 17
(b) (1) (I) The council of unit owners shall give notice to all unit owners of 18
the termination of any insurance policy within 10 days of termination. 19
(II) The declaration or bylaws may require the council of unit owners 20
to carry any other insurance, and the council of unit owners in any event may carry any 21
other insurance it deems appropriate to protect the council of unit owners or the unit 22
owners. 23
(2) (I) THE COUNCIL OF UNIT O WNERS SHALL GIVE AN ANNUAL 24
NOTICE, IN WRITING, OF ANY OBLIGATION OF AN OWNER OF A RESIDE NTIAL, 25
DETACHED UNIT TO OBT AIN PROPERTY INSURAN CE COVERAGE ON THE U NIT. 26
(II) IF THERE IS A CHANGE IN ANY OBLIGATION UN DER 27
SUBPARAGRAPH (I) OF THIS PARAGRAPH , THE COUNCIL OF UNIT OWNERS SHALL 28
PROMPTLY PROVIDE THE UNIT OWNER WITH AN U PDATED NOTICE . 29
(c) Insurance policies carried pursuant to subsection (a) of this section shall 30
provide that: 31
(1) Subject to the applicable coverage specified under subsection (a)(1) of 32
this section, each unit owner is an insured person under the policy with respect to liability 33
arising out of the unit owner’s ownership of an undivided interest in the common elements 34
or membership in the council of unit owners for property and casualty losses to the common 35
elements and the units, exclusive of improvements and betterments installed in the units 36 SENATE BILL 1015 3
by unit owners other than the developer; 1
(2) The insurer waives its right to subrogation under the policy against any 2
unit owner of the condominium or members of his household; 3
(3) An act or omission by any unit owner, unless acting within the scope of 4
his authority on behalf of the council of unit owners, does not void the policy and is not a 5
condition to recovery under the policy; and 6
(4) If, at the time of a loss under the policy, there is other insurance in the 7
name of a unit owner covering the same property covered by the policy, the policy is primary 8
insurance not contributing with the other insurance. 9
(d) (1) Subject to the applicable coverage specified under subsection (a)(1) of 10
this section, any loss covered by the property policy shall be adjusted with the council of 11
unit owners, but the insurance proceeds for that loss shall be payable to any insurance 12
trustee designated for that purpose, or otherwise to the council of unit owners, and not to 13
any mortgagee. 14
(2) The insurance trustee or the council of unit owners shall hold any 15
insurance proceeds in trust for unit owners and lien holders as their interests may appear. 16
(3) (i) Subject to the provisions of subsection (g) of this section, the 17
proceeds shall be disbursed first for the repair or restoration of the damaged common 18
elements and, for condominiums with attached [or] UNITS, multifamily units, OR 19
DETACHED UNITS LOCAT ED WITHIN A CONDOMIN IUM NOT COMPOSED ENT IRELY OF 20
SIMILAR DETACHED UNI TS that must maintain a property insurance policy on the units, 21
the damaged units. 22
(ii) Unit owners and lien holders are not entitled to receive payment 23
of any portion of the proceeds unless: 24
1. There is a surplus of proceeds after the common elements 25
and, for condominiums with attached [or] UNITS, multifamily units, OR DETACHED UNITS 26
LOCATED WITHIN A CON DOMINIUM NOT COMPOSE D ENTIRELY OF SIMILAR 27
DETACHED UNITS that must maintain a property insurance policy on the units, the units 28
have been completely repaired or restored; or 29
2. The condominium is terminated. 30
(e) (1) An insurance policy issued to the council of unit owners does not 31
prevent a unit owner from obtaining insurance for his own benefit. 32
(2) An UNLESS A COUNCIL OF U NIT OWNERS EXERCISES THE 33
AUTHORITY UNDER PARA GRAPH (3) OF THIS SUBSECTION , AN owner of a residential, 34
detached unit, unit LOCATED WITHIN A CON DOMINIUM COMPOSED ENTIRELY OF 35 4 SENATE BILL 1015
SIMILAR DETACHED UNI TS, shall carry homeowners insurance coverage on the entirety 1
of the unit. 2
(3) A COUNCIL OF UNIT OWNE RS MAY CARRY HOMEOWN ERS 3
INSURANCE ON THE ENT IRETY OF ALL DETACHE D UNITS LOCATED WITH IN A 4
CONDOMINIUM COMPOSED ENTIRELY OF SIMILAR DETACHED UNITS. 5
(f) (1) An insurer that has issued an insurance policy under this section shall 6
issue certificates or memoranda of insurance to the council of unit owners and, upon 7
request, to any unit owner, mortgagee, or beneficiary under a deed of trust. 8
(2) An insurer may cancel an insurance policy issued under this section in 9
accordance with § 27–603 of the Insurance Article. 10
(g) (1) Subject to the applicable coverage specified under subsection (a)(1) of 11
this section, any portion of the common elements and the units, exclusive of improvements 12
and betterments installed in the units by unit owners other than the developer, damaged 13
or destroyed shall be repaired or replaced promptly by the council of unit owners unless: 14
(i) The condominium is terminated; 15
(ii) Repair or replacement would be illegal under any State or local 16
health or safety statute or ordinance; or 17
(iii) 80 percent of the unit owners, including every owner of a unit or 18
assigned limited common element which will not be rebuilt, vote not to rebuild. 19
(2) (i) 1. The cost of repair or replacement in excess of insurance 20
proceeds and reserves is a common expense. 21
2. A property insurance deductible is not a cost of repair or 22
replacement in excess of insurance proceeds. 23
(ii) If the cause of any damage to or destruction of any portion of the 24
condominium originates from the common elements or an event outside of the condominium 25
units and common elements, the council of unit owners’ property insurance deductible is a 26
common expense. 27
(iii) 1. If the cause of any damage to or destruction of any portion 28
of the condominium originates from a unit, the owner of the unit where the cause of the 29
damage or destruction originated is responsible for the council of unit owners’ property 30
insurance deductible not to exceed $10,000. 31
2. The council of unit owners shall inform each unit owner 32
annually in writing of: 33
A. The unit owner’s responsibility for the council of unit 34 SENATE BILL 1015 5
owners’ property insurance deductible; and 1
B. The amount of the deductible. 2
3. The council of unit owners’ property insurance deductible 3
amount exceeding the $10,000 responsibility of the unit owner is a common expense. 4
(iv) In the same manner as provided under § 11–110 of this title, the 5
council of unit owners may make an annual assessment against the unit owner responsible 6
under subparagraph (iii) of this paragraph. 7
(3) If the damaged or destroyed portion of the condominium is not repaired 8
or replaced: 9
(i) The insurance proceeds attributable to the damaged common 10
elements shall be used to restore the damaged area to a condition compatible with the 11
remainder of the condominium; 12
(ii) The insurance proceeds attributable to units and limited 13
common elements which are not rebuilt shall be distributed to the owners of those units 14
and the owners of the units to which those limited common elements were assigned; and 15
(iii) The remainder of the proceeds shall be distributed to all the unit 16
owners in proportion to their percentage interest in the common elements. 17
(4) (i) If the unit owners vote not to rebuild any unit, that unit’s entire 18
common element interest, votes in the council of unit owners, and common expense liability 19
are automatically reallocated upon the vote as if the unit had been condemned under § 20
11–112 of this title, and the council of unit owners promptly shall prepare, execute, and 21
record an amendment to the declaration reflecting the reallocations. 22
(ii) Notwithstanding the provisions of this subsection, § 11–123 of 23
this title governs the distribution of insurance proceeds if the condominium is terminated. 24
(h) The council of unit owners shall maintain and make available for inspection a 25
copy of all insurance policies maintained by the council of unit owners. 26
(i) The provisions of this section do not apply to a condominium all of whose units 27
are intended for nonresidential use. 28
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 29
October 1, 2024. 30