Maryland 2025 Regular Session

Maryland Senate Bill SB63 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1
2	2
3	3		EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4		[Brackets] indicate matter deleted from existing law.
5		-	Underlining indicates amendments to bill.
6		-	Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7		-	amendment.
8	5		sb0063
9	6
10	7		SENATE BILL 63
11	8		N1, C1 5lr1630
12		-	SB 1157/24 – JPR (PRE–FILED) CF ~~HB 292~~
	9	+	SB 1157/24 – JPR (PRE–FILED) CF 5lr1629
13	10		By: Senator Muse
14	11		Requested: November 1, 2024
15	12		Introduced and read first time: January 8, 2025
16	13		Assigned to: Judicial Proceedings
17		-	Committee Report: Favorable with amendments
18		-	Senate action: Adopted
19		-	Read second time: February 23, 2025
20	14
21		-	~~CHAPTER ______~~
	15	+	A BILL ENTITLED
22	16
23	17		AN ACT concerning 1
24	18
25	19		Cooperative Housing Corporations, Condominiums, and Homeowners 2
26	20		Associations – Funding of Reserve Accounts and Preparation of Funding Plans 3
27	21
28	22		FOR the purpose of requiring that the annual budget of a cooperative housing corporation, 4
29	23		a residential condominium, or a homeowners association include certain funds; 5
30	24		requiring that certain funds for the reserve account of a cooperative housing 6
31	25		corporation, a residential condominium, or a homeowners association be deposited 7
32	26		by a certain day each fiscal year; extending the amount of time after an initial 8
33	27		reserve study that a cooperative housing corporation, a residential condominium, or 9
34	28		a homeowners association has to obtain a certain recommended reserve funding 10
35		-	level; authorizing a cooperative housing corporation, a residential condominium, or 11
36		-	a homeowners association to reasonably deviate from certain reserve funding 12
37		-	requirements following a certain financial hardship determination by the governing 13
38		-	body; requiring that certain updated reserve studies be prepared by a certain person; 14
39		-	requiring the governing body of a cooperative housing corporation, a residential 15
40		-	condominium, or a homeowners association to review the reserves and the most 16
41		-	recent reserve study or updated reserve study annually for accuracy to determine 17
42		-	whether there is adequate funding in accordance with a certain funding plan; 18
43		-	altering the definition of “reserve study” to provide that the governing body of a 19
44		-	cooperative housing corporation, a residential condominium, or a homeowners 20
45		-	association may determine a minimum cost of repair or replacement for components, 21
46		-	subject to certain restrictions; requiring the governing body of a cooperative housing 22
47		-	corporation, a residential condominium, or a homeowners association to prepare a 23
48		-	certain funding plan subject to certain requirements; altering a certain provision of 24 2 SENATE BILL 63
	29	+	level; requiring that certain updated reserve studies be prepared by a certain person; 11
	30	+	requiring a residential condominium or a homeowners association to review the 12
	31	+	reserve study annually for accuracy; requiring the governing body of a cooperative 13
	32	+	housing corporation, a residential condominium, or a homeowners association to 14
	33	+	prepare a certain funding plan subject to certain requirements; and generally 15
	34	+	relating to reserve studies and annual budgets of cooperative housing corporations, 16
	35	+	condominiums, and homeowners associations. 17
	36	+
	37	+	BY repealing and reenacting, with amendments, 18
	38	+	Article – Corporations and Associations 19
	39	+	Section 5–6B–26.1 20
	40	+	Annotated Code of Maryland 21
	41	+	(2014 Replacement Volume and 2024 Supplement) 22
	42	+
	43	+	BY repealing and reenacting, with amendments, 23
	44	+	Article – Real Property 24
	45	+	Section 11–109.2(b) and (c), 11–109.4, 11B–112.2(c) and (d), and 11B–112.3 25
	46	+	Annotated Code of Maryland 26
	47	+	(2023 Replacement Volume and 2024 Supplement) 27
	48	+	2 SENATE BILL 63
49	49
50	50
51		-	law relating to component costs and the application of certain reserve study 1
52		-	requirements to a homeowners association; and generally relating to the funding of 2
53		-	reserve accounts, reserve studies, and annual budgets of cooperative housing 3
54		-	corporations, condominiums, and homeowners associations. 4
	51	+	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
	52	+	That the Laws of Maryland read as follows: 2
55	53
56		-	BY repealing and reenacting, with amendments, 5
57		-	Article – Corporations and Associations 6
58		-	Section 5–6B–26.1 7
59		-	Annotated Code of Maryland 8
60		-	(2014 Replacement Volume and 2024 Supplement) 9
	54	+	Article – Corporations and Associations 3
61	55
62		-	BY repealing and reenacting, without amendments, 10
63		-	Article – Real Property 11
64		-	Section 11–109.2(b) and 11B–112.2(c) 12
65		-	Annotated Code of Maryland 13
66		-	(2023 Replacement Volume and 2024 Supplement) 14
	56	+	5–6B–26.1. 4
67	57
68		-	BY repealing and reenacting, with amendments, 15
69		-	Article – Real Property 16
70		-	Section 11–109.2(b) and (c) 11–109.2(c), 11–109.4, 11B–112.2(c) and (d) 17
71		-	11B–112.2(d), and 11B–112.3 18
72		-	Annotated Code of Maryland 19
73		-	(2023 Replacement Volume and 2024 Supplement) 20
	58	+	(a) (1) In this section[, “reserve] THE FOLLOWING WORDS HAVE THE 5
	59	+	MEANINGS INDICATED . 6
74	60
75		-	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 21
76		-	That the Laws of Maryland read as follows: 22
	61	+	(2) “RESERVE study” means a study of the reserves required for future 7
	62	+	major repairs and replacement of the common elements of a cooperative housing 8
	63	+	corporation that: 9
77	64
78		-	Article – Corporations and Associations 23
	65	+	[(1)] (I) [Identifies] USING AN ITEMIZED LIS T, CLEARLY IDENTIFIES 10
	66	+	each structural, mechanical, electrical, and plumbing component of the common elements 11
	67	+	and any other components that are the responsibility of the cooperative housing corporation 12
	68	+	to repair and replace; 13
79	69
80		-	5–6B–26.1. 24
	70	+	[(2)] (II) States the normal useful life and the estimated remaining useful 14
	71	+	life of each identified component; 15
81	72
82		-	(a) ~~(1) In this section[, “reserve]~~ THE ~~FOLLOWING WORDS HAVE THE 25~~
83		-	~~MEANINGS INDICATED . 26~~
	73	+	[(3)] (III) States the estimated cost of repair or replacement of each 16
	74	+	identified component; [and] 17
84	75
85		-	(2) “RESERVE study” means a study of the reserves required for future 27
86		-	major repairs and replacement of the common elements of a cooperative housing 28
87		-	corporation that: 29
	76	+	[(4)] (IV) States the estimated annual reserve amount necessary to 18
	77	+	accomplish any identified future repair or replacement; AND 19
88	78
89		-	[(1)] (I) [Identifies] USING AN ITEMIZED LIS T, CLEARLY IDENTIFIES 30
90		-	each structural, mechanical, electrical, and plumbing component of the common elements 31
91		-	and any other components that are: 32
	79	+	(V) STATES THE SQUARE FOO TAGE OF EACH IDENTIF IED 20
	80	+	COMPONENT . 21
92	81
93		-	1. ARE the responsibility of the cooperative housing 33
94		-	corporation to repair and replace; AND 34
	82	+	(3) “UPDATED RESERVE STUDY ” MEANS, FOR THE COMMON 22
	83	+	ELEMENTS SINCE THE P RIOR RESERVE STUDY W AS COMPLETED WITHIN THE 23
	84	+	PREVIOUS 5 YEARS, A STUDY THAT: 24
	85	+
	86	+	(I) ANALYZES ANY WORK PER FORMED; 25
	87	+
	88	+	(II) REVISES REPLACEMENT C OST, REMAINING LIFE , AND 26
	89	+	USEFUL LIFE ESTIMATE S; AND 27
	90	+
	91	+	(III) IDENTIFIES: 28
	92	+
	93	+	1. WORK PERFORMED AND AM OUNTS SPENT; AND 29
95	94		SENATE BILL 63 3
96	95
97	96
98		-	2. ~~IF APPLICABLE,~~ ~~MEET A MINIMUM COST OF REPAIR~~ 1
99		-	~~OR REPLACEMENT , AS DETERMINED BY THE GOVERNING BODY , THAT IS:~~ 2
	97	+	2. WHETHER ANY MAINTENAN CE CONTRACTS ARE IN 1
	98	+	PLACE. 2
100	99
101		-	A~~. REASONABLY BASED ON T HE EXPENSES OF THE~~ 3
102		-	~~COOPERATIVE HOUSING CORPORATION ; AND~~ 4
	100	+	(b) (1) This subsection applies only to a cooperative housing corporation 3
	101	+	established in: 4
103	102
104		-	B. NOT A MINOR EXPENSE T HAT IS OTHERWISE 5
105		-	ADDRESSED BY THE BUDGET OF THE COOPER ATIVE HOUSING CORPOR ATION; 6
	103	+	(i) Prince George’s County on or after October 1, 2020; 5
106	104
107		-	[(2)] (II) States the normal useful life and the estimated remaining useful 7
108		-	life of each identified component; 8
	105	+	(ii) Montgomery County on or after October 1, 2021; or 6
109	106
110		-	~~[(3)]~~ (III) ~~States the estimated cost of repair~~ or ~~replacement of each 9~~
111		-	~~identified component;~~ ~~[and] 10~~
	107	+	(iii) Any county other than Prince George’s County or Montgomery 7
	108	+	County on or after October 1, 2022. 8
112	109
113		-	[(4)] (IV) States the estimated annual reserve amount necessary to 11
114		-	accomplish any identified future repair or replacement; AND 12
	110	+	(2) The governing body of the cooperative housing corporation shall have 9
	111	+	an independent reserve study completed not less than 30 calendar days before the first 10
	112	+	meeting of the cooperative housing corporation at which the members other than the owner 11
	113	+	have a majority of votes in the cooperative housing corporation. 12
115	114
116		-	(V) ~~STATES~~ THE ~~SQUARE FOOTAGE QUANTITY OR SIZE OF EACH~~ 13
117		-	~~IDENTIFIED COMPONENT USING~~ THE ~~APPROPRIAT E MEASUREMENT , SUCH AS UNIT~~ 14
118		-	~~AMOUNT~~, ~~SQUARE FOOTAGE , OR CUBIC FEET~~. 15
	115	+	(3) The governing body shall have an updated reserve study completed 13
	116	+	within 5 years after the date of the initial reserve study conducted under paragraph (2) of 14
	117	+	this subsection, which shall be updated at least every 5 years thereafter. 15
119	118
120		-	(3) “UPDATED RESERVE STUDY ” MEANS, FOR THE COMMON 16
121		-	ELEMENTS SINCE THE P RIOR RESERVE STUDY W AS COMPLETED WITHIN THE 17
122		-	PREVIOUS 5 YEARS, A STUDY THAT: 18
	119	+	(c) (1) (i) This paragraph applies only to a cooperative housing corporation 16
	120	+	established in Prince George’s County before October 1, 2020. 17
123	121
124		-	(I) ANALYZES ANY WORK PER FORMED; 19
	122	+	(ii) If the governing body of a cooperative housing corporation has 18
	123	+	had a reserve study conducted on or after October 1, 2016, the governing body shall have 19
	124	+	an updated reserve study conducted within 5 years after the date of that reserve study and 20
	125	+	at least every 5 years thereafter. 21
125	126
126		-	(II) REVISES REPLACEMENT COST , REMAINING LIFE , AND 20
127		-	USEFUL LIFE ESTIMATE S; AND 21
	127	+	(iii) If the governing body of a cooperative housing corporation has 22
	128	+	not had a reserve study conducted on or after October 1, 2016, the governing body shall 23
	129	+	have a reserve study conducted on or before October 1, 2021, and an updated reserve study 24
	130	+	at least every 5 years thereafter. 25
128	131
129		-	(III) IDENTIFIES: 22
	132	+	(2) (i) This paragraph applies only to a cooperative housing corporation 26
	133	+	established in Montgomery County before October 1, 2021. 27
130	134
131		-	1. (II) WORK ANALYZES WORK PERFORMED AND 23
132		-	AMOUNTS SPENT ; AND 24
	135	+	(ii) If the governing body of a cooperative housing corporation has 28
	136	+	had a reserve study conducted on or after October 1, 2017, the governing body shall have 29
	137	+	an updated reserve study conducted within 5 years after the date of that reserve study and 30
	138	+	at least every 5 years thereafter. 31
133	139
134		-	2. (III) WHETHER IDENTIFIES WHETHER ANY 25
135		-	MAINTENANCE CONTRACT S ARE IN PLACE. 26
136		-
137		-	(b) (1) This subsection applies only to a cooperative housing corporation 27
138		-	established in: 28
139		-
140		-	(i) Prince George’s County on or after October 1, 2020; 29
141		-
142		-	(ii) Montgomery County on or after October 1, 2021; or 30 4 SENATE BILL 63
	140	+	(iii) If the governing body of a cooperative housing corporation has 32
	141	+	not had a reserve study conducted on or after October 1, 2017, the governing body shall 33
	142	+	have a reserve study conducted on or before October 1, 2022, and an updated reserve study 34
	143	+	at least every 5 years thereafter. 35 4 SENATE BILL 63
143	144
144	145
145	146
146		-	(iii) Any county other than Prince George’s County or Montgomery 1
147		-	County on or after October 1, 2022. 2
	147	+	(3) (i) This paragraph applies to a cooperative housing corporation 1
	148	+	established in any county other than Prince George’s County or Montgomery County before 2
	149	+	October 1, 2022. 3
148	150
149		-	(2) The governing body of ~~the~~ cooperative housing corporation ~~shall have 3~~
150		-	~~an independent~~ reserve study ~~completed not less than 30 calendar days before~~ the ~~first 4~~
151		-	~~meeting~~ of ~~the cooperative housing corporation at which the members other than the owner 5~~
152		-	~~have a majority of votes in the cooperative housing corporation~~. 6
	151	+	(ii) If the governing body of a cooperative housing corporation has 4
	152	+	had a reserve study conducted on or after October 1, 2018, the governing body shall have 5
	153	+	an updated reserve study conducted within 5 years after the date of that reserve study and 6
	154	+	at least every 5 years thereafter. 7
153	155
154		-	(3) The governing body shall have an updated reserve study completed 7
155		-	within 5 years after the date of the initial reserve study conducted under paragraph (2) of 8
156		-	this subsection, which shall be updated at least every 5 years thereafter. 9
	156	+	(iii) If the governing body of a cooperative housing corporation has 8
	157	+	not had a reserve study conducted on or after October 1, 2018, the governing body shall 9
	158	+	have a reserve study conducted on or before October 1, 2023, and an updated reserve study 10
	159	+	at least every 5 years thereafter. 11
157	160
158		-	(c) ~~(1) (i)~~ This ~~paragraph applies only to a cooperative housing corporation 10~~
159		-	~~established in Prince George’s County before October 1, 2020. 11~~
	161	+	(d) Each reserve study AND UPDATED RESERVE STUDY required under this 12
	162	+	section shall: 13
160	163
161		-	(ii) If the governing body of a cooperative housing corporation has 12
162		-	had a reserve study conducted on or after October 1, 2016, the governing body shall have 13
163		-	an updated reserve study conducted within 5 years after the date of that reserve study and 14
164		-	at least every 5 years thereafter. 15
	164	+	(1) Be prepared by a person who: 14
165	165
166		-	(iii) If the governing body of a cooperative housing corporation has 16
167		-	not had a reserve study conducted on or after October 1, 2016, the governing body shall 17
168		-	have a reserve study conducted on or before October 1, 2021, and an updated reserve study 18
169		-	at least every 5 years thereafter. 19
	166	+	(i) Has prepared at least 30 reserve studies within the prior 3 15
	167	+	calendar years; 16
170	168
171		-	(2) ~~(i) This paragraph applies only to a cooperative housing corporation 20~~
172		-	~~established in Montgomery County before October 1,~~ ~~2021. 21~~
	169	+	(ii) Has participated in the preparation of at least 30 reserve studies 17
	170	+	within the prior 3 calendar years while employed by a firm that prepares reserve studies; 18
173	171
174		-	(ii) If the governing body of a cooperative housing corporation has 22
175		-	had a reserve study conducted on or after October 1, 2017, the governing body shall have 23
176		-	an updated reserve study conducted within 5 years after the date of that reserve study and 24
177		-	at least every 5 years thereafter. 25
	172	+	(iii) Holds a current license from the State Board of Architects or the 19
	173	+	State Board for Professional Engineers; or 20
178	174
179		-	(iii) If the governing body of a cooperative housing corporation has 26
180		-	not had a reserve study conducted on or after October 1, 2017, the governing body shall 27
181		-	have a reserve study conducted on or before October 1, 2022, and an updated reserve study 28
182		-	at least every 5 years thereafter. 29
	175	+	(iv) Is currently designated as a reserve specialist by the Community 21
	176	+	Association Institute or as a professional reserve analyst by the Association of Professional 22
	177	+	Reserve Analysts; 23
183	178
184		-	(3) (i) This paragraph applies to a cooperative housing corporation 30
185		-	established in any county other than Prince George’s County or Montgomery County before 31
186		-	October 1, 2022. 32
	179	+	(2) Be available for inspection and copying by any unit owner; 24
187	180
188		-	(ii) If the governing body of a cooperative housing corporation has 33
189		-	had a reserve study conducted on or after October 1, 2018, the governing body shall have 34
190		-	an updated reserve study conducted within 5 years after the date of that reserve study and 35
191		-	at least every 5 years thereafter. 36 SENATE BILL 63 5
	181	+	(3) Be reviewed by the governing body of the cooperative housing 25
	182	+	corporation in connection with the preparation of the annual proposed budget; and 26
	183	+
	184	+	(4) Be summarized for submission with the annual proposed budget to the 27
	185	+	unit owners. 28
	186	+
	187	+	(e) To the extent that a reserve study conducted in accordance with this section 29
	188	+	indicates a need to budget for reserves, the budget shall include: 30
	189	+
	190	+	(1) For the capital components, the current estimated: 31
	191	+	SENATE BILL 63 5
192	192
193	193
	194	+	(i) Replacement cost IF THE ESTIMATED REP LACEMENT COST IS 1
	195	+	GREATER THAN $10,000 AS DETERMINED BY THE MOST RECENT RESERVE STUDY OR 2
	196	+	UPDATED RESERVE STUD Y; 3
194	197
195		-	(iii) If the governing body of a cooperative housing corporation has 1
196		-	not had a reserve study conducted on or after October 1, 2018, the governing body shall 2
197		-	have a reserve study conducted on or before October 1, 2023, and an updated reserve study 3
198		-	at least every 5 years thereafter. 4
	198	+	(ii) Remaining life; and 4
199	199
200		-	(d) Each reserve study AND UPDATED RESERVE STUDY required under this 5
201		-	section shall: 6
	200	+	(iii) Useful life; 5
202	201
203		-	(1) Be prepared by a person who: 7
	202	+	(2) The amount of accumulated cash reserves set aside for the repair, 6
	203	+	replacement, or restoration of capital components as of the beginning of the fiscal year in 7
	204	+	which the reserve study is conducted and the amount of the expected contribution to the 8
	205	+	reserve fund for the fiscal year; 9
204	206
205		-	(i) ~~Has prepared at least 30 reserve studies within~~ the ~~prior 3 8~~
206		-	~~calendar years~~; 9
	207	+	(3) A statement describing the procedures used for estimation and 10
	208	+	accumulation of cash reserves in accordance with this section; and 11
207	209
208		-	(ii) ~~Has participated~~ in the ~~preparation of at least 30 reserve studies 10~~
209		-	~~within~~ the ~~prior 3 calendar years while employed by a firm that prepares reserve studies; 11~~
	210	+	(4) A statement of the amount of reserves recommended in the study and 12
	211	+	the amount of current cash for replacement reserves. 13
210	212
211		-	(iii) Holds a current license from the State Board of Architects or the 12
212		-	State Board for Professional Engineers; or 13
	213	+	(f) (1) (i) 1. Subject to subparagraph (ii) of this paragraph, the 14
	214	+	governing body of a cooperative housing corporation shall [provide] DEPOSIT funds to the 15
	215	+	reserve ACCOUNT in accordance with the most recent reserve study AND THE FUNDING 16
	216	+	PLAN REQUIRED UNDER SUBSECTION (G) OF THIS SECTION ON OR BEFORE THE LAS T 17
	217	+	DAY OF EACH FISCAL Y EAR and shall review the reserve study annually for accuracy. 18
213	218
214		-	~~(iv) Is currently designated as a~~ reserve ~~specialist by the Community 14~~
215		-	~~Association Institute or as~~ a ~~professional~~ reserve ~~analyst by the Association of Professional 15~~
216		-	~~Reserve Analysts;~~ 16
	219	+	2. THE ANNUAL REVIEW OF THE RESERVE STUDY FOR 19
	220	+	ACCURACY DOES NOT RE QUIRE A RESERVE STUD Y IN ADDITION TO THE RESERVE 20
	221	+	STUDY REQUIREMENTS U NDER SUBSECTIONS (B) AND (C) OF THIS SECTION. 21
217	222
218		-	(2) Be available for inspection and copying by any unit owner; 17
	223	+	(ii) If the most recent reserve study was an initial reserve study, the 22
	224	+	governing body shall, within [3] 5 fiscal years following the fiscal year in which the initial 23
	225	+	reserve study was completed, attain the annual reserve funding level recommended in the 24
	226	+	initial reserve study. 25
219	227
220		-	(3) Be reviewed by the governing body of the cooperative housing 18
221		-	corporation in connection with the preparation of the annual proposed budget; and 19
	228	+	(2) The governing body of a cooperative housing corporation has the 26
	229	+	authority to increase an assessment levied to cover the reserve funding amount required 27
	230	+	under this section, notwithstanding any provision of the articles of incorporation, bylaws, 28
	231	+	or proprietary lease restricting assessment increases or capping the assessment that may 29
	232	+	be levied in a fiscal year. 30
222	233
223		-	(4) Be summarized for submission with the annual proposed budget to the 20
224		-	unit owners. 21
225		-
226		-	(e) To the extent that a reserve study conducted in accordance with this section 22
227		-	indicates a need to budget for reserves, the budget shall include: 23
228		-
229		-	(1) For the capital components, the current estimated: 24
230		-
231		-	(i) Replacement cost IF THE ESTIMATED REP LACEMENT COST IS 25
232		-	GREATER THAN $10,000 AS DETERMINED BY THE MOST RECENT RESERVE STUDY OR 26
233		-	UPDATED RESERVE STUD Y; 27
234		-
235		-	(ii) Remaining life; and 28
236		-
237		-	(iii) Useful life; 29
238		-
239		-	(2) The amount of accumulated cash reserves set aside for the repair, 30
240		-	replacement, or restoration of capital components as of the beginning of the fiscal year in 31 6 SENATE BILL 63
	234	+	(G) (1) THE GOVERNING BODY OF A COOPERATIVE HOUSIN G 31
	235	+	CORPORATION SHALL , IN CONSULTATION WITH A PERSON IDENTIFIED UNDER 32
	236	+	SUBSECTION (D)(1) OF THIS SECTION , DEVELOP A FUNDING PL AN TO DETERMINE 33
	237	+	HOW TO FULLY FUND TH E RESERVES N ECESSARY UNDER THIS SECTION. 34
	238	+	6 SENATE BILL 63
241	239
242	240
243		-	which the reserve study is conducted and the amount of the expected contribution to the 1
244		-	reserve fund for the fiscal year; 2
	241	+	(2) IN DEVELOPING THE FUN DING PLAN UNDER THIS SUBSECTION, 1
	242	+	THE GOVERNING BODY S HALL CONSIDER THE FO LLOWING METHODS TO A CHIEVE 2
	243	+	THE RESERVE FUNDING UNDER THIS SECTION : 3
245	244
246		-	(3) A statement describing the procedures used for estimation and 3
247		-	accumulation of cash reserves in accordance with this section; and 4
	245	+	(I) THE COMPONENT OR FULL FUNDING METHOD ; 4
248	246
249		-	(4) A statement of the amount of reserves recommended in the study and 5
250		-	the amount of current cash for replacement reserves. 6
	247	+	(II) THE CASH FLOW METHOD ; 5
251	248
252		-	(f) (1) (i) 1. Subject to PARAGRAPH (2) OF THIS SUBSECTION A ND 7
253		-	subparagraph (ii) of this paragraph, the governing body of a cooperative housing 8
254		-	corporation shall [provide] DEPOSIT funds to the reserve ACCOUNT in accordance with the 9
255		-	most recent reserve study OR UPDATED RESERVE S TUDY AND THE FUNDING PLAN 10
256		-	REQUIRED UNDER SUBSE CTION (G) OF THIS SECTION ON OR BEFORE THE LAS T DAY 11
257		-	OF EACH FISCA L YEAR and shall review the RESERVES AND THE MOS T RECENT 12
258		-	RESERVE STUDY OR UPD ATED reserve study annually for accuracy TO DETERMINE 13
259		-	WHETHER THERE IS ADE QUATE FUNDING IN ACC ORDANCE WITH THE FUN DING PLAN 14
260		-	REQUIRED UNDER SUBSE CTION (G) OF THIS SECTION . 15
	249	+	(III) THE BASELINE FUNDING METHOD; 6
261	250
262		-	2. THE ANNUAL REVIEW OF THE RESERVE STUDY FOR 16
263		-	ACCURACY UNDER SUBSUBPARAGRAP H 1 OF THIS SUBPARAGRAPH DOES NOT 17
264		-	REQUIRE A RESERVE ST UDY OR UPDATED RESERVE S TUDY IN ADDITION TO THE 18
265		-	RESERVE STUDY REQUIR EMENTS UNDER SUBSECT IONS (B) AND (C) OF THIS 19
266		-	SECTION. 20
	251	+	(IV) THE THRESHOLD CASH FL OW METHOD ; AND 7
267	252
268		-	(ii) If SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , IF the 21
269		-	most recent reserve study was an initial reserve study, the governing body shall, within [3] 22
270		-	5 fiscal years following the fiscal year in which the initial reserve study was completed, 23
271		-	attain the annual reserve funding level recommended in the initial reserve study IN 24
272		-	ACCORDANCE WITH THE FUNDING PLAN UNDER S UBSECTION (G) OF THIS SECTION . 25
	253	+	(V) OTHER FUNDING METHODS ACCEPTED BY GENERALL Y 8
	254	+	ACCEPTED ACCOUNTING PRINCIPLES. 9
273	255
274		-	(2) (I) THE GOVERNING BODY OF A COOPERATIVE HOUSIN G 26
275		-	CORPORATION MAY DETE RMINE BY A TWO –THIRDS MAJORITY VOTE THAT THE 27
276		-	COOPERATIVE HOUSING CORPORATION AND THE MEMBERS ARE EXPERIEN CING A 28
277		-	FINANCIAL HARDSHIP T HAT LIMITS THE ABILI TY TO FUND RESERVES THAT ARE 29
278		-	REQUIRED UNDER PARAG RAPH (1)(I) OR (II) OF THIS SUBSECTION . 30
	256	+	(3) A FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION SHALL 10
	257	+	PRIORITIZE ADEQUATE AMOUNTS FOR REPAIR AND REPLACEME NT OF COMMON 11
	258	+	ELEMENTS OF THE COOP ERATIVE HOUSING CORP ORATION THAT ARE NEC ESSARY 12
	259	+	FOR: 13
279	260
280		-	(II) SUBJECT TO SUBPARAGRA PHS (III) THROUGH (V) OF THIS 31
281		-	PARAGRAPH , IF A GOVERNING BODY MAKES A FINANCIAL HA RDSHIP 32
282		-	DETERMINATION BASED ON THE RESERVE FUNDI NG REQUIREMENTS OF 33
283		-	PARAGRAPH (1)(I) OR (II) OF THIS SUBSECTION : 34
	261	+	(I) THE HEALTH, SAFETY, AND WELL–BEING OF THE MEMBERS ; 14
284	262
285		-	1. THE COOPERATIVE HOUSI NG CORPORATION MAY 35
286		-	REASONABLY DEVIATE F ROM THAT RESERVE FUN DING REQUIREMENT ; AND 36
	263	+	(II) ENSURING STRUCTURAL I NTEGRITY, SUCH AS ROOFING 15
	264	+	REPLACEMENTS AND MAINTAINING STRU CTURAL SYSTEMS ; AND 16
	265	+
	266	+	(III) ESSENTIAL FUNCTIONING , SUCH AS PLUMBING AND 17
	267	+	ELECTRICAL INFRASTRU CTURE. 18
	268	+
	269	+	(4) RESERVES MAY NOT BE U SED FOR PURPOSES OTH ER THAN THOSE 19
	270	+	SPECIFIED IN THE FUN DING PLAN. 20
	271	+
	272	+	(5) A GOVERNING BODY SHALL REVIEW PROGR ESS TOWARD 21
	273	+	COMPLIANCE WITH THE FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION AT 22
	274	+	EACH ANNUAL MEETING OF THE GOVERNING BOD Y. 23
	275	+
	276	+	Article – Real Property 24
	277	+
	278	+	11–109.2. 25
	279	+
	280	+	(b) The annual budget shall provide for at least the following items: 26
	281	+
	282	+	(1) Income; 27
	283	+
	284	+	(2) Administration; 28
287	285		SENATE BILL 63 7
288	286
289	287
290		-	2. THE FUNDING LEVEL UND ER THAT REQUIREMENT 1
291		-	SHALL BE AT LEAST TH E FUNDING AMOUNT NEC ESSARY FOR THE PURPO SES 2
292		-	SPECIFIED UNDER SUBS ECTION (G)(3) OF THIS SECTION. 3
	288	+	(3) Maintenance; 1
293	289
294		-	(III) 1. EXCEPT AS PROVIDED IN SUBSUBPARAGRAPH 2 OF 4
295		-	THIS SUBPARAGRAPH , A COOPERATIVE HOUSIN G CORPORATION MAY NO T DEVIATE 5
296		-	FROM THE RESERVE FUN DING REQUIREMENTS OF PARAGRAPH (1)(I) OR (II) OF THIS 6
297		-	SUBSECTION FOR A PER IOD OF MORE THAN 1 FISCAL YEAR FOLLOWIN G THE 7
298		-	FINANCIAL HARDSHIP D ETERMINATION . 8
	290	+	(4) Utilities; 2
299	291
300		-	2. THE GOVERNI NG BODY MAY RENEW A FINANCIAL 9
301		-	HARDSHIP DETERMINATI ON UNDER SUBPARAGRAP H (I) OF THIS PARAGRAPH BY A 10
302		-	TWO–THIRDS MAJORITY VOTE TO EXTEND THE PERIOD THAT A COOPERATIVE 11
303		-	HOUSING CORPORATION MAY DEVIATE FROM THE RESERVE FUNDING 12
304		-	REQUIREMENT BY 1 FISCAL YEAR FOLLOW ING THE RENEWAL . 13
	292	+	(5) General expenses; 3
305	293
306		-	(IV) THE GOVERNING BODY SH ALL: 14
	294	+	(6) Reserves, INCLUDING REPLACEMEN T COSTS IF THE ESTIM ATED 4
	295	+	REPLACEMENT COST IS GREATER THAN $10,000 AS DETERMINED BY THE MOST 5
	296	+	RECENT RESERVE STUDY OR UPDATED RESERVE S TUDY; and 6
307	297
308		-	1. MAKE GOOD FAITH EFFOR TS TO RESOLVE THE 15
309		-	FINANCIAL HARDSHIP A ND RESUME FUNDING RE SERVES AS REQUIRED U NDER 16
310		-	PARAGRAPH (1)(I) OR (II) OF THIS SUBSECTION ; 17
	298	+	(7) Capital items. 7
311	299
312		-	2. MAINTAIN DETAILED DOC UMENTATION OF THE GOOD 18
313		-	FAITH EFFORTS MADE U NDER ITEM 1 OF THIS SUBPARAGRAPH ; AND 19
	300	+	(c) (1) Subject to paragraph (2) of this subsection AND IN ACCORDANCE WI TH 8
	301	+	THE FUNDING PLAN UND ER § 11–109.4(F) OF THIS TITLE, the reserves provided for in 9
	302	+	the annual budget under subsection (b) of this section for a residential condominium shall 10
	303	+	[be]: 11
314	304
315		-	3. TREAT THE DOCUMENTS U NDER ITEM 2 OF THIS 20
316		-	SUBPARAGRAPH AS RECO RDS FOR EXAMINATION AND COPYING UNDER § 5–6B–26 21
317		-	OF THIS SUBTITLE. 22
	305	+	(I) BE the funding amount recommended in the most recent reserve 12
	306	+	study OR UPDATED RESERVE S TUDY completed under § 11–109.4 of this title; AND 13
318	307
319		-	(V) 1. ALL MEMBERS SHALL BE GIVEN REASONABLE NOT ICE 23
320		-	IN ADVANCE OF A VOTE ON AN INITIAL OR A R ENEWAL OF A FINANCIA L HARDSHIP 24
321		-	DETERMINATION UNDER THIS PARAGRAPH . 25
	308	+	(II) BE DEPOSITED IN THE R ESERVE ACCOUNT ON OR BEFORE 14
	309	+	THE LAST DAY OF EACH FISCAL YEAR. 15
322	310
323		-	2. A VOTE ON AN INITIAL O R A RENEWAL OF A FIN ANCIAL 26
324		-	HARDSHIP DETERMINATI ON UNDER THIS PARAGR APH MAY BE TAKEN ONL Y AT A 27
325		-	REGULAR OR SPECIAL M EETING OF THE COOPERATIVE HOUSING CORPORATION . 28
	311	+	(2) If the most recent reserve study was an initial reserve study, the 16
	312	+	governing body shall, within [3] 5 fiscal years following the fiscal year in which the initial 17
	313	+	reserve study was completed, attain the annual reserve funding level recommended in the 18
	314	+	initial reserve study. 19
326	315
327		-	(3) The governing body of a cooperative housing corporation has the 29
328		-	authority to increase an assessment levied to cover the reserve funding amount required 30
329		-	under this section, notwithstanding any provision of the articles of incorporation, bylaws, 31
330		-	or proprietary lease restricting assessment increases or capping the assessment that may 32
331		-	be levied in a fiscal year. 33
332		-	8 SENATE BILL 63
	316	+	(3) (I) A RESIDENTIAL CONDOMIN IUM SHALL REVIEW THE 20
	317	+	RESERVE STUDY ANNUAL LY FOR ACCURACY. 21
	318	+
	319	+	(II) THE ANNUAL REVIEW OF THE RESERVE STUDY FO R 22
	320	+	ACCURACY DOES NOT RE QUIRE A RESERVE STUD Y IN ADDITION TO THE RESERVE 23
	321	+	STUDY REQUIREMENTS U NDER § 11–109.4 OF THIS TITLE. 24
	322	+
	323	+	11–109.4. 25
	324	+
	325	+	(a) (1) In this section[, “reserve] THE FOLLOWING WORDS HAVE THE 26
	326	+	MEANINGS INDICATED . 27
	327	+
	328	+	(2) “RESERVE study” means a study of the reserves required for future 28
	329	+	major repairs and replacement of the common elements of a condominium that: 29
	330	+
	331	+	[(1)] (I) [Identifies] USING AN ITEMIZED LIS T, IDENTIFIES each 30
	332	+	structural, mechanical, electrical, and plumbing component of the common elements and 31 8 SENATE BILL 63
333	333
334	334
335		-	(G) (1) THE GOVERNING BODY OF A COOPERATIVE HOUSIN G 1
336		-	CORPORATION SHALL , IN CONSULTATION WITH A PERSON IDENTIFIED UNDER 2
337		-	SUBSECTION (D)(1) OF THIS SECTION , DEVELOP A FUNDING PL AN TO DETERMINE 3
338		-	HOW TO FULLY FUND THE RESERVES NE CESSARY UNDER THIS S ECTION. 4
	335	+	any other components that are the responsibility of the council of unit owners to repair and 1
	336	+	replace; 2
339	337
340		-	(2) IN DEVELOPING THE FUN DING PLAN UNDER THIS SUBSECTION, 5
341		-	THE GOVERNING BODY S HALL CONSIDER SELECT ONE OF THE FOLLOWING 6
342		-	METHODS TO ACHIEVE T HE RESERVE FUNDING U NDER THIS SECTION : 7
	338	+	[(2)] (II) States the normal useful life and the estimated remaining useful 3
	339	+	life of each identified component; 4
343	340
344		-	(I) THE COMPONENT OR FULL FUNDING METHOD; 8
	341	+	[(3)] (III) States the estimated cost of repair or replacement of each 5
	342	+	identified component; [and] 6
345	343
346		-	(II) THE CASH FLOW METHOD ; 9
	344	+	[(4)] (IV) States the estimated annual reserve amount necessary to 7
	345	+	accomplish any identified future repair or replacement; AND 8
347	346
348		-	(III) THE BASELINE FUNDING METHOD; 10
	347	+	(V) STATES THE SQUARE FOO TAGE OF EACH IDENTIF IED 9
	348	+	COMPONENT . 10
349	349
350		-	(IV) THE THRESHOLD CASH FL OW METHOD ; AND OR 11
	350	+	(3) “UPDATED RESERVE STUDY ” MEANS, FOR THE COMMON 11
	351	+	ELEMENTS SINCE THE P RIOR RESERVE STUDY W AS COMPLETED WITHIN THE 12
	352	+	PREVIOUS 5 YEARS, A STUDY THAT: 13
351	353
352		-	(V) OTHER FUNDING METHODS ACCEPT ED BY ANY OTHER 12
353		-	FUNDING METHOD CONSI STENT WITH GENERALLY ACCEPTED A CCOUNTING 13
354		-	PRINCIPLES. 14
	354	+	(I) ANALYZES ANY WORK PER FORMED; 14
355	355
356		-	(3) A FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION SHALL 15
357		-	PRIORITIZE ADEQUATE AMOUNTS FOR REPAIR A ND REPLACEMENT OF CO MMON 16
358		-	ELEMENTS OF THE COOP ERATIVE HOUSING CORPOR ATION THAT ARE NECES SARY 17
359		-	FOR: 18
	356	+	(II) REVISES REPLACEMENT C OST, REMAINING LIFE , AND 15
	357	+	USEFUL LIFE ESTIMATE S; AND 16
360	358
361		-	(I) THE HEALTH, SAFETY, AND WELL–BEING OF THE MEMBERS 19
362		-	OCCUPANTS; 20
	359	+	(III) IDENTIFIES: 17
363	360
364		-	(II) ENSURING STRUCTURAL I NTEGRITY, SUCH AS ROOFING 21
365		-	REPLACEMENTS AND MAI NTAINING STRUCTURAL SYSTEMS; AND 22
	361	+	1. WORK PERFORMED AND AM OUNTS SPENT; AND 18
366	362
367		-	(III) ESSENTIAL FUNCTIONING , SUCH AS PLUMBING , SEWER, 23
368		-	HEATING, COOLING, AND ELECTRICAL INFRA STRUCTURE; AND 24
369		-
370		-	(IV) ANY OTHER ESSENTIAL O R CRITICAL PURPOSE , AS 25
371		-	DETERMINED BY THE GO VERNING BODY . 26
372		-
373		-	(4) RESERVES MAY NOT BE U SED FOR PURPOSES OTH ER THAN THOSE 27
374		-	SPECIFIED IN THE FUNDING PLAN . 28
375		-
376		-	(4) RESERVES MAY BE USED FOR PURPOSES OTHER T HAN THOSE 29
377		-	SPECIFIED IN THE FUN DING PLAN IF THE FUN DS ARE REPAID TO THE RESERVE FUND 30
378		-	WITHIN 5 YEARS AFTER THEIR US E. 31 SENATE BILL 63 9
379		-
380		-
381		-
382		-	(5) A GOVERNING BODY SHALL REVIEW PROGRESS TOWA RD 1
383		-	COMPLIANCE WITH THE FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION AT 2
384		-	EACH ANNUAL MEETING OF THE GOVERNING BOD Y. 3
385		-
386		-	Article – Real Property 4
387		-
388		-	11–109.2. 5
389		-
390		-	(b) The annual budget shall provide for at least the following items: 6
391		-
392		-	(1) Income; 7
393		-
394		-	(2) Administration; 8
395		-
396		-	(3) Maintenance; 9
397		-
398		-	(4) Utilities; 10
399		-
400		-	(5) General expenses; 11
401		-
402		-	(6) Reserves, INCLUDING REPLACEMEN T COSTS IF THE ESTIM ATED 12
403		-	REPLACEMENT COST IS GREATER THAN $10,000 AS DETERMINED BY THE MOST 13
404		-	RECENT RESERVE STUDY OR UPDATED RESERVE S TUDY; and 14
405		-
406		-	(7) Capital items. 15
407		-
408		-	(c) (1) Subject to paragraph (2) PARAGRAPHS (2) AND (3) of this subsection 16
409		-	AND IN ACCORDANCE WI TH THE FUNDING PLAN UNDER § 11–109.4(F) OF THIS TITLE, 17
410		-	the reserves provided for in the annual budget under subsection (b) of this section for a 18
411		-	residential condominium shall [be]: 19
412		-
413		-	(I) BE the funding amount recommended in the most recent reserve 20
414		-	study OR UPDATED RESERVE S TUDY completed under § 11–109.4 of this title; AND 21
415		-
416		-	(II) BE DEPOSITED IN THE R ESERVE ACCOUNT ON OR BEFORE 22
417		-	THE LAST DAY OF EACH FISCAL YEAR. 23
418		-
419		-	(2) If SUBJECT TO PARAGRAPH (3) OF THIS SUBSECTION , IF the most 24
420		-	recent reserve study was an initial reserve study, the governing body shall, within [3] 5 25
421		-	fiscal years following the fiscal year in which the initial reserve study was completed, attain 26
422		-	the annual reserve funding level recommended in the initial reserve study IN 27
423		-	ACCORDANCE WITH THE FUNDING PLAN UNDER § 11–109.4(F) OF THIS TITLE. 28
424		-	10 SENATE BILL 63
425		-
426		-
427		-	(3) (I) THE GOVERNING BODY OF A RESIDENTIAL CONDOM INIUM 1
428		-	MAY DETERMINE BY A T WO–THIRDS MAJORITY VOTE THAT THE CONDOMINIUM AND 2
429		-	THE UNIT OWNERS ARE EXPERIENCING A FINAN CIAL HARDSHIP THAT L IMITS THE 3
430		-	ABILITY TO FUND RESE RVES THAT ARE REQUIR ED UNDER PARAGRAPH (1) OR (2) OF 4
431		-	THIS SUBSECTION . 5
432		-
433		-	(II) SUBJECT TO SUBPARAGRA PHS (III) THROUGH (V) OF THIS 6
434		-	PARAGRAPH , IF A GOVE RNING BODY MAKES A F INANCIAL HARDSHIP 7
435		-	DETERMINATION BASED ON THE RESERVE FUNDI NG REQUIREMENTS OF 8
436		-	PARAGRAPH (1) OR (2) OF THIS SUBSECTION : 9
437		-
438		-	1. THE CONDOMINIUM MAY R EASONABLY DEVIATE 10
439		-	FROM THAT RESERVE FU NDING REQUIREMENT ; AND 11
440		-
441		-	2. THE FUNDING LEVEL UN DER THAT REQUIREMENT 12
442		-	SHALL BE AT LEAST TH E FUNDING AMOUNT NEC ESSARY FOR THE PURPO SES 13
443		-	SPECIFIED UNDER § 11–109.4(F)(3) OF THIS TITLE. 14
444		-
445		-	(III) 1. EXCEPT AS PROVIDED IN SUBSUBPARAGRAPH 2 OF 15
446		-	THIS SUBPARAGRAPH , A RESIDENTIAL CONDOM INIUM MAY NOT DEVIAT E FROM THE 16
447		-	RESERVE FUNDING REQU IREMENTS OF PARAGRAP H (1) OR (2) OF THIS SUBSECTION 17
448		-	FOR A PERIOD OF MORE THAN 1 FISCAL YEAR FOLLOWIN G THE FINANCIAL 18
449		-	HARDSHIP DETERMINATI ON. 19
450		-
451		-	2. THE GOVERNING BODY MA Y RENEW A FINANCIAL 20
452		-	HARDSHIP DETERMINATI ON UNDER SUBPARAGRAP H (I) OF THIS PARAGRAPH BY A 21
453		-	TWO–THIRDS MAJORITY VOTE TO EXTEND THE PERIOD THAT A RESIDENTIAL 22
454		-	CONDOMINIUM MAY DEVI ATE FROM THE RESERVE FUNDING REQUIREMENT BY 1 23
455		-	FISCAL YEAR FOLLOWIN G THE RENEWAL . 24
456		-
457		-	(IV) THE GOVERNING BODY SH ALL: 25
458		-
459		-	1. MAKE GOOD FAITH EFFORTS TO RESOLVE T HE 26
460		-	FINANCIAL HARDSHIP A ND RESUME FUNDING RE SERVES AS REQUIRED U NDER 27
461		-	PARAGRAPH (1) OR (2) OF THIS SUBSECTION ; 28
462		-
463		-	2. MAINTAIN DETAILED DOC UMENTATION OF THE GO OD 29
464		-	FAITH EFFORTS MADE U NDER ITEM 1 OF THIS SUBPARAGRAPH ; AND 30
465		-
466		-	3. TREAT THE DOCUMENTS UNDER ITEM 2 OF THIS 31
467		-	SUBPARAGRAPH AS RECO RDS AVAILABLE FOR EX AMINATION AND COPYIN G UNDER 32
468		-	§ 11–116 OF THIS TITLE. 33
469		-	SENATE BILL 63 11
470		-
471		-
472		-	(V) 1. ALL UNIT OWNERS SHALL BE GIVEN REASONABLE 1
473		-	NOTICE IN ADVANCE OF A VOTE ON AN INITIAL OR A RENEWAL OF A FI NANCIAL 2
474		-	HARDSHIP DETERMINATION UNDER THIS PARAGRAPH . 3
475		-
476		-	2. A VOTE ON AN INITIAL O R A RENEWAL OF A FIN ANCIAL 4
477		-	HARDSHIP DETERMINATI ON UNDER THIS PARAGR APH MAY BE TAKEN ONL Y AT A 5
478		-	REGULAR OR SPECIAL M EETING OF THE CONDOM INIUM. 6
479		-
480		-	(4) (I) A THE GOVERNING BODY OF A RESIDENTIAL CONDOMIN IUM 7
481		-	SHALL ANNUALLY REVIEW THE RESERVE STUDY ANNUAL LY FOR ACCURACY 8
482		-	RESERVES AND THE MOS T RECENT RESERVE STU DY OR UPDATED RESERV E STUDY 9
483		-	TO DETERMINE WHETHER THERE IS ADEQUATE FU NDING IN ACCORDANCE WITH THE 10
484		-	FUNDING PLAN REQUIRE D UNDER § 11–109.4(F) OF THIS TITLE. 11
485		-
486		-	(II) THE ANNUAL REVIEW OF THE RESERVE STUDY FOR 12
487		-	ACCURACY UNDER THIS PARAGRAPH DOES NOT REQUIRE A R ESERVE STUDY OR 13
488		-	UPDATED RESERVE STUD Y IN ADDITION TO THE RESERVE STUDY REQUIR EMENTS 14
489		-	UNDER § 11–109.4 OF THIS TITLE. 15
490		-
491		-	11–109.4. 16
492		-
493		-	(a) (1) In this section[, “reserve] THE FOLLOWING WORDS HAVE THE 17
494		-	MEANINGS INDICATED . 18
495		-
496		-	(2) “RESERVE study” means a study of the reserves required for future 19
497		-	major repairs and replacement of the common elements of a condominium that: 20
498		-
499		-	[(1)] (I) [Identifies] USING AN ITEMIZED LIS T, IDENTIFIES each 21
500		-	structural, mechanical, electrical, and plumbing component of the common elements and 22
501		-	any other components that are: 23
502		-
503		-	1. ARE the responsibility of the council of unit owners to 24
504		-	repair and replace; AND 25
505		-
506		-	2. IF APPLICABLE, MEET A MINIMUM COST OF REPAIR 26
507		-	OR REPLACEMENT , AS DETERMINED BY THE GOVERNING BODY , THAT IS: 27
508		-
509		-	A. REASONABLY BASED ON T HE EXPENSES OF THE 28
510		-	CONDOMINIUM ; AND 29
511		-
512		-	B. NOT A MINOR EXPENSE T HAT IS OTHERWISE 30
513		-	ADDRESSED BY THE BUD GET OF THE CONDOMINIUM ; 31
514		-
515		-	12 SENATE BILL 63
516		-
517		-
518		-	[(2)] (II) States the normal useful life and the estimated remaining useful 1
519		-	life of each identified component; 2
520		-
521		-	[(3)] (III) States the estimated cost of repair or replacement of each 3
522		-	identified component; [and] 4
523		-
524		-	[(4)] (IV) States the estimated annual reserve amount necessary to 5
525		-	accomplish any identified future repair or replacement; AND 6
526		-
527		-	(V) STATES THE SQUARE FOOTAGE QUANTITY OR SIZE OF EACH 7
528		-	IDENTIFIED COMPONENT USING THE APPROPRIAT E MEASUREMENT , SUCH AS UNIT 8
529		-	AMOUNT, SQUARE FOOT AGE, OR CUBIC FEET. 9
530		-
531		-	(3) “UPDATED RESERVE STUDY ” MEANS, FOR THE COMMON 10
532		-	ELEMENTS SINCE THE P RIOR RESERVE STUDY W AS COMPLETED WITHIN THE 11
533		-	PREVIOUS 5 YEARS, A STUDY THAT: 12
534		-
535		-	(I) ANALYZES ANY WORK PER FORMED; 13
536		-
537		-	(II) REVISES REPLACEMENT C OST, REMAINING LIFE , AND 14
538		-	USEFUL LIFE ESTIMATE S; AND 15
539		-
540		-	(III) IDENTIFIES: 16
541		-
542		-	1. (II) WORK ANALYZES WORK PERFORMED AND 17
543		-	AMOUNTS SPENT ; AND 18
544		-
545		-	2. (III) WHETHER IDENTIFIES WHETHER ANY 19
546		-	MAINTENANCE CONTRACT S ARE IN PLACE. 20
	363	+	2. WHETHER ANY MAINTENAN CE CONTRACTS ARE IN 19
	364	+	PLACE. 20
547	365
548	366		(b) This section applies only to a residential condominium. 21
549	367
550	368		(c) (1) This subsection applies only to a condominium established in: 22
551	369
552	370		(i) Prince George’s County on or after October 1, 2020; 23
553	371
554	372		(ii) Montgomery County on or after October 1, 2021; or 24
555	373
556	374		(iii) Any county other than Prince George’s County or Montgomery 25
557	375		County on or after October 1, 2022. 26
558	376
559	377		(2) The governing body of the condominium shall have an independent 27
560	378		reserve study completed not less than 30 calendar days before the meeting of the council of 28
561		-	unit owners required under § 11–109(c)(16) of this title. 29
562		-	~~SENATE BILL 63 13~~
	379	+	unit owners required under § 11–109(c)(16) of this title. 29 SENATE BILL 63 9
	380	+
563	381
564	382
565	383		(3) The governing body shall have an updated reserve study completed 1
566	384		within 5 years after the date of the initial reserve study conducted under paragraph (2) of 2
567	385		this subsection and at least every 5 years thereafter. 3
568	386
569	387		(d) (1) (i) This paragraph applies only to a condominium established in 4
570	388		Prince George’s County before October 1, 2020. 5
571	389
572	390		(ii) If the governing body of a condominium has had a reserve study 6
573	391		conducted on or after October 1, 2016, the governing body shall have an updated reserve 7
574	392		study conducted within 5 years after the date of that reserve study and at least every 5 8
575	393		years thereafter. 9
576	394
577	395		(iii) If the governing body of a condominium has not had a reserve 10
578	396		study conducted on or after October 1, 2016, the governing body shall have a reserve study 11
579	397		conducted on or before October 1, 2021, and an updated reserve study at least every 5 years 12
580	398		thereafter. 13
581	399
582	400		(2) (i) This paragraph applies only to a condominium established in 14
583	401		Montgomery County before October 1, 2021. 15
584	402
585	403		(ii) If the governing body of a condominium has had a reserve study 16
586	404		conducted on or after October 1, 2017, the governing body shall have an updated reserve 17
587	405		study conducted within 5 years after the date of that reserve study and at least every 5 18
588	406		years thereafter. 19
589	407
590	408		(iii) If the governing body of a condominium has not had a reserve 20
591	409		study conducted on or after October 1, 2017, the governing body shall have a reserve study 21
592	410		conducted on or before October 1, 2022, and an updated reserve study at least every 5 years 22
593	411		thereafter. 23
594	412
595	413		(3) (i) This paragraph applies only to a condominium established in any 24
596	414		county other than Prince George’s County or Montgomery County before October 1, 2022. 25
597	415
598	416		(ii) If the governing body of a condominium has had a reserve study 26
599	417		conducted on or after October 1, 2018, the governing body shall have an updated reserve 27
600	418		study conducted within 5 years after the date of that reserve study and at least every 5 28
601	419		years thereafter. 29
602	420
603	421		(iii) If the governing body of a condominium has not had a reserve 30
604	422		study conducted on or after October 1, 2018, the governing body shall have a reserve study 31
605	423		conducted on or before October 1, 2023, and an updated reserve study at least every 5 years 32
606	424		thereafter. 33
607	425
608	426		(e) Each reserve study AND UPDATED RESERVE STUDY required under this 34
609	427		section shall: 35
	428	+	10 SENATE BILL 63
610	429
611		-	(1) Be prepared by a person who: 36 14 SENATE BILL 63
	430	+
	431	+	(1) Be prepared by a person who: 1
	432	+
	433	+	(i) Has prepared at least 30 reserve studies within the prior 3 2
	434	+	calendar years; 3
	435	+
	436	+	(ii) Has participated in the preparation of at least 30 reserve studies 4
	437	+	within the prior 3 calendar years while employed by a firm that prepares reserve studies; 5
	438	+
	439	+	(iii) Holds a current license from the State Board of Architects or the 6
	440	+	State Board for Professional Engineers; or 7
	441	+
	442	+	(iv) Is currently designated as a reserve specialist by the Community 8
	443	+	Association Institute or as a professional reserve analyst by the Association of Professional 9
	444	+	Reserve Analysts; 10
	445	+
	446	+	(2) Be available for inspection and copying by any unit owner; 11
	447	+
	448	+	(3) Be reviewed by the governing body of the condominium in connection 12
	449	+	with the preparation of the annual proposed budget; and 13
	450	+
	451	+	(4) Be summarized for submission with the annual proposed budget to the 14
	452	+	unit owners. 15
	453	+
	454	+	(F) (1) THE GOVERNING BODY OF A CONDOMINIUM SHALL , IN 16
	455	+	CONSULTATION WITH A PERSON IDENTIFIED UN DER SUBSECTION (E)(1) OF THIS 17
	456	+	SECTION, DEVELOP A FUNDING PL AN TO DETERMINE HOW TO FULLY FUND THE 18
	457	+	RESERVES NECESSARY U NDER THIS SECTION . 19
	458	+
	459	+	(2) IN DEVELOPING THE FUN DING PLAN UNDER THIS SUBSECTION, 20
	460	+	THE GOVERNING BODY S HALL CONSIDER THE FO LLOWING METHODS TO A CHIEVE 21
	461	+	THE RESERVE FUNDING UNDER THIS SECTION: 22
	462	+
	463	+	(I) THE COMPONENT OR FULL FUNDING METHOD ; 23
	464	+
	465	+	(II) THE CASH FLOW METHOD ; 24
	466	+
	467	+	(III) THE BASELINE FUNDING METHOD; 25
	468	+
	469	+	(IV) THE THRESHOLD CASH FL OW METHOD ; AND 26
	470	+
	471	+	(V) OTHER FUNDING METHODS ACCEPTED BY GENERALL Y 27
	472	+	ACCEPTED ACCOUNTING PRINCIPLES. 28
	473	+
	474	+	(3) A FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION SHALL 29
	475	+	PRIORITIZE ADEQUATE AMOUNTS FOR REPAIR A ND REPLACEMENT OF CO MMON 30
	476	+	ELEMENTS OF THE COND OMINIUM THAT ARE NEC ESSARY FOR: 31 SENATE BILL 63 11
612	477
613	478
614	479
615		-	(i) Has prepared at least 30 reserve studies within the prior 3 1
616		-	calendar years; 2
	480	+	(I) THE HEALTH, SAFETY, AND WELL–BEING OF THE MEMBERS ; 1
617	481
618		-	(ii) ~~Has participated in the preparation of at least 30 reserve studies 3~~
619		-	~~within the prior~~ 3 ~~calendar years while employed by a firm that prepares reserve studies; 4~~
	482	+	(II) ENSURING STRUCTURAL I NTEGRITY, SUCH AS ROOFING 2
	483	+	REPLACEMENTS AND MAI NTAINING STRUCTURAL SYSTEMS; AND 3
620	484
621		-	(iii) ~~Holds a current license from the State Board of Architects or the 5~~
622		-	~~State Board for Professional Engineers; or 6~~
	485	+	(III) ESSENTIAL FUNCTIONING , SUCH AS PLUMBING AND 4
	486	+	ELECTRICAL INFRASTRU CTURE. 5
623	487
624		-	(iv) Is currently designated as a reserve specialist by the Community 7
625		-	Association Institute or as a professional reserve analyst by the Association of Professional 8
626		-	Reserve Analysts; 9
	488	+	(4) RESERVES MAY NOT BE U SED FOR PURPOSES OTH ER THAN THOSE 6
	489	+	SPECIFIED IN THE FUNDING PLAN . 7
627	490
628		-	(2) Be available for inspection and copying by any unit owner; 10
	491	+	(5) A GOVERNING BODY SHALL REVIEW PROGRESS TOWA RD 8
	492	+	COMPLIANCE WITH THE FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION AT 9
	493	+	EACH ANNUAL MEETING OF THE GOVERNING BOD Y. 10
629	494
630		-	(3) Be reviewed by the governing body of the condominium in connection 11
631		-	with the preparation of the annual proposed budget; and 12
	495	+	11B–112.2. 11
632	496
633		-	(4) Be summarized for submission with the annual proposed budget to the 13
634		-	unit owners. 14
	497	+	(c) The annual budget shall provide for at least the following items: 12
635	498
636		-	(F) (1) THE GOVERNING BODY OF A CONDOMINIUM SHALL , IN 15
637		-	CONSULTATION WITH A PERSON IDENTIFIED UN DER SUBSECTION (E)(1) OF THIS 16
638		-	SECTION, DEVELOP A FUNDING PL AN TO DETERMINE HOW TO FULLY FUND THE 17
639		-	RESERVES NECESSARY U NDER THIS SECTION . 18
	499	+	(1) Income; 13
640	500
641		-	(2) IN DEVELOPING THE FUN DING PLAN UNDER THIS SUBSECTION, 19
642		-	THE GOVERNING BODY S HALL CONSIDER SELECT ONE OF THE FOLLOWING 20
643		-	METHODS TO ACHIEVE T HE RESERVE FUNDING U NDER THIS SECTION : 21
	501	+	(2) Administration; 14
644	502
645		-	(I) ~~THE COMPONENT OR FULL FUNDING METHOD~~; 22
	503	+	(3) Maintenance; 15
646	504
647		-	(II) ~~THE CASH FLOW METHOD~~ ; 23
	505	+	(4) Utilities; 16
648	506
649		-	(~~III~~) ~~THE BASELINE FUNDING METHOD~~; 24
	507	+	(5) General expenses; 17
650	508
651		-	(IV) THE THRESHOLD CASH FL OW METHOD ; AND OR 25
	509	+	(6) Reserves, INCLUDING REPLACEMEN T COSTS IF THE ESTIM ATED 18
	510	+	REPLACEMENT COST IS GREATER THAN $10,000 AS DETERMINED BY THE MOST 19
	511	+	RECENT RESERVE STUDY OR UPDATED RES ERVE STUDY; and 20
652	512
653		-	(V) OTHER FUNDING METHODS ACCEPTED BY ANY OTHER 26
654		-	FUNDING METHOD CONSI STENT WITH GENERALLY ACCEPTED A CCOUNTING 27
655		-	PRINCIPLES. 28
	513	+	(7) Capital expenses. 21
656	514
657		-	(3) A FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION SHALL 29
658		-	PRIORITIZE ADEQUATE AMOUNTS FOR REPAIR A ND REPLACEMENT OF CO MMON 30
659		-	ELEMENTS OF THE COND OMINIUM THAT ARE NECESSARY FOR : 31 SENATE BILL 63 15
	515	+	(d) (1) Subject to paragraph (2) of this subsection AND IN ACCORDANCE WI TH 22
	516	+	THE FUNDING PLAN UND ER § 11B–112.3(F) OF THIS TITLE, reserves provided for in 23
	517	+	the annual budget under subsection (c) of this section shall [be]: 24
	518	+
	519	+	(I) BE the funding amount recommended in the most recent reserve 25
	520	+	study OR UPDATED RESERVE S TUDY completed under § 11B–112.3 of this title; AND 26
	521	+
	522	+	(II) BE DEPOSITED IN THE RESERV E ACCOUNT ON OR BEFO RE 27
	523	+	THE LAST DAY OF EACH FISCAL YEAR. 28 12 SENATE BILL 63
660	524
661	525
662	526
663		-	(I) THE HEALTH, SAFETY, AND WELL–BEING OF THE MEMBERS 1
664		-	OCCUPANTS; 2
	527	+	(2) If the most recent reserve study was an initial reserve study, the 1
	528	+	governing body shall, within [3] 5 fiscal years following the fiscal year in which the initial 2
	529	+	reserve study was completed, attain the annual reserve funding level recommended in the 3
	530	+	initial reserve study. 4
665	531
666		-	(II) ~~ENSURING STRUCTURAL I NTEGRITY,~~ ~~SUCH AS ROOFING 3~~
667		-	~~REPLACEMENTS AND MAI NTAINING STRUCTURAL SYSTEMS;~~ ~~AND 4~~
	532	+	(3) (I) A HOMEOWNERS ASSOCIATI ON SHALL REVIEW THE 5
	533	+	RESERVE STUDY ANNUAL LY FOR ACCURACY . 6
668	534
669		-	(III) ESSENTIAL FUNCTIONING , SUCH AS PLUMBING , SEWER, 5
670		-	HEATING, COOLING, AND ELECTRICAL INFRA STRUCTURE; AND 6
	535	+	(II) THE ANNUAL REVIEW OF THE RESERVE STUDY FO R 7
	536	+	ACCURACY DOES NOT REQUIRE A RESERV E STUDY IN ADDITION TO THE RESERVE 8
	537	+	STUDY REQUIREMENTS U NDER § 11B–112.3 OF THIS TITLE. 9
671	538
672		-	(IV) ANY OTHER ESSENTIAL O R CRITICAL PURPOSE , AS 7
673		-	DETERMINED BY THE GO VERNING BODY . 8
	539	+	11B–112.3. 10
674	540
675		-	(4) ~~RESERVES MAY NOT BE U SED FOR PURPOSES OTH ER THAN THOSE 9~~
676		-	~~SPECIFIED IN THE FUN DING PLAN~~. 10
	541	+	(a) (1) In this section[, “reserve] THE FOLLOWING WORDS HAVE THE 11
	542	+	MEANINGS INDICATED . 12
677	543
678		-	(4) RESERVES MAY BE USED FOR PURPOSES OTHER T HAN THOSE 11
679		-	SPECIFIED IN THE FUN DING PLAN IF THE FUN DS ARE REPAID TO THE RESERVE FUND 12
680		-	WITHIN 5 YEARS AFTER THEIR US E. 13
	544	+	(2) “RESERVE study” means a study of the reserves required for future 13
	545	+	major repairs and replacement of the common areas of a homeowners association that: 14
681	546
682		-	(5) A GOVERNING BODY SHALL REVIEW PROGRESS TOWA RD 14
683		-	COMPLIANCE WITH THE FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION AT 15
684		-	EACH ANNUAL MEETING OF THE GOVERNING BOD Y. 16
	547	+	[(1)] (I) [Identifies] USING AN ITEMIZED LIS T, IDENTIFIES each 15
	548	+	structural, mechanical, electrical, and plumbing component of the common areas and any 16
	549	+	other components that are the responsibility of the homeowners association to repair and 17
	550	+	replace; 18
685	551
686		-	11B–112.2. 17
	552	+	[(2)] (II) States the estimated remaining useful life of each identified 19
	553	+	component; 20
687	554
688		-	(c) The annual budget shall provide for at least the following items: 18
	555	+	[(3)] (III) States the estimated cost of repair or replacement of each 21
	556	+	identified component; [and] 22
689	557
690		-	(1) Income; 19
	558	+	[(4)] (IV) States the estimated annual reserve amount necessary to 23
	559	+	accomplish any identified future repair or replacement; AND 24
691	560
692		-	(2) Administration; 20
	561	+	(V) STATES THE SQUARE FOO TAGE OF EACH IDENTIF IED 25
	562	+	COMPONENT . 26
693	563
694		-	(3) Maintenance; 21
	564	+	(3) “UPDATED RESERVE STUDY ” MEANS, FOR THE COMMON 27
	565	+	ELEMENTS SINCE THE P RIOR RESERVE STUDY W AS COMPLETED WITHIN THE 28
	566	+	PREVIOUS 5 YEARS, A STUDY THAT: 29
695	567
696		-	(4) Utilities; 22
	568	+	(I) ANALYZES ANY WORK PER FORMED; 30
	569	+	SENATE BILL 63 13
697	570
698		-	(5) General expenses; 23
699	571
700		-	(6) Reserves, INCLUDING REPLACEMEN T COSTS IF THE ESTIM ATED 24
701		-	REPLACEMENT COST IS GREATER THAN $10,000 AS DETERMINED BY THE MOST 25
702		-	RECENT RESERVE STUDY OR UPDATED RESERVE S TUDY; and 26
	572	+	(II) REVISES REPLACEMENT C OST, REMAINING LIFE , AND 1
	573	+	USEFUL LIFE ESTIMATE S; AND 2
703	574
704		-	(7) Capital expenses. 27
	575	+	(III) IDENTIFIES: 3
	576	+
	577	+	1. WORK PERFORMED AND AM OUNTS SPENT; AND 4
	578	+
	579	+	2. WHETHER ANY MAINTENAN CE CONTRACTS ARE IN 5
	580	+	PLACE. 6
	581	+
	582	+	(b) (1) This section applies only to a homeowners association: 7
	583	+
	584	+	(i) That has responsibility under its declaration for maintaining and 8
	585	+	repairing common areas; and 9
	586	+
	587	+	(ii) For which the total initial purchase and installation costs for all 10
	588	+	components identified in subsection [(a)(1)] (A) of this section is at least $10,000. 11
	589	+
	590	+	(2) This section does not apply to a homeowners association that issues 12
	591	+	bonds for the purpose of meeting capital expenditures. 13
	592	+
	593	+	(c) (1) This subsection applies only to a homeowners association established 14
	594	+	in: 15
	595	+
	596	+	(i) Prince George’s County on or after October 1, 2020; 16
	597	+
	598	+	(ii) Montgomery County on or after October 1, 2021; or 17
	599	+
	600	+	(iii) Any county other than Prince George’s County or Montgomery 18
	601	+	County on or after October 1, 2022. 19
	602	+
	603	+	(2) The governing body of the homeowners association shall have an 20
	604	+	independent reserve study completed not more than 90 calendar days and not less than 30 21
	605	+	calendar days before the meeting of the homeowners association required under § 22
	606	+	11B–106.1(a) of this title. 23
	607	+
	608	+	(3) The governing body shall have an updated reserve study completed 24
	609	+	within 5 years after the date of the initial reserve study conducted under paragraph (2) of 25
	610	+	this subsection and at least every 5 years thereafter. 26
	611	+
	612	+	(d) (1) (i) This paragraph applies only to a homeowners association 27
	613	+	established in Prince George’s County before October 1, 2020. 28
	614	+
	615	+	(ii) If the governing body of a homeowners association has had a 29
	616	+	reserve study conducted on or after October 1, 2016, the governing body shall have an 30 14 SENATE BILL 63
	617	+
	618	+
	619	+	updated reserve study conducted within 5 years after the date of that reserve study and at 1
	620	+	least every 5 years thereafter. 2
	621	+
	622	+	(iii) If the governing body of a homeowners association has not had a 3
	623	+	reserve study conducted on or after October 1, 2016, the governing body shall have a reserve 4
	624	+	study conducted on or before October 1, 2021, and an updated reserve study at least every 5
	625	+	5 years thereafter. 6
	626	+
	627	+	(2) (i) This paragraph applies only to a homeowners association 7
	628	+	established in Montgomery County before October 1, 2021. 8
	629	+
	630	+	(ii) If the governing body of a homeowners association has had a 9
	631	+	reserve study conducted on or after October 1, 2017, the governing body shall have an 10
	632	+	updated reserve study conducted within 5 years after the date of that reserve study and at 11
	633	+	least every 5 years thereafter. 12
	634	+
	635	+	(iii) If the governing body of a homeowners association has not had a 13
	636	+	reserve study conducted on or after October 1, 2017, the governing body shall have a reserve 14
	637	+	study conducted on or before October 1, 2022, and an updated reserve study at least every 15
	638	+	5 years thereafter. 16
	639	+
	640	+	(3) (i) This paragraph applies only to a homeowners association 17
	641	+	established in any county other than Prince George’s County or Montgomery County before 18
	642	+	October 1, 2022. 19
	643	+
	644	+	(ii) If the governing body of a homeowners association has had a 20
	645	+	reserve study conducted on or after October 1, 2018, the governing body shall have an 21
	646	+	updated reserve study conducted within 5 years after the date of that reserve study and at 22
	647	+	least every 5 years thereafter. 23
	648	+
	649	+	(iii) If the governing body of a homeowners association has not had a 24
	650	+	reserve study conducted on or after October 1, 2018, the governing body shall have a reserve 25
	651	+	study conducted on or before October 1, 2023, and an updated reserve study at least every 26
	652	+	5 years thereafter. 27
	653	+
	654	+	(e) Each reserve study AND UPDATED RESERVE STUDY required under this 28
	655	+	section shall: 29
	656	+
	657	+	(1) Be prepared by a person who: 30
	658	+
	659	+	(i) Has prepared at least 30 reserve studies within the prior 3 31
	660	+	calendar years; 32
	661	+
	662	+	(ii) Has participated in the preparation of at least 30 reserve studies 33
	663	+	within the prior 3 calendar years while employed by a firm that prepares reserve studies; 34
	664	+	SENATE BILL 63 15
	665	+
	666	+
	667	+	(iii) Holds a current license from the State Board of Architects or the 1
	668	+	State Board for Professional Engineers; or 2
	669	+
	670	+	(iv) Is currently designated as a reserve specialist by the Community 3
	671	+	Association Institute or as a professional reserve analyst by the Association of Professional 4
	672	+	Reserve Analysts; 5
	673	+
	674	+	(2) Be available for inspection and copying by any lot owner; 6
	675	+
	676	+	(3) Be reviewed by the governing body of the homeowners association in 7
	677	+	connection with the preparation of the annual proposed budget; and 8
	678	+
	679	+	(4) Be summarized for submission with the annual proposed budget to the 9
	680	+	lot owners. 10
	681	+
	682	+	(F) (1) A HOMEOWNERS ASSOCIATI ON SHALL, IN CONSULTATION WITH A 11
	683	+	PERSON IDENTIFIED UN DER SUBSECTION (E)(1) OF THIS SECTION , DEVELOP A 12
	684	+	FUNDING PLAN TO DETE RMINE HOW TO FULLY F UND THE RESERVES NEC ESSARY 13
	685	+	UNDER THIS SECTION . 14
	686	+
	687	+	(2) IN DEVELOPING THE FUN DING PLAN UNDER THIS SUBSECTION, 15
	688	+	THE HOMEOWN ERS SHALL CONSIDER T HE FOLLOWING METHODS TO ACHIEVE THE 16
	689	+	RESERVE FUNDING UNDE R THIS SECTION: 17
	690	+
	691	+	(I) THE COMPONENT OR FULL FUNDING METHOD ; 18
	692	+
	693	+	(II) THE CASH FLOW METHOD ; 19
	694	+
	695	+	(III) THE BASELINE FUNDING METHOD; 20
	696	+
	697	+	(IV) THE THRESHOLD CASH FL OW METHOD ; AND 21
	698	+
	699	+	(V) OTHER FUNDING METHODS CONSISTENT WITH GENE RALLY 22
	700	+	ACCEPTED ACCOUNTING PRINCIPLES. 23
	701	+
	702	+	(3) A FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION SHALL 24
	703	+	PRIORITIZE ADEQUATE AMOUNTS FOR REPAIR A ND REPLACEMENT OF CO MMON 25
	704	+	ELEMENTS OF THE HOME OWNERS ASSOCIATION T HAT ARE NECESSARY FOR : 26
	705	+
	706	+	(I) THE HEALTH, SAFETY, AND WELL–BEING OF THE MEMBERS ; 27
	707	+
	708	+	(II) ENSURING STRUCTURAL I NTEGRITY, SUCH AS ROOFING 28
	709	+	REPLACEMENTS AND MAI NTAINING STRUCTURAL SYSTEMS; AND 29
705	710		16 SENATE BILL 63
706	711
707	712
708		-	(d) (1) Subject to paragraph (2) PARAGRAPHS (2) AND (3) of this subsection 1
709		-	AND IN ACCORDANCE WI TH THE FUNDING PLAN UNDER § 11B–112.3(F) OF THIS 2
710		-	TITLE, reserves provided for in the annual budget under subsection (c) of this section shall 3
711		-	[be]: 4
	713	+	(III) ESSENTIAL FUNCTIONING , SUCH AS PLUMBING AND 1
	714	+	ELECTRICAL INFRAS TRUCTURE. 2
712	715
713		-	(I) BE ~~the funding amount recommended in the most recent reserve 5~~
714		-	~~study OR UPDATED RESERVE S TUDY completed under § 11B–112.3 of this title; AND 6~~
	716	+	(4) RESERVES MAY NOT BE U SED FOR PURPOSES OTH ER THAN THOSE 3
	717	+	SPECIFIED IN THE FUN DING PLAN. 4
715	718
716		-	(II) BE DEPOSITED IN THE R ESERVE ACCOUNT ON OR BEFORE 7
717		-	THE LAST DAY OF EACH FISCAL YEAR. 8
718		-
719		-	(2) If SUBJECT TO PARAGRAPH (3) OF THIS SUBSECTION , IF the most 9
720		-	recent reserve study was an initial reserve study, the governing body shall, within [3] 5 10
721		-	fiscal years following the fiscal year in which the initial reserve study was completed, attain 11
722		-	the annual reserve funding level recommended in the initial reserve study IN 12
723		-	ACCORDANCE WITH THE FUNDING PLA N UNDER § 11B–112.3(F) OF THIS TITLE. 13
724		-
725		-	(3) (I) THE GOVERNING BODY OF A HOMEOWNERS ASSOCIA TION 14
726		-	MAY DETERMINE BY A T WO–THIRDS MAJORITY VOTE THAT THE HOMEOWNERS 15
727		-	ASSOCIATION AND THE LOT OWNERS ARE EXPER IENCING A FINANCIAL HARDSHIP 16
728		-	THAT LIMITS THE ABILITY TO FUND RESERVES THAT A RE REQUIRED UNDER 17
729		-	PARAGRAPH (1) OR (2) OF THIS SUBSECTION . 18
730		-
731		-	(II) SUBJECT TO SUBPARAGRA PHS (III) THROUGH (V) OF THIS 19
732		-	PARAGRAPH , IF A GOVERNING BODY MAKES A FINANCIAL HA RDSHIP 20
733		-	DETERMINATION BASED ON THE RESERVE FUNDING REQUIREMENTS OF 21
734		-	PARAGRAPH (1) OR (2) OF THIS SUBSECTION : 22
735		-
736		-	1. THE HOMEOWNERS ASSOCI ATION MAY REASONABLY 23
737		-	DEVIATE FROM THAT RE SERVE FUNDING REQUIR EMENT; AND 24
738		-
739		-	2. THE FUNDING LEVEL UND ER THAT REQUIREMENT 25
740		-	SHALL BE AT LEAST TH E FUNDING AMOUNT NECESSARY FOR THE PU RPOSES 26
741		-	SPECIFIED UNDER § 11B–112.3(F)(3) OF THIS TITLE. 27
742		-
743		-	(III) 1. EXCEPT AS PROVIDED IN SUBSUBPARAGRAPH 2 OF 28
744		-	THIS SUBPARAGRAPH , A HOMEOWNERS ASSOCIA TION MAY NOT DEVIATE FROM THE 29
745		-	RESERVE FUNDING REQU IREMENTS OF PARAGRAP H (1) OR (2) OF THIS SUBSECTION 30
746		-	FOR A PERIOD OF MORE THAN 1 FISCAL YEAR FOLLOWIN G THE FINANCIAL 31
747		-	HARDSHIP DETERMINATI ON. 32
748		-
749		-	2. THE GOVERNING BODY MA Y RENEW A FINANCIAL 33
750		-	HARDSHIP DETERMINATI ON UNDER SUBPARAGRAP H (I) OF THIS PARAGRAPH BY A 34
751		-	TWO–THIRDS MAJORITY VOTE TO EXTEND THE PERIOD THAT A HOMEOWNERS 35 SENATE BILL 63 17
752		-
753		-
754		-	ASSOCIATION MAY DEVI ATE FROM THE RESERVE FUNDING REQUIREMENT BY 1 1
755		-	FISCAL YEAR FOLLOWIN G THE RENEWAL . 2
756		-
757		-	(IV) THE GOVERNING BODY SH ALL: 3
758		-
759		-	1. MAKE GOOD FAITH EFFOR TS TO RESOLVE THE 4
760		-	FINANCIAL HARDSHIP A ND RESUME FUNDING RE SERVES AS REQUIRED UN DER 5
761		-	PARAGRAPH (1) OR (2) OF THIS SUBSECTION ; 6
762		-
763		-	2. MAINTAIN DETAILED DOC UMENTATION OF THE GO OD 7
764		-	FAITH EFFORTS MADE U NDER ITEM 1 OF THIS SUBPARAGRAPH ; AND 8
765		-
766		-	3. TREAT THE DOCUMENTS U NDER ITEM 2 OF THIS 9
767		-	SUBPARAGRAPH AS RECO RDS FOR EXAM INATION AND COPYING UNDER § 11B–112 10
768		-	OF THIS TITLE. 11
769		-
770		-	(V) 1. ALL LOT OWNERS SHALL BE GIVEN REASONABLE 12
771		-	NOTICE IN ADVANCE OF A VOTE ON AN INITIAL OR A RENEWAL OF A FI NANCIAL 13
772		-	HARDSHIP DETERMINATI ON UNDER THIS PARAGR APH. 14
773		-
774		-	2. A VOTE ON AN INITIAL O R A RENEWAL OF A FINANCIAL 15
775		-	HARDSHIP DETERMINATI ON UNDER THIS PARAGR APH MAY ONLY BE TAKE N AT A 16
776		-	REGULAR OR SPECIAL M EETING OF THE HOMEOW NERS ASSOCIATION . 17
777		-
778		-	(4) (I) A THE GOVERNING BODY OF A HOMEOWNERS ASSOCIATI ON 18
779		-	SHALL ANNUALLY REVIEW THE RESERVE STUDY ANNUAL LY FOR ACCURACY 19
780		-	RESERVES AND THE MOS T RECENT RESERVE STU DY OR UPDATED RESERV E STUDY 20
781		-	TO DETERMINE WHETHER THERE IS ADEQUATE FU NDING IN ACCORDANCE WITH THE 21
782		-	FUNDING PLAN REQUIRE D UNDER § 11B–112.3(F) OF THIS TITLE. 22
783		-
784		-	(II) THE ANNUAL REVIEW OF THE RESERVE STUDY FOR 23
785		-	ACCURACY UNDER THIS PARAGRAPH DOES NOT REQUIRE A R ESERVE STUDY OR 24
786		-	UPDATED RESERVE STUD Y IN ADDITION TO THE RESERVE STUDY REQUIR EMENTS 25
787		-	UNDER § 11B–112.3 OF THIS TITLE. 26
788		-
789		-	11B–112.3. 27
790		-
791		-	(a) (1) In this section[, “reserve] THE FOLLOWING WORDS HAVE THE 28
792		-	MEANINGS INDICATED . 29
793		-
794		-	(2) “RESERVE study” means a study of the reserves required for future 30
795		-	major repairs and replacement of the common areas of a homeowners association that: 31
796		-	18 SENATE BILL 63
797		-
798		-
799		-	[(1)] (I) [Identifies] USING AN ITEMIZED LIS T, IDENTIFIES each 1
800		-	structural, mechanical, electrical, and plumbing component of the common areas and any 2
801		-	other components that are: 3
802		-
803		-	1. ARE the responsibility of the homeowners association to 4
804		-	repair and replace; AND 5
805		-
806		-	2. IF APPLICABLE, MEET A MINIMUM COST OF REPAIR 6
807		-	OR REPLACEMENT , AS DETERMINED BY THE GOVERNING BODY , THAT IS: 7
808		-
809		-	A. REASONABLY BASED ON T HE EXPENSES OF THE 8
810		-	HOMEOWNERS ASSOCIATI ON; AND 9
811		-
812		-	B. NOT A MINOR EXPENSE T HAT IS OTHERWISE 10
813		-	ADDRESSED BY THE BUD GET OF THE HOMEOWNER S ASSOCIATION; 11
814		-
815		-	[(2)] (II) States the estimated remaining useful life of each identified 12
816		-	component; 13
817		-
818		-	[(3)] (III) States the estimated cost of repair or replacement of each 14
819		-	identified component; [and] 15
820		-
821		-	[(4)] (IV) States the estimated annual reserve amount necessary to 16
822		-	accomplish any identified future repair or replacement; AND 17
823		-
824		-	(V) STATES THE SQUARE FOOTAGE QUANTITY OR SIZE OF EACH 18
825		-	IDENTIFIED COMPONENT USING THE APPROPRIAT E MEASUREMENT , SUCH AS UNIT 19
826		-	AMOUNT, SQUARE FOOTAGE , OR CUBIC FEET. 20
827		-
828		-	(3) “UPDATED RESERVE STUDY ” MEANS, FOR THE COMMON 21
829		-	ELEMENTS AREAS SINCE THE PRIOR RESE RVE STUDY WAS COMPLE TED WITHIN THE 22
830		-	PREVIOUS 5 YEARS, A STUDY THAT: 23
831		-
832		-	(I) ANALYZES ANY WORK PER FORMED; 24
833		-
834		-	(II) REVISES REPLACEMENT C OST, REMAINING LIFE , AND 25
835		-	USEFUL LIFE ESTI MATES; AND 26
836		-
837		-	(III) IDENTIFIES: 27
838		-
839		-	1. (II) WORK ANALYZES WORK PERFORMED AND 28
840		-	AMOUNTS SPENT ; AND 29
841		-
842		-	2. (III) WHETHER IDENTIFIES WHETHER ANY 30
843		-	MAINTENANCE CONTRACT S ARE IN PLACE. 31 SENATE BILL 63 19
844		-
845		-
846		-
847		-	(b) (1) This section applies only to a homeowners association: 1
848		-
849		-	(i) That has responsibility under its declaration for maintaining and 2
850		-	repairing common areas; and 3
851		-
852		-	(ii) For which the total initial purchase and installation REPAIR OR 4
853		-	REPLACEMENT costs for all components identified in subsection [(a)(1)] (A) of this section 5
854		-	is at least $10,000. 6
855		-
856		-	(2) This section does not apply to a homeowners association that issues 7
857		-	bonds for the purpose of meeting capital expenditures. 8
858		-
859		-	(c) (1) This subsection applies only to a homeowners association established 9
860		-	in: 10
861		-
862		-	(i) Prince George’s County on or after October 1, 2020; 11
863		-
864		-	(ii) Montgomery County on or after October 1, 2021; or 12
865		-
866		-	(iii) Any county other than Prince George’s County or Montgomery 13
867		-	County on or after October 1, 2022. 14
868		-
869		-	(2) The governing body of the homeowners association shall have an 15
870		-	independent reserve study completed not more than 90 calendar days and not less than 30 16
871		-	calendar days before the meeting of the homeowners association required under § 17
872		-	11B–106.1(a) of this title. 18
873		-
874		-	(3) The governing body shall have an updated reserve study completed 19
875		-	within 5 years after the date of the initial reserve study conducted under paragraph (2) of 20
876		-	this subsection and at least every 5 years thereafter. 21
877		-
878		-	(d) (1) (i) This paragraph applies only to a homeowners association 22
879		-	established in Prince George’s County before October 1, 2020. 23
880		-
881		-	(ii) If the governing body of a homeowners association has had a 24
882		-	reserve study conducted on or after October 1, 2016, the governing body shall have an 25
883		-	updated reserve study conducted within 5 years after the date of that reserve study and at 26
884		-	least every 5 years thereafter. 27
885		-
886		-	(iii) If the governing body of a homeowners association has not had a 28
887		-	reserve study conducted on or after October 1, 2016, the governing body shall have a reserve 29
888		-	study conducted on or before October 1, 2021, and an updated reserve study at least every 30
889		-	5 years thereafter. 31
890		-
891		-	(2) (i) This paragraph applies only to a homeowners association 32
892		-	established in Montgomery County before October 1, 2021. 33 20 SENATE BILL 63
893		-
894		-
895		-
896		-	(ii) If the governing body of a homeowners association has had a 1
897		-	reserve study conducted on or after October 1, 2017, the governing body shall have an 2
898		-	updated reserve study conducted within 5 years after the date of that reserve study and at 3
899		-	least every 5 years thereafter. 4
900		-
901		-	(iii) If the governing body of a homeowners association has not had a 5
902		-	reserve study conducted on or after October 1, 2017, the governing body shall have a reserve 6
903		-	study conducted on or before October 1, 2022, and an updated reserve study at least every 7
904		-	5 years thereafter. 8
905		-
906		-	(3) (i) This paragraph applies only to a homeowners association 9
907		-	established in any county other than Prince George’s County or Montgomery County before 10
908		-	October 1, 2022. 11
909		-
910		-	(ii) If the governing body of a homeowners association has had a 12
911		-	reserve study conducted on or after October 1, 2018, the governing body shall have an 13
912		-	updated reserve study conducted within 5 years after the date of that reserve study and at 14
913		-	least every 5 years thereafter. 15
914		-
915		-	(iii) If the governing body of a homeowners association has not had a 16
916		-	reserve study conducted on or after October 1, 2018, the governing body shall have a reserve 17
917		-	study conducted on or before October 1, 2023, and an updated reserve study at least every 18
918		-	5 years thereafter. 19
919		-
920		-	(e) Each reserve study AND UPDATED RESERVE STUDY required under this 20
921		-	section shall: 21
922		-
923		-	(1) Be prepared by a person who: 22
924		-
925		-	(i) Has prepared at least 30 reserve studies within the prior 3 23
926		-	calendar years; 24
927		-
928		-	(ii) Has participated in the preparation of at least 30 reserve studies 25
929		-	within the prior 3 calendar years while employed by a firm that prepares reserve studies; 26
930		-
931		-	(iii) Holds a current license from the State Board of Architects or the 27
932		-	State Board for Professional Engineers; or 28
933		-
934		-	(iv) Is currently designated as a reserve specialist by the Community 29
935		-	Association Institute or as a professional reserve analyst by the Association of Professional 30
936		-	Reserve Analysts; 31
937		-
938		-	(2) Be available for inspection and copying by any lot owner; 32
939		-
940		-	(3) Be reviewed by the governing body of the homeowners association in 33
941		-	connection with the preparation of the annual proposed budget; and 34 SENATE BILL 63 21
942		-
943		-
944		-
945		-	(4) Be summarized for submission with the annual proposed budget to the 1
946		-	lot owners. 2
947		-
948		-	(F) (1) A THE GOVERNING BODY OF A HOMEOWNERS ASSOCIATIO N 3
949		-	SHALL, IN CONSULTATION WITH A PERSON IDENTIFIED UNDER SUBSECTION (E)(1) 4
950		-	OF THIS SECTION, DEVELOP A FUNDING PL AN TO DETERMINE HOW TO FULLY FUND 5
951		-	THE RESERVES NECESSA RY UNDER THIS SECTIO N. 6
952		-
953		-	(2) IN DEVELOPING THE FUN DING PLAN UNDER THIS SUBSECTION, 7
954		-	THE HOMEOWNERS GOVERNING BODY SHALL CONSIDER SELECT ONE OF THE 8
955		-	FOLLOWING METHODS TO ACHIEVE THE RESERVE FUNDING UNDER THIS S ECTION: 9
956		-
957		-	(I) THE COMPONENT OR FULL FUNDING METHOD; 10
958		-
959		-	(II) THE CASH FLOW M ETHOD; 11
960		-
961		-	(III) THE BASELINE FUNDING METHOD; 12
962		-
963		-	(IV) THE THRESHOLD CASH FL OW METHOD ; AND OR 13
964		-
965		-	(V) OTHER FUNDING METHODS ANY OTHER FUNDING MET HOD 14
966		-	CONSISTENT WITH GENE RALLY ACCEPTED ACCOU NTING PRINCIPLES . 15
967		-
968		-	(3) A FUNDING PLAN DEVELOP ED UNDER THIS SUBSEC TION SHALL 16
969		-	PRIORITIZE ADEQUATE AMOUNTS FOR REPAIR A ND REPLACEMENT OF CO MMON 17
970		-	ELEMENTS AREAS OF THE HOMEOWNERS AS SOCIATION THAT ARE N ECESSARY FOR : 18
971		-
972		-	(I) THE HEALTH, SAFETY, AND WELL–BEING OF THE MEMBERS 19
973		-	OCCUPANTS; 20
974		-
975		-	(II) ENSURING STRUCTURAL I NTEGRITY, SUCH AS ROOFING 21
976		-	REPLACEMENTS AND MAI NTAINING STRUCTURAL SYSTEMS; AND 22
977		-
978		-	(III) ESSENTIAL FUNCTIONING , SUCH AS PLUMBING , SEWER, 23
979		-	HEATING, COOLING, AND ELECTRICAL INFRA STRUCTURE; AND 24
980		-
981		-	(IV) ANY OTHER ESSENTIAL O R CRITICAL PURP OSE, AS 25
982		-	DETERMINED BY THE GO VERNING BODY . 26
983		-
984		-	(4) RESERVES MAY NOT BE U SED FOR PURPOSES OTH ER THAN THOSE 27
985		-	SPECIFIED IN THE FUN DING PLAN. 28
986		-	22 SENATE BILL 63
987		-
988		-
989		-	(4) RESERVES MAY BE USED FOR PURPOSES OTHER T HAN THOSE 1
990		-	SPECIFIED IN THE FUN DING PLAN IF THE FUN DS ARE REPAID TO THE RESERVE FUND 2
991		-	WITHIN 5 YEARS AFTER THEIR US E. 3
992		-
993		-	(5) A GOVERNING BODY OF A HOMEOWNERS ASSOCIATI ON SHALL 4
994		-	REVIEW PROGRESS TOWA RD COMPLIANCE WITH T HE FUNDING PLAN DEVE LOPED 5
995		-	UNDER THIS SUBSECTIO N AT EACH ANNUAL MEE TING OF THE HOMEOWNE RS 6
996		-	ASSOCIATION. 7
	719	+	(5) A HOMEOWNERS ASSOCIATI ON SHALL REVIEW PROG RESS 5
	720	+	TOWARD COMPLIANCE WI TH THE FUNDING PLAN DEVELOPED UNDER THIS 6
	721	+	SUBSECTION AT EACH A NNUAL MEETING OF T HE HOMEOWNERS ASSOCI ATION. 7
997	722
998	723		SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 8
999	724		October 1, 2025. 9
1000	725
1001		-
1002		-
1003		-
1004		-	Approved:
1005		-	________________________________________________________________________________
1006		-	Governor.
1007		-	________________________________________________________________________________
1008		-	President of the Senate.
1009		-	________________________________________________________________________________
1010		-	Speaker of the House of Delegates.