MD
Maryland Senate Bill SB787

Maryland 2025 Regular Session

Maryland Senate Bill SB787 Compare Versions

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33 EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
44 [Brackets] indicate matter deleted from existing law.
55 *sb0787*
66
77 SENATE BILL 787
88 N1, C1 5lr3051
99
1010 By: Senator Jennings
1111 Introduced and read first time: January 28, 2025
1212 Assigned to: Judicial Proceedings
1313
1414 A BILL ENTITLED
1515
1616 AN ACT concerning 1
1717
1818 Cooperative Housing Corporations and Condominiums – Funding of Reserve 2
1919 Accounts and Timing of Reserve Studies 3
2020
2121 FOR the purpose of establishing that a reserve study conducted for a cooperative housing 4
2222 corporation or condominium must identify only certain components with a value 5
2323 exceeding a certain amount; establishing a certain exception to the requirement to 6
2424 conduct a reserve study for certain cooperative housing corporations and 7
2525 condominiums; extending the amount of time that a cooperative housing corporation 8
2626 or a residential condominium has to complete a certain reserve study; extending the 9
2727 amount of time after an initial reserve study that a cooperative housing corporation 10
2828 or a residential condominium has to obtain a certain recommended reserve funding 11
2929 level; providing that a reserve study may be prepared by certain persons; and 12
3030 generally relating to cooperative housing corporations and condominiums. 13
3131
3232 BY repealing and reenacting, with amendments, 14
3333 Article – Corporations and Associations 15
3434 Section 5–6B–26.1 16
3535 Annotated Code of Maryland 17
3636 (2014 Replacement Volume and 2024 Supplement) 18
3737
3838 BY repealing and reenacting, without amendments, 19
3939 Article – Real Property 20
4040 Section 11–109.2(a) and (b) 21
4141 Annotated Code of Maryland 22
4242 (2023 Replacement Volume and 2024 Supplement) 23
4343
4444 BY repealing and reenacting, with amendments, 24
4545 Article – Real Property 25
4646 Section 11–109.2(c) and 11–109.4 26
4747 Annotated Code of Maryland 27
4848 (2023 Replacement Volume and 2024 Supplement) 28 2 SENATE BILL 787
4949
5050
5151
5252 SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
5353 That the Laws of Maryland read as follows: 2
5454
5555 Article – Corporations and Associations 3
5656
5757 5–6B–26.1. 4
5858
5959 (a) In this section, “reserve study” means a study of the reserves required for 5
6060 future major repairs and replacement of the common elements of a cooperative housing 6
6161 corporation that: 7
6262
6363 (1) Identifies each structural, mechanical, electrical, and plumbing 8
6464 component of the common elements and any other components that are the responsibility 9
6565 of the cooperative housing corporation [to repair and replace] WITH A REPAIR OR 10
6666 REPLACEMENT COST THA T EXCEEDS $10,000; 11
6767
6868 (2) States the normal useful life and the estimated remaining useful life of 12
6969 each identified component; 13
7070
7171 (3) States the estimated cost of repair or replacement of each identified 14
7272 component; and 15
7373
7474 (4) States the estimated annual reserve amount necessary to accomplish 16
7575 any identified future repair or replacement. 17
7676
7777 (B) THIS SECTION APPLIES ONLY TO A COOPERATIVE HOU SING 18
7878 CORPORATION THAT: 19
7979
8080 (1) CONSISTS OF ANY BUILDING CONTAINING FOUR OR MORE 20
8181 STORIES USED FOR HABITATION BY RESIDENTS; OR 21
8282
8383 (2) CONTAINS FOUR OR MORE SINGLE–FAMILY UNITS. 22
8484
8585 [(b)] (C) (1) This subsection applies only to a cooperative housing corporation 23
8686 established in: 24
8787
8888 (i) Prince George’s County on or after October 1, 2020; 25
8989
9090 (ii) Montgomery County on or after October 1, 2021; or 26
9191
9292 (iii) Any county other than Prince George’s County or Montgomery 27
9393 County on or after October 1, 2022. 28
9494
9595 (2) The governing body of the cooperative housing corporation shall have 29
9696 an independent reserve study completed not less than 30 calendar days before the first 30 SENATE BILL 787 3
9797
9898
9999 meeting of the cooperative housing corporation at which the members other than the owner 1
100100 have a majority of votes in the cooperative housing corporation. 2
101101
102102 (3) The governing body shall have an updated reserve study completed 3
103103 within 5 years after the date of the initial reserve study conducted under paragraph (2) of 4
104104 this subsection, which shall be updated at least every [5] 10 years thereafter. 5
105105
106106 [(c)] (D) (1) (i) This paragraph applies only to a cooperative housing 6
107107 corporation established in Prince George’s County before October 1, 2020. 7
108108
109109 (ii) If the governing body of a cooperative housing corporation has 8
110110 had a reserve study conducted on or after October 1, 2016, the governing body shall have 9
111111 an updated reserve study conducted within 5 years after the date of that reserve study and 10
112112 at least every [5] 10 years thereafter. 11
113113
114114 (iii) If the governing body of a cooperative housing corporation has 12
115115 not had a reserve study conducted on or after October 1, 2016, the governing body shall 13
116116 have a reserve study conducted on or before October 1, 2021, and an updated reserve study 14
117117 at least every [5] 10 years thereafter. 15
118118
119119 (2) (i) This paragraph applies only to a cooperative housing corporation 16
120120 established in Montgomery County before October 1, 2021. 17
121121
122122 (ii) If the governing body of a cooperative housing corporation has 18
123123 had a reserve study conducted on or after October 1, 2017, the governing body shall have 19
124124 an updated reserve study conducted within 5 years after the date of that reserve study and 20
125125 at least every [5] 10 years thereafter. 21
126126
127127 (iii) If the governing body of a cooperative housing corporation has 22
128128 not had a reserve study conducted on or after October 1, 2017, the governing body shall 23
129129 have a reserve study conducted on or before October 1, 2022, and an updated reserve study 24
130130 at least every [5] 10 years thereafter. 25
131131
132132 (3) (i) This paragraph applies to a cooperative housing corporation 26
133133 established in any county other than Prince George’s County or Montgomery County before 27
134134 October 1, 2022. 28
135135
136136 (ii) If the governing body of a cooperative housing corporation has 29
137137 had a reserve study conducted on or after October 1, 2018, the governing body shall have 30
138138 an updated reserve study conducted within 5 years after the date of that reserve study and 31
139139 at least every [5] 10 years thereafter. 32
140140
141141 (iii) If the governing body of a cooperative housing corporation has 33
142142 not had a reserve study conducted on or after October 1, 2018, the governing body shall 34
143143 have a reserve study conducted on or before October 1, 2023, and an updated reserve study 35
144144 at least every [5] 10 years thereafter. 36 4 SENATE BILL 787
145145
146146
147147
148148 [(d)] (E) Each reserve study required under this section shall: 1
149149
150150 (1) Be prepared by a person who: 2
151151
152152 (i) Has prepared at least 30 reserve studies within the prior 3 3
153153 calendar years; 4
154154
155155 (ii) Has participated in the preparation of at least 30 reserve studies 5
156156 within the prior 3 calendar years while employed by a firm that prepares reserve studies; 6
157157
158158 (iii) Holds a current license from the State Board of Architects or the 7
159159 State Board for Professional Engineers; [or] 8
160160
161161 (iv) Is currently designated as a reserve specialist by the Community 9
162162 Association Institute or as a professional reserve analyst by the Association of Professional 10
163163 Reserve Analysts; OR 11
164164
165165 (V) HOLDS A CURRENT LICEN SE FROM: 12
166166
167167 1. THE STATE BOARD OF ELECTRICIANS; 13
168168
169169 2. THE STATE BOARD OF PLUMBERS; OR 14
170170
171171 3. THE MARYLAND HOME IMPROVEMENT COMMISSION; 15
172172
173173 (2) Be available for inspection and copying by any unit owner; 16
174174
175175 (3) Be reviewed by the governing body of the cooperative housing 17
176176 corporation in connection with the preparation of the annual proposed budget; and 18
177177
178178 (4) Be summarized for submission with the annual proposed budget to the 19
179179 unit owners. 20
180180
181181 [(e)] (F) To the extent that a reserve study conducted in accordance with this 21
182182 section indicates a need to budget for reserves, the budget shall include: 22
183183
184184 (1) For the capital components, the current estimated: 23
185185
186186 (i) Replacement cost IF THE ESTIMATED REP LACEMENT COST IS 24
187187 GREATER THAN $10,000 AS DETERMINED BY THE MOST RECENT RESERVE STUDY; 25
188188
189189 (ii) Remaining life; and 26
190190
191191 (iii) Useful life; 27
192192 SENATE BILL 787 5
193193
194194
195195 (2) The amount of accumulated cash reserves set aside for the repair, 1
196196 replacement, or restoration of capital components as of the beginning of the fiscal year in 2
197197 which the reserve study is conducted and the amount of the expected contribution to the 3
198198 reserve fund for the fiscal year; 4
199199
200200 (3) A statement describing the procedures used for estimation and 5
201201 accumulation of cash reserves in accordance with this section; and 6
202202
203203 (4) A statement of the amount of reserves recommended in the study and 7
204204 the amount of current cash for replacement reserves. 8
205205
206206 [(f)] (G) (1) (i) Subject to subparagraph (ii) of this paragraph, the 9
207207 governing body of a cooperative housing corporation shall provide funds to the reserve in 10
208208 accordance with the most recent reserve study and shall review the reserve study annually 11
209209 for accuracy. 12
210210
211211 (ii) If the most recent reserve study was an initial reserve study, the 13
212212 governing body shall, within [3] 10 fiscal years following the fiscal year in which the initial 14
213213 reserve study was completed, attain the annual reserve funding level recommended in the 15
214214 initial reserve study. 16
215215
216216 (2) The governing body of a cooperative housing corporation has the 17
217217 authority to increase an assessment levied to cover the reserve funding amount required 18
218218 under this section, notwithstanding any provision of the articles of incorporation, bylaws, 19
219219 or proprietary lease restricting assessment increases or capping the assessment that may 20
220220 be levied in a fiscal year. 21
221221
222222 Article – Real Property 22
223223
224224 11–109.2. 23
225225
226226 (a) The council of unit owners shall cause to be prepared and submitted to the 24
227227 unit owners an annual proposed budget at least 30 days before its adoption. 25
228228
229229 (b) The annual budget shall provide for at least the following items: 26
230230
231231 (1) Income; 27
232232
233233 (2) Administration; 28
234234
235235 (3) Maintenance; 29
236236
237237 (4) Utilities; 30
238238
239239 (5) General expenses; 31
240240
241241 (6) Reserves; and 32 6 SENATE BILL 787
242242
243243
244244
245245 (7) Capital items. 1
246246
247247 (c) (1) Subject to paragraph (2) of this subsection, the reserves provided for in 2
248248 the annual budget under subsection (b) of this section for a residential condominium shall 3
249249 be the funding amount recommended in the most recent reserve study completed under § 4
250250 11–109.4 of this title. 5
251251
252252 (2) If the most recent reserve study was an initial reserve study, the 6
253253 governing body shall, within [3] 10 fiscal years following the fiscal year in which the initial 7
254254 reserve study was completed, attain the annual reserve funding level recommended in the 8
255255 initial reserve study. 9
256256
257257 11–109.4. 10
258258
259259 (a) In this section, “reserve study” means a study of the reserves required for 11
260260 future major repairs and replacement of the common elements of a condominium that: 12
261261
262262 (1) Identifies each structural, mechanical, electrical, and plumbing 13
263263 component of the common elements and any other components that are the responsibility 14
264264 of the council of unit owners to repair and replace WITH A REPAIR OR REPLACEM ENT 15
265265 COST THAT EXCEEDS $10,000; 16
266266
267267 (2) States the normal useful life and the estimated remaining useful life of 17
268268 each identified component; 18
269269
270270 (3) States the estimated cost of repair or replacement of each identified 19
271271 component; and 20
272272
273273 (4) States the estimated annual reserve amount necessary to accomplish 21
274274 any identified future repair or replacement. 22
275275
276276 (b) This section applies only to a residential condominium THAT: 23
277277
278278 (1) CONSISTS OF ANY BUILD ING CONTAINING FOUR OR MORE 24
279279 STORIES USED FOR HAB ITATION BY RESIDENTS ; OR 25
280280
281281 (2) CONTAINS FOUR OR MORE SINGLE–FAMILY UNITS. 26
282282
283283 (c) (1) This subsection applies only to a condominium established in: 27
284284
285285 (i) Prince George’s County on or after October 1, 2020; 28
286286
287287 (ii) Montgomery County on or after October 1, 2021; or 29
288288 SENATE BILL 787 7
289289
290290
291291 (iii) Any county other than Prince George’s County or Montgomery 1
292292 County on or after October 1, 2022. 2
293293
294294 (2) The governing body of the condominium shall have an independent 3
295295 reserve study completed not less than 30 calendar days before the meeting of the council of 4
296296 unit owners required under § 11–109(c)(16) of this title. 5
297297
298298 (3) The governing body shall have an updated reserve study completed 6
299299 within 5 years after the date of the initial reserve study conducted under paragraph (2) of 7
300300 this subsection and at least every [5] 10 years thereafter. 8
301301
302302 (d) (1) (i) This paragraph applies only to a condominium established in 9
303303 Prince George’s County before October 1, 2020. 10
304304
305305 (ii) If the governing body of a condominium has had a reserve study 11
306306 conducted on or after October 1, 2016, the governing body shall have an updated reserve 12
307307 study conducted within 5 years after the date of that reserve study and at least every [5] 13
308308 10 years thereafter. 14
309309
310310 (iii) If the governing body of a condominium has not had a reserve 15
311311 study conducted on or after October 1, 2016, the governing body shall have a reserve study 16
312312 conducted on or before October 1, 2021, and an updated reserve study at least every [5] 10 17
313313 years thereafter. 18
314314
315315 (2) (i) This paragraph applies only to a condominium established in 19
316316 Montgomery County before October 1, 2021. 20
317317
318318 (ii) If the governing body of a condominium has had a reserve study 21
319319 conducted on or after October 1, 2017, the governing body shall have an updated reserve 22
320320 study conducted within 5 years after the date of that reserve study and at least every [5] 23
321321 10 years thereafter. 24
322322
323323 (iii) If the governing body of a condominium has not had a reserve 25
324324 study conducted on or after October 1, 2017, the governing body shall have a reserve study 26
325325 conducted on or before October 1, 2022, and an updated reserve study at least every [5] 10 27
326326 years thereafter. 28
327327
328328 (3) (i) This paragraph applies only to a condominium established in any 29
329329 county other than Prince George’s County or Montgomery County before October 1, 2022. 30
330330
331331 (ii) If the governing body of a condominium has had a reserve study 31
332332 conducted on or after October 1, 2018, the governing body shall have an updated reserve 32
333333 study conducted within 5 years after the date of that reserve study and at least every [5] 33
334334 10 years thereafter. 34
335335 8 SENATE BILL 787
336336
337337
338338 (iii) If the governing body of a condominium has not had a reserve 1
339339 study conducted on or after October 1, 2018, the governing body shall have a reserve study 2
340340 conducted on or before October 1, 2023, and an updated reserve study at least every [5] 10 3
341341 years thereafter. 4
342342
343343 (e) Each reserve study required under this section shall: 5
344344
345345 (1) Be prepared by a person who: 6
346346
347347 (i) Has prepared at least 30 reserve studies within the prior 3 7
348348 calendar years; 8
349349
350350 (ii) Has participated in the preparation of at least 30 reserve studies 9
351351 within the prior 3 calendar years while employed by a firm that prepares reserve studies; 10
352352
353353 (iii) Holds a current license from the State Board of Architects or the 11
354354 State Board for Professional Engineers; [or] 12
355355
356356 (iv) Is currently designated as a reserve specialist by the Community 13
357357 Association Institute or as a professional reserve analyst by the Association of Professional 14
358358 Reserve Analysts; OR 15
359359
360360 (V) HOLDS A CURRENT LICEN SE FROM: 16
361361
362362 1. THE STATE BOARD OF ELECTRICIANS; 17
363363
364364 2. THE STATE BOARD OF PLUMBERS; OR 18
365365
366366 3. THE MARYLAND HOME IMPROVEMENT COMMISSION; 19
367367
368368 (2) Be available for inspection and copying by any unit owner; 20
369369
370370 (3) Be reviewed by the governing body of the condominium in connection 21
371371 with the preparation of the annual proposed budget; and 22
372372
373373 (4) Be summarized for submission with the annual proposed budget to the 23
374374 unit owners. 24
375375
376376 SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 25
377377 October 1, 2025. 26