EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0787*
SENATE BILL 787
N1, C1 5lr3051
By: Senator Jennings
Introduced and read first time: January 28, 2025
Assigned to: Judicial Proceedings
A BILL ENTITLED
AN ACT concerning 1
Cooperative Housing Corporations and Condominiums – Funding of Reserve 2
Accounts and Timing of Reserve Studies 3
FOR the purpose of establishing that a reserve study conducted for a cooperative housing 4
corporation or condominium must identify only certain components with a value 5
exceeding a certain amount; establishing a certain exception to the requirement to 6
conduct a reserve study for certain cooperative housing corporations and 7
condominiums; extending the amount of time that a cooperative housing corporation 8
or a residential condominium has to complete a certain reserve study; extending the 9
amount of time after an initial reserve study that a cooperative housing corporation 10
or a residential condominium has to obtain a certain recommended reserve funding 11
level; providing that a reserve study may be prepared by certain persons; and 12
generally relating to cooperative housing corporations and condominiums. 13
BY repealing and reenacting, with amendments, 14
Article – Corporations and Associations 15
Section 5–6B–26.1 16
Annotated Code of Maryland 17
(2014 Replacement Volume and 2024 Supplement) 18
BY repealing and reenacting, without amendments, 19
Article – Real Property 20
Section 11–109.2(a) and (b) 21
Annotated Code of Maryland 22
(2023 Replacement Volume and 2024 Supplement) 23
BY repealing and reenacting, with amendments, 24
Article – Real Property 25
Section 11–109.2(c) and 11–109.4 26
Annotated Code of Maryland 27
(2023 Replacement Volume and 2024 Supplement) 28 2 SENATE BILL 787
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Corporations and Associations 3
5–6B–26.1. 4
(a) In this section, “reserve study” means a study of the reserves required for 5
future major repairs and replacement of the common elements of a cooperative housing 6
corporation that: 7
(1) Identifies each structural, mechanical, electrical, and plumbing 8
component of the common elements and any other components that are the responsibility 9
of the cooperative housing corporation [to repair and replace] WITH A REPAIR OR 10
REPLACEMENT COST THA T EXCEEDS $10,000; 11
(2) States the normal useful life and the estimated remaining useful life of 12
each identified component; 13
(3) States the estimated cost of repair or replacement of each identified 14
component; and 15
(4) States the estimated annual reserve amount necessary to accomplish 16
any identified future repair or replacement. 17
(B) THIS SECTION APPLIES ONLY TO A COOPERATIVE HOU SING 18
CORPORATION THAT: 19
(1) CONSISTS OF ANY BUILDING CONTAINING FOUR OR MORE 20
STORIES USED FOR HABITATION BY RESIDENTS; OR 21
(2) CONTAINS FOUR OR MORE SINGLE–FAMILY UNITS. 22
[(b)] (C) (1) This subsection applies only to a cooperative housing corporation 23
established in: 24
(i) Prince George’s County on or after October 1, 2020; 25
(ii) Montgomery County on or after October 1, 2021; or 26
(iii) Any county other than Prince George’s County or Montgomery 27
County on or after October 1, 2022. 28
(2) The governing body of the cooperative housing corporation shall have 29
an independent reserve study completed not less than 30 calendar days before the first 30 SENATE BILL 787 3
meeting of the cooperative housing corporation at which the members other than the owner 1
have a majority of votes in the cooperative housing corporation. 2
(3) The governing body shall have an updated reserve study completed 3
within 5 years after the date of the initial reserve study conducted under paragraph (2) of 4
this subsection, which shall be updated at least every [5] 10 years thereafter. 5
[(c)] (D) (1) (i) This paragraph applies only to a cooperative housing 6
corporation established in Prince George’s County before October 1, 2020. 7
(ii) If the governing body of a cooperative housing corporation has 8
had a reserve study conducted on or after October 1, 2016, the governing body shall have 9
an updated reserve study conducted within 5 years after the date of that reserve study and 10
at least every [5] 10 years thereafter. 11
(iii) If the governing body of a cooperative housing corporation has 12
not had a reserve study conducted on or after October 1, 2016, the governing body shall 13
have a reserve study conducted on or before October 1, 2021, and an updated reserve study 14
at least every [5] 10 years thereafter. 15
(2) (i) This paragraph applies only to a cooperative housing corporation 16
established in Montgomery County before October 1, 2021. 17
(ii) If the governing body of a cooperative housing corporation has 18
had a reserve study conducted on or after October 1, 2017, the governing body shall have 19
an updated reserve study conducted within 5 years after the date of that reserve study and 20
at least every [5] 10 years thereafter. 21
(iii) If the governing body of a cooperative housing corporation has 22
not had a reserve study conducted on or after October 1, 2017, the governing body shall 23
have a reserve study conducted on or before October 1, 2022, and an updated reserve study 24
at least every [5] 10 years thereafter. 25
(3) (i) This paragraph applies to a cooperative housing corporation 26
established in any county other than Prince George’s County or Montgomery County before 27
October 1, 2022. 28
(ii) If the governing body of a cooperative housing corporation has 29
had a reserve study conducted on or after October 1, 2018, the governing body shall have 30
an updated reserve study conducted within 5 years after the date of that reserve study and 31
at least every [5] 10 years thereafter. 32
(iii) If the governing body of a cooperative housing corporation has 33
not had a reserve study conducted on or after October 1, 2018, the governing body shall 34
have a reserve study conducted on or before October 1, 2023, and an updated reserve study 35
at least every [5] 10 years thereafter. 36 4 SENATE BILL 787
[(d)] (E) Each reserve study required under this section shall: 1
(1) Be prepared by a person who: 2
(i) Has prepared at least 30 reserve studies within the prior 3 3
calendar years; 4
(ii) Has participated in the preparation of at least 30 reserve studies 5
within the prior 3 calendar years while employed by a firm that prepares reserve studies; 6
(iii) Holds a current license from the State Board of Architects or the 7
State Board for Professional Engineers; [or] 8
(iv) Is currently designated as a reserve specialist by the Community 9
Association Institute or as a professional reserve analyst by the Association of Professional 10
Reserve Analysts; OR 11
(V) HOLDS A CURRENT LICEN SE FROM: 12
1. THE STATE BOARD OF ELECTRICIANS; 13
2. THE STATE BOARD OF PLUMBERS; OR 14
3. THE MARYLAND HOME IMPROVEMENT COMMISSION; 15
(2) Be available for inspection and copying by any unit owner; 16
(3) Be reviewed by the governing body of the cooperative housing 17
corporation in connection with the preparation of the annual proposed budget; and 18
(4) Be summarized for submission with the annual proposed budget to the 19
unit owners. 20
[(e)] (F) To the extent that a reserve study conducted in accordance with this 21
section indicates a need to budget for reserves, the budget shall include: 22
(1) For the capital components, the current estimated: 23
(i) Replacement cost IF THE ESTIMATED REP LACEMENT COST IS 24
GREATER THAN $10,000 AS DETERMINED BY THE MOST RECENT RESERVE STUDY; 25
(ii) Remaining life; and 26
(iii) Useful life; 27
SENATE BILL 787 5
(2) The amount of accumulated cash reserves set aside for the repair, 1
replacement, or restoration of capital components as of the beginning of the fiscal year in 2
which the reserve study is conducted and the amount of the expected contribution to the 3
reserve fund for the fiscal year; 4
(3) A statement describing the procedures used for estimation and 5
accumulation of cash reserves in accordance with this section; and 6
(4) A statement of the amount of reserves recommended in the study and 7
the amount of current cash for replacement reserves. 8
[(f)] (G) (1) (i) Subject to subparagraph (ii) of this paragraph, the 9
governing body of a cooperative housing corporation shall provide funds to the reserve in 10
accordance with the most recent reserve study and shall review the reserve study annually 11
for accuracy. 12
(ii) If the most recent reserve study was an initial reserve study, the 13
governing body shall, within [3] 10 fiscal years following the fiscal year in which the initial 14
reserve study was completed, attain the annual reserve funding level recommended in the 15
initial reserve study. 16
(2) The governing body of a cooperative housing corporation has the 17
authority to increase an assessment levied to cover the reserve funding amount required 18
under this section, notwithstanding any provision of the articles of incorporation, bylaws, 19
or proprietary lease restricting assessment increases or capping the assessment that may 20
be levied in a fiscal year. 21
Article – Real Property 22
11–109.2. 23
(a) The council of unit owners shall cause to be prepared and submitted to the 24
unit owners an annual proposed budget at least 30 days before its adoption. 25
(b) The annual budget shall provide for at least the following items: 26
(1) Income; 27
(2) Administration; 28
(3) Maintenance; 29
(4) Utilities; 30
(5) General expenses; 31
(6) Reserves; and 32 6 SENATE BILL 787
(7) Capital items. 1
(c) (1) Subject to paragraph (2) of this subsection, the reserves provided for in 2
the annual budget under subsection (b) of this section for a residential condominium shall 3
be the funding amount recommended in the most recent reserve study completed under § 4
11–109.4 of this title. 5
(2) If the most recent reserve study was an initial reserve study, the 6
governing body shall, within [3] 10 fiscal years following the fiscal year in which the initial 7
reserve study was completed, attain the annual reserve funding level recommended in the 8
initial reserve study. 9
11–109.4. 10
(a) In this section, “reserve study” means a study of the reserves required for 11
future major repairs and replacement of the common elements of a condominium that: 12
(1) Identifies each structural, mechanical, electrical, and plumbing 13
component of the common elements and any other components that are the responsibility 14
of the council of unit owners to repair and replace WITH A REPAIR OR REPLACEM ENT 15
COST THAT EXCEEDS $10,000; 16
(2) States the normal useful life and the estimated remaining useful life of 17
each identified component; 18
(3) States the estimated cost of repair or replacement of each identified 19
component; and 20
(4) States the estimated annual reserve amount necessary to accomplish 21
any identified future repair or replacement. 22
(b) This section applies only to a residential condominium THAT: 23
(1) CONSISTS OF ANY BUILD ING CONTAINING FOUR OR MORE 24
STORIES USED FOR HAB ITATION BY RESIDENTS ; OR 25
(2) CONTAINS FOUR OR MORE SINGLE–FAMILY UNITS. 26
(c) (1) This subsection applies only to a condominium established in: 27
(i) Prince George’s County on or after October 1, 2020; 28
(ii) Montgomery County on or after October 1, 2021; or 29
SENATE BILL 787 7
(iii) Any county other than Prince George’s County or Montgomery 1
County on or after October 1, 2022. 2
(2) The governing body of the condominium shall have an independent 3
reserve study completed not less than 30 calendar days before the meeting of the council of 4
unit owners required under § 11–109(c)(16) of this title. 5
(3) The governing body shall have an updated reserve study completed 6
within 5 years after the date of the initial reserve study conducted under paragraph (2) of 7
this subsection and at least every [5] 10 years thereafter. 8
(d) (1) (i) This paragraph applies only to a condominium established in 9
Prince George’s County before October 1, 2020. 10
(ii) If the governing body of a condominium has had a reserve study 11
conducted on or after October 1, 2016, the governing body shall have an updated reserve 12
study conducted within 5 years after the date of that reserve study and at least every [5] 13
10 years thereafter. 14
(iii) If the governing body of a condominium has not had a reserve 15
study conducted on or after October 1, 2016, the governing body shall have a reserve study 16
conducted on or before October 1, 2021, and an updated reserve study at least every [5] 10 17
years thereafter. 18
(2) (i) This paragraph applies only to a condominium established in 19
Montgomery County before October 1, 2021. 20
(ii) If the governing body of a condominium has had a reserve study 21
conducted on or after October 1, 2017, the governing body shall have an updated reserve 22
study conducted within 5 years after the date of that reserve study and at least every [5] 23
10 years thereafter. 24
(iii) If the governing body of a condominium has not had a reserve 25
study conducted on or after October 1, 2017, the governing body shall have a reserve study 26
conducted on or before October 1, 2022, and an updated reserve study at least every [5] 10 27
years thereafter. 28
(3) (i) This paragraph applies only to a condominium established in any 29
county other than Prince George’s County or Montgomery County before October 1, 2022. 30
(ii) If the governing body of a condominium has had a reserve study 31
conducted on or after October 1, 2018, the governing body shall have an updated reserve 32
study conducted within 5 years after the date of that reserve study and at least every [5] 33
10 years thereafter. 34
8 SENATE BILL 787
(iii) If the governing body of a condominium has not had a reserve 1
study conducted on or after October 1, 2018, the governing body shall have a reserve study 2
conducted on or before October 1, 2023, and an updated reserve study at least every [5] 10 3
years thereafter. 4
(e) Each reserve study required under this section shall: 5
(1) Be prepared by a person who: 6
(i) Has prepared at least 30 reserve studies within the prior 3 7
calendar years; 8
(ii) Has participated in the preparation of at least 30 reserve studies 9
within the prior 3 calendar years while employed by a firm that prepares reserve studies; 10
(iii) Holds a current license from the State Board of Architects or the 11
State Board for Professional Engineers; [or] 12
(iv) Is currently designated as a reserve specialist by the Community 13
Association Institute or as a professional reserve analyst by the Association of Professional 14
Reserve Analysts; OR 15
(V) HOLDS A CURRENT LICEN SE FROM: 16
1. THE STATE BOARD OF ELECTRICIANS; 17
2. THE STATE BOARD OF PLUMBERS; OR 18
3. THE MARYLAND HOME IMPROVEMENT COMMISSION; 19
(2) Be available for inspection and copying by any unit owner; 20
(3) Be reviewed by the governing body of the condominium in connection 21
with the preparation of the annual proposed budget; and 22
(4) Be summarized for submission with the annual proposed budget to the 23
unit owners. 24
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 25
October 1, 2025. 26