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Committee hears revisions to condo reserve-law after owners say current language is confusing
Summary
House Bill 292 clarifies reserve-study requirements for cooperative housing, condominiums and homeowners associations, enumerates funding methods and extends the time to meet funding targets; witnesses urged additional flexibility for boards and longer ramp periods for low-income communities.
The committee heard House Bill 292, which proposes clarifications to Maryland’s reserve-study and reserve-funding law for cooperative housing corporations, condominiums and homeowners associations.
Sponsor Delegate Marvin Holmes said the bill was intended to remove confusion and make clear that the statute does not mandate a single funding method. Holmes explained two common approaches used by reserve specialists — a pooling or cash-flow method and a component (sometimes described as full-funding) method — and showed how the methods differ in timing and total collections.
Witnesses including the Attorney General’s Consumer Protection Division, condo board members and homeowners described widespread confusion about how the current law has been interpreted. Karen Strawn of the Attorney General’s office said the bill ‘‘stretches the period of time for people to become in compliance’’ and clarifies that the original law does not require full funding or a particular funding method. Multiple condo residents and board members from Baltimore City said conflicting legal opinions and rigid interpretations have led to sharply rising assessments and special assessments that can force owners to sell.
Several witnesses urged changes beyond the bill’s text: they asked for explicit board discretion to use reserves for unexpected repairs, clearer differentiation by building type (high-rise vs. garden vs. small converted homes) and a longer ramp for low-income communities. An in-committee witness suggested extending the compliance ramp to as long as 10 years for some owners; the bill itself extends a compliance period from three years to five years.
Supporters also recommended annual reserve-study updates, clearer component definitions, and standards for measurements and useful-life assumptions. HOA United and other witnesses urged more structured, machine-readable reserve-study formats and earlier developer-provided studies at turnover.
Why it matters: owners and board members testified that ambiguous statutory language, varied legal interpretations and inconsistent reserve-study practices have produced sizable assessments and uncertainty for fixed-income residents.
Next steps: the bill drew broad support with suggested amendments to add flexibility for boards, clarify component lists and consider longer timelines for low-income communities and smaller associations. No committee vote was recorded in the hearing transcript.
