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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1201*
HOUSE BILL 1201
N1 6lr2110
HB 968/24 – ENT
By: Delegates Wivell, Baker, and Valentine
Introduced and read first time: February 11, 2026
Assigned to: Economic Matters
A BILL ENTITLED
AN ACT concerning 1
Condominiums and Homeowners Associations – Reserve Studies – Exemptions 2
FOR the purpose of exempting condominiums under certain circumstances and certain 3
homeowners associations from provisions of law pertaining to reserve studies; and 4
generally relating to condominiums, homeowners associations, and reserve studies. 5
BY repealing and reenacting, with amendments, 6
Article – Real Property 7
Section 11–109.4 and 11B–112.3 8
Annotated Code of Maryland 9
(2023 Replacement Volume and 2025 Supplement) 10
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 11
That the Laws of Maryland read as follows: 12
Article – Real Property 13
11–109.4. 14
(a) (1) In this section the following words have the meanings indicated. 15
(2) “Reserve study” means a study of the reserves required for future major 16
repairs and replacement of the common elements of a condominium that: 17
(i) Using an itemized list, identifies each structural, mechanical, 18
electrical, and plumbing component of the common elements and any other components 19
that: 20
1. Are the responsibility of the council of unit owners to 21
repair and replace; and 22
2 HOUSE BILL 1201
2. If applicable, meet a minimum cost of repair or 1
replacement, as determined by the governing body, that is: 2
A. Reasonably based on the expenses of the condominium; 3
and 4
B. Not a minor expense that is otherwise addressed by the 5
budget of the condominium; 6
(ii) States the normal useful life and the estimated remaining useful 7
life of each identified component; 8
(iii) States the estimated cost of repair or replacement of each 9
identified component; 10
(iv) States the estimated annual reserve amount necessary to 11
accomplish any identified future repair or replacement; and 12
(v) States the quantity or size of each identified component using the 13
appropriate measurement, such as unit amount, square footage, or cubic feet. 14
(3) “Updated reserve study” means, for the common elements since the 15
prior reserve study was completed within the previous 5 years, a study that: 16
(i) Revises replacement cost, remaining life, and useful life 17
estimates; 18
(ii) Analyzes work performed and amounts spent; and 19
(iii) Identifies whether any maintenance contracts are in place. 20
(b) (1) [This] EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS 21
SUBSECTION, THIS section applies only to a residential condominium. 22
(2) THIS SECTION DOES NOT APPLY TO A RESIDENTI AL 23
CONDOMINIUM FOR WHIC H THE COUNCIL OF UNI T OWNERS VOTES TO FU ND 24
REPAIRS TO THE COMMON ELEMENTS OF THE CONDOMINIUM THROUGH A SPECIAL 25
ASSESSMENT BY AN AFF IRMATIVE VOTE OF THE UNIT OWNERS IN GOOD STANDING 26
HAVING AT LEAST 80% OF THE VOTES IN THE COUNCIL. 27
(c) (1) This subsection applies only to a condominium established in: 28
(i) Prince George’s County on or after October 1, 2020; 29
(ii) Montgomery County on or after October 1, 2021; or 30
HOUSE BILL 1201 3
(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 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 bod y shall have an updated reserve 12
study conducted within 5 years after the date of that reserve study and at least every 5 13
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 years 17
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
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 years 27
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
years thereafter. 34
(iii) If the governing body of a condominium has not had a reserve 35
study conducted on or after October 1, 2018, the governing body shall have a reserve study 36
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conducted on or before October 1, 2023, and an updated reserve study at least every 5 years 1
thereafter. 2
(e) Each reserve study and updated reserve st udy required under this section 3
shall: 4
(1) Be prepared by a person who: 5
(i) Has prepared at least 30 reserve studies within the prior 3 6
calendar years; 7
(ii) Has participated in the preparation of at least 30 reserve studies 8
within the prior 3 calendar years while employed by a firm that prepares reserve studies; 9
(iii) Holds a current license from the State Board of Architects or the 10
State Board for Professional Engineers; or 11
(iv) Is currently designated as a reserve specialist by the Community 12
Association Institute or as a professional reserve analyst by the Association of Professional 13
Reserve Analysts; 14
(2) Be available for inspection and copying by any unit owner; 15
(3) Be reviewed by the governing body of the condominium in connect ion 16
with the preparation of the annual proposed budget; and 17
(4) Be summarized for submission with the annual proposed budget to the 18
unit owners. 19
(f) (1) The governing body of a condominium shall, in consultation with a 20
person identified under subsection (e)(1) of this section, develop a funding plan to determine 21
how to fund the reserves necessary under this section. 22
(2) In developing the funding plan under this subsection, the governing 23
body shall select one of the following methods to achieve the r eserve funding under this 24
section: 25
(i) The component method; 26
(ii) The cash flow method; 27
(iii) The baseline funding method; 28
(iv) The threshold cash flow method; or 29
(v) Any other funding method consistent with generally accepted 30
accounting principles. 31
HOUSE BILL 1201 5
(3) A funding plan developed under this subsection shall prioritize 1
adequate amounts for repair and replacement of common elements of the condominium 2
that are necessary for: 3
(i) The health, safety, and well–being of the occupants; 4
(ii) Ensuring structural integrity, such as roofing replacements and 5
maintaining structural systems; 6
(iii) Essential functioning, such as plumbing, sewer, heating, cooling, 7
and electrical infrastructure; and 8
(iv) Any other essential or cri tical purpose, as determined by the 9
governing body. 10
(4) Reserves may be used for purposes other than those specified in the 11
funding plan if the funds are repaid to the reserve fund within 5 years after their use. 12
(5) A governing body shall review pro gress toward compliance with the 13
funding plan developed under this subsection at each annual meeting of the governing 14
body. 15
11B–112.3. 16
(a) (1) In this section the following words have the meanings indicated. 17
(2) “Reserve study” means a study of the reserves required for future major 18
repairs and replacement of the common areas of a homeowners association that: 19
(i) Using an itemized list, identifies each structural, mechanical, 20
electrical, and plumbing component of the common areas and any other components that: 21
1. Are the responsibility of the homeowners association to 22
repair and replace; and 23
2. If applicable, meet a minimum cost of repair or 24
replacement, as determined by the governing body, that is: 25
A. Reasonably based on the expenses of the homeowners 26
association; and 27
B. Not a minor expense that is otherwise addressed by the 28
budget of the homeowners association; 29
(ii) States the estimated remaining useful life of each identified 30
component; 31
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(iii) States the estimate d cost of repair or replacement of each 1
identified component; 2
(iv) States the estimated annual reserve amount necessary to 3
accomplish any identified future repair or replacement; and 4
(v) States the quantity or size of each identified component using the 5
appropriate measurement, such as unit amount, square footage, or cubic feet. 6
(3) “Updated reserve study” means, for the common areas since the prior 7
reserve study was completed within the previous 5 years, a study that: 8
(i) Revises replacement cost, remaining life, and useful life 9
estimates; 10
(ii) Analyzes work performed and amounts spent; and 11
(iii) Identifies whether any maintenance contracts are in place. 12
(b) (1) This section applies only to a homeowners association: 13
(i) That has responsibility under its declaration for maintaining and 14
repairing common areas; and 15
(ii) For which the total repair or replacement costs for all 16
components identified in subsection (a) of this section is at least $10,000. 17
(2) This section does not apply to a homeowners association that [issues]: 18
(I) ISSUES bonds for the purpose of meeting capital expenditures; 19
(II) COMPRISES 50 OR FEWER HOMES; 20
(III) COMPRISES ON LY SINGLE FAMILY HOMES ON LOTS THAT 21
ARE UNABLE TO BE SUBDIVIDED; OR 22
(IV) DOES NOT HAVE RESPONSIBILITY UNDER ITS DECLARATION 23
FOR MAINTAINING AND REPAIRING COMMON ELE MENTS OTHER THAN COM MON 24
PRIVATE ROADS. 25
(c) (1) This subsection applies only to a homeowners association established 26
in: 27
(i) Prince George’s County on or after October 1, 2020; 28
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(ii) Montgomery County on or after October 1, 2021; or 1
(iii) Any county other than Prince George’s County or Montgomery 2
County on or after October 1, 2022. 3
(2) The governing body of the homeowners associati on shall have an 4
independent reserve study completed not more than 90 calendar days and not less than 30 5
calendar days before the meeting of the homeowners association required under § 6
11B–106.1(a) of this title. 7
(3) The governing body shall have an up dated reserve study completed 8
within 5 years after the date of the initial reserve study conducted under paragraph (2) of 9
this subsection and at least every 5 years thereafter. 10
(d) (1) (i) This paragraph applies only to a homeowners association 11
established in Prince George’s County before October 1, 2020. 12
(ii) If the governing body of a homeowners association has had a 13
reserve study conducted on or after October 1, 2016, the governing body shall have an 14
updated reserve study conducted within 5 years after the date of that reserve study and at 15
least every 5 years thereafter. 16
(iii) If the governing body of a homeowners association has not had a 17
reserve study conducted on or after October 1, 2016, the governing body shall have a reserve 18
study conducted on or before October 1, 2021, and an updated reserve study at least every 19
5 years thereafter. 20
(2) (i) This paragraph applies only to a homeowners association 21
established in Montgomery County before October 1, 2021. 22
(ii) If the governing body of a homeowners association has had a 23
reserve study conducted on or after October 1, 2017, the governing body shall have an 24
updated reserve study conducted within 5 years after the date of that reserve study and at 25
least every 5 years thereafter. 26
(iii) If the governing body of a homeowners association has not had a 27
reserve study conducted on or after October 1, 2017, the governing body shall have a reserve 28
study conducted on or before October 1, 2022, and an updated reserve study at least every 29
5 years thereafter. 30
(3) (i) This paragraph applies only to a homeowners association 31
established in any county other than Prince George’s County or Montgomery County before 32
October 1, 2022. 33
(ii) If the governing body of a homeowners association has had a 34
reserve study conducted on or after October 1, 2018, the governing body shall have an 35
updated reserve study conducted within 5 years after the date of that reserve study and at 36
8 HOUSE BILL 1201
least every 5 years thereafter. 1
(iii) If the governing body of a homeowners association has not had a 2
reserve study conducted on or after October 1, 2018, the governing body shall have a reserve 3
study conducted on or before October 1, 2023, and an updated reserve study at least every 4
5 years thereafter. 5
(e) Each reserve study and updat ed reserve study required under this section 6
shall: 7
(1) Be prepared by a person who: 8
(i) Has prepared at least 30 reserve studies within the prior 3 9
calendar years; 10
(ii) Has participated in the preparation of at least 30 reserve studies 11
within the prior 3 calendar years while employed by a firm that prepares reserve studies; 12
(iii) Holds a current license from the State Board of Architects or the 13
State Board for Professional Engineers; or 14
(iv) Is currently designated as a reserve specialist by the Community 15
Association Institute or as a professional reserve analyst by the Association of Professional 16
Reserve Analysts; 17
(2) Be available for inspection and copying by any lot owner; 18
(3) Be reviewed by the governing body of the homeowners association in 19
connection with the preparation of the annual proposed budget; and 20
(4) Be summarized for submission with the annual proposed budget to the 21
lot owners. 22
(f) (1) The governing body of a homeowners association shall, in consultation 23
with a person identified under subsection (e)(1) of this section, develop a funding plan to 24
determine how to fund the reserves necessary under this section. 25
(2) In developing the funding plan under this subsection, the governing 26
body shall select one of the fo llowing methods to achieve the reserve funding under this 27
section: 28
(i) The component method; 29
(ii) The cash flow method; 30
(iii) The baseline funding method; 31
HOUSE BILL 1201 9
(iv) The threshold cash flow method; or 1
(v) Any other funding method consistent w ith generally accepted 2
accounting principles. 3
(3) A funding plan developed under this subsection shall prioritize 4
adequate amounts for repair and replacement of common areas of the homeowners 5
association that are necessary for: 6
(i) The health, safety, and well–being of the occupants; 7
(ii) Ensuring structural integrity, such as roofing replacements and 8
maintaining structural systems; 9
(iii) Essential functioning, such as plumbing, sewer, heating, cooling, 10
and electrical infrastructure; and 11
(iv) Any other essential or critical purpose, as determined by the 12
governing body. 13
(4) Reserves may be used for purposes other than those specified in the 14
funding plan if the funds are repaid to the reserve fund within 5 years after their use. 15
(5) A governing body of a homeowners association shall review progress 16
toward compliance with the funding plan developed under this subsection at each annual 17
meeting of the homeowners association. 18
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 19
October 1, 2026. 20