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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0576*
SENATE BILL 576
N1, C1 6lr2586
By: Senator Jennings
Introduced and read first time: February 4, 2026
Assigned to: Judicial Proceedings
A BILL ENTITLED
AN ACT concerning 1
Cooperative Housing Corporations and Condominiums – Emergency Use of 2
Reserve Funds 3
FOR the purpose of providing that reserve funds of a cooperative housing corporation or 4
condominium may be used for purposes other than those specified in the funding 5
plan in an emergency and under certain circumstances; and generally relating to 6
cooperative housing corporations and condominiums. 7
BY repealing and reenacting, with amendments, 8
Article – Corporations and Associations 9
Section 5–6B–26.1(g) 10
Annotated Code of Maryland 11
(2025 Replacement Volume) 12
BY repealing and reenacting, with amendments, 13
Article – Real Property 14
Section 11–109.4(f) 15
Annotated Code of Maryland 16
(2023 Replacement Volume and 2025 Supplement) 17
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 18
That the Laws of Maryland read as follows: 19
Article – Corporations and Associations 20
5–6B–26.1. 21
(g) (1) The governing body of a cooperative housing corporation shall, in 22
consultation with a person identi fied under subsection (d)(1) of this section, develop a 23
funding plan to determine how to fund the reserves necessary under this section. 24
2 SENATE BILL 576
(2) In developing the funding plan under this subsection, the governing 1
body shall select one of the following metho ds to achieve the reserve funding under this 2
section: 3
(i) The component method; 4
(ii) The cash flow method; 5
(iii) The baseline funding method; 6
(iv) The threshold cash flow method; or 7
(v) Any other funding method consistent with generally accepted 8
accounting principles. 9
(3) A funding plan developed under this subsection shall prioritize 10
adequate amounts for repair and replacement of common elements of the cooperative 11
housing corporation that are necessary for: 12
(i) The health, safety, and well–being of the occupants; 13
(ii) Ensuring structural integrity, such as roofing replacements and 14
maintaining structural systems; 15
(iii) Essential functioning, such as plumbing, sewer, heating, cooling, 16
and electrical infrastructure; and 17
(iv) Any other essential or critical purpose, as determined by the 18
governing body. 19
(4) Reserves may be used for purposes other than those specified in the 20
funding plan IN AN EMERGENCY if [the]: 21
(I) THE funds are repaid to the reserve fund within 5 ye ars after 22
their use; AND 23
(II) THE USE OF THE FUNDS IS APPROVED BY AN AFFIRMATIVE 24
VOTE OF AT LEAST TWO –THIRDS OF THE MEMBERS IN GOOD ST ANDING IN THE 25
COOPERATIVE HOUSING CORPORATION. 26
(5) A governing body shall review progress toward compliance with the 27
funding plan developed under this subsection at each annual meeting of the governing 28
body. 29
Article – Real Property 30
SENATE BILL 576 3
11–109.4. 1
(f) (1) The governing body of a condominium shall, in consultation with a 2
person identified under subsection (e)(1) of this section, develop a funding plan to determine 3
how to fund the reserves necessary under this section. 4
(2) In developing the funding plan under this subsection, the governing 5
body shall select one of the following methods to achieve the reserve funding under this 6
section: 7
(i) The component method; 8
(ii) The cash flow method; 9
(iii) The baseline funding method; 10
(iv) The threshold cash flow method; or 11
(v) Any other funding method consistent with generally accepted 12
accounting principles. 13
(3) A funding plan developed under this subsection shall prioritize 14
adequate amounts for repair and replacement of common elements of the condominium 15
that are necessary for: 16
(i) The health, safety, and well–being of the occupants; 17
(ii) Ensuring structural integrity, such as roofing replacements and 18
maintaining structural systems; 19
(iii) Essential functioning, such as plumbing, sewer, heating, cooling, 20
and electrical infrastructure; and 21
(iv) Any other essential or critical purpose, as determined by the 22
governing body. 23
(4) Reserves may be used for purposes other than those specified in the 24
funding plan IN AN EMERGENCY if [the]: 25
(I) THE funds are repaid to the reserve fund within 5 years after 26
their use; AND 27
(II) THE USE OF THE FUNDS IS APPROVED BY AN AFFIRMATIVE 28
VOTE OF AT LEAST TWO–THIRDS OF THE UNIT OWNERS IN GOOD STANDING IN THE 29
COUNCIL. 30
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(5) A governing body shall review progr ess toward compliance with the 1
funding plan developed under this subsection at each annual meeting of the governing 2
body. 3
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 4
October 1, 2026. 5