The Maryland Condominium Act and Maryland Homeowners Association Act require associations to undertake a reserve study at least once every five years. Delaware and Virginia already required reserve studies, but all 50 states are developing similar requirements as a response to the tragic collapse of the Champlain Tower South condominium in Surfside, Florida.
Maryland Reserve Study Laws – The Basics
If a condominium or homeowners association has not had a reserve study on or after October 1, 2018, they will need to have a reserve study done prior to October 1, 2023
- The reserve study must be updated every 5 years
- The Reserve study must be prepared by someone that meets one of the following 4 requirements:
- Prepared at least 30 reserve studies within the prior three calendar years
- Participated in preparing 30 reserve studies within the prior three years while employed by a firm that prepares reserve studies
- Licensed architect or professional engineer
- Holds the Reserve Specialist or Professional Reserve Analyst designation
- Associations have 3 fiscal years following the study to fund the reserves to the level recommended in the study.
The Deeper Dive
- All Maryland condominiums must comply.
- Maryland Homeowners associations with over $10,000 in common elements must comply.
- The cost of a reserve study is dependent on size of the community, the number of common elements and the qualification of the reserve study professionals. The cost of the study is considered an operating expense.
- The law is clear that the study must be completed prior to October 1, 2023 and funded within three years of completion.
- The enforcement mechanism for this association requirement has not been communicated.
- For more information, see Maryland House Bill 107.
It is our collective responsibility to take the steps within our control to avoid preventable tragedies and ensure the safety of homeowners and the homes they love.
Reserve studies offer insight into managing your community’s physical and financial assets, determining what repairs are needed, the lifespan of common areas, and the timeline for major repairs or replacements, as well as recommending allocated funding to complete the work. A thorough examination will provide guidance for protecting your association today and in shaping its future.
There are many third-party reserve study providers who will help your community plan for tomorrow. The Chesapeake Chapter of Community Associations Institute provides this list as a starting point.
1997 Annapolis Exchange Pkwy Ste 300
Annapolis, MD 21401-3273 United States
2302 E Cary St
Richmond, VA 23223-7822 United States
46040 Center Oak Plz Ste 100
Sterling, VA 20166-6595 United States
95 Mount Bethel Rd Ste 5
Warren, NJ 07059-5169 United States
Serving the Entire U.S.
4000 Executive Parkway, Suite 100
San Ramon, CA 94583 United States
1700 Rockville Pike Ste 400
Rockville, MD 20852-1631 United States
2661 Riva Rd Ste 1023
Annapolis, MD 21401-8416 United States
PO Box 3453
Crofton, MD 21114 United States
735 N Water St Ste 175
Milwaukee, WI 53202-4100 United States
301 N Fairfax St Ste 108
Alexandria, VA 22314-2633 United States
Are you in Delaware or Virginia?
See below for the requirements for your reserve studies:
Condominiums must contain within their declaration provisions that mandate that the association create and maintain, in addition to any reserve for contingencies, a fully funded repair and replacement reserve based upon a current reserve study. Section 81-205(14). Minimum contributions to reserves vary based on the Reserve Study or a statutory formula based on number of common area components. Section 81-315. Condominium disclosure statement must include the current balance in reserves and the most recent reserve study. Section 81-409. Condominums and cooperatives must contain a line item in their annual budget funding any replacement and repair reserve. Section 81-324.
Associations must conduct a reserve study at least once every five years to determine the necessity and amount of reserves required to repair, replace and restore the common elements or capital components. The board of directors must review the study at least annually and make adjustments as the board determines to keep the funding of reserves sufficient. The statutory provisions on reserves also include requirements for the contents of the association budget if reserves are determined to be a necessity. Section 55.1-1965. Resale certificates must include the current reserve study report or a summary thereof, a statement of the status and amount of any reserve or replacement fund and any portion of the fund designated for any specified project by the association. Section 55.1-1991.