Maryland Community Association Law Updates

Condos, HOA & Co-ops

2025-2026

In October 2025 the Maryland General Assembly enacted legislation that reshapes the legal obligations and governance frameworks for condominium associations (“Condos”), homeowners associations (“HOAs”), and housing cooperative corporations (‘Co-ops”) (collectively “Community Associations” or “Associations”). Here’s a summary of this legislation:

1. Reserve Account Budgeting Reforms, including “Funding Plans” and Hardship Exception (SB 63/HB 292)
2. Restrictions on Association Ability to Regulate Family Child Care Businesses (HB 785)
3. Associations Prohibited from Collecting Owners’ Sensitive Information and Data  (SB 540 / HB 755)
4. Election Reforms, including Independent Party Requirement for Conducting Elections (SB 758)
5. Books and Records – No Fee for Reviewing Financial Statements (SB 758)
6. Expanded Consumer Protection Enforcement of Condo & HOA Acts (SB 758)
7. Required Accessory Dwelling Unit Accommodation for HOAs (SB 891 / HB 1466)
8. Updated Permissible Standards for Owner Installation of Solar Collector Systems (SB 120 / HB 4)
9. Mandatory Registration for PG County Community Associations (HB 360)

“SB” and “HB” refer to Senate Bill and House Bill, respectively. Legislators introduced these bills in the 2025 Regular Legislative Session of the Maryland General Assembly, and the Governor has approved them. Now, the bills are enacted and part of the Maryland Condominium Act (“MD Condo Act”), Maryland Homeowners Association Act (“MD HOA Act”), and Maryland Cooperative Housing Corporation Act (“MD Co-Op Act”). Details below.

Reserve Funding Reforms: Reserve Studies, Funding Plans, Borrowing, Funding Deadline, and “Catch Up” / Hardship Exceptions

SB 63 and HB 292 (enacted as Chapters 518 & 519 of the 2005 Legislative Session), effective October 1, 2025

This legislation introduced significant changes affecting reserve account funding, including new criteria for reserve studies and a requirement that Associations adopt a “funding plan” to achieve their legal funding obligations.

What are Reserve Accounts and Reserve Studies?

As of October 1, 2022 all Maryland Community Associations  are required to maintain a reserve account which must be funded annually based upon a reserve study that is updated every 5 years. See, Cowie Law Group article, “Reserve Studies and reserve Funding in Maryland.” A reserve account is where a Community Association accumulates and saves funds for expensive future repairs or replacement of major common facilities or “components” for which an association is responsible (e.g., replacement of aging roofs, exterior siding, recreational facilities, street paving, stormwater management facilities, etc.).

A reserve study is the budgeting tool a Community Association uses to determine the  amount of money that should be deposited in the reserve account annually to ensure it will have sufficient funds available to pay for the future repair or replacement. A “normal useful life” and “the estimated remaining useful life” expectancy is assigned to each major components (e.g., a 25-year roof) as well as an estimated cost to repair or replace those components at the end of their useful life. MD Condo Act § 11-109.4(a)(2)(i) and (iii); MD HOA Act § 11B-112.3(a)(2)(ii)and (iii);  MD Co-op Act § 5–6B–26.1(a)(2)(ii) and (iii). Based on these projections, an engineer or reserve analysist estimates the amount of money a Community Association should allocate to its reserve account each year to ensure necessary funds will be available when the time comes to repair and replace the component. MD Condo Act § 11-109.4(a)(2)(iv); MD HOA Act § 11B-112.3(a)(2)(iv);  MD Co-op Act § 5–6B–26.1(a)(2)(iv). These findings along with backup information are presented to the Board of Directors in the form of a written report typically called a “reserve study.”

Reserve study estimates are updated every 5 years and annual reserve fund allocations adjusted to account for changing circumstances (e.g., aging of building components, inflation and construction costs, common area components added or removed, etc.). MD Condo Act § 11-109.4(c)(3) and (d)(3); MD HOA Act §§ 11B-112.3(c)(3)and (d)(3); MD Co-op Act § 5–6B–26.1(b)(3) and (c)(3). Minor, regularly occurring, maintenance, repair or replacement expenses are not included in reserve studies because they are designed to plan for large, infrequent and predictable expenses, not routine operating costs addressed by the annual operating budget.

Practice Tip for Hiring a Reserve Study Analysts:

When hiring a reserve study analyst, consider where the company and its employees are located. Many reserve study companies who perform reserve studies in Maryland are located in the Midwest. This can be problematic when an Association needs to have its reserve study specialist come to the community in person, such as to review unanticipated issues that arise or attend in person board meetings or site inspections with developers/ builders. For this reason many Community Associations prefer to have a reserve analyst whose office is within driving distance of their community.

New Reserve Study Criteria

Itemized Lists & Quantities of Components:

Reserve study criteria have been updated. Reserve Studies must now include:

(i) an “itemized list” identifying each of the included components (structural, mechanical, electrical, plumbing and other components that are the responsibility of the Association); as well as

(ii) the “quantity or size” of each component (e.g., number of units or square footage).

MD Condo Act § 11-109.4(a)(2)(i) and (v); MD HOA Act § 11B-112.3(a)(2)(i) and (v);  MD Co-op Act § 5–6B–26.1(a)(2)(i) and (v). Itemizing and quantifying each included component was already common practice but is now expressly required by law.

Minor Component Exclusion:

Community Associations are now authorized to exclude components from the reserve study that do not meet “a minimum cost of repair or replacement” threshold to be established by the Association. This allows an association to exclude components that do not need to be funded over long periods of time because the repair / replacement cost is minimal or the component is otherwise reasonably addressed by expenses allocated to the association’s yearly operating budget. MD Condo Act § 11-109.4(a)(2)(i)2; MD HOA Act § 11B-112.3(a)(2)(i)2;  MD Co-op Act § 5–6B–26.1(a)(2)(i)2. Excluding minor components from a reserve study was already a common practice but is now expressly permitted by law.

Updated Reserve Studies Defined:

Maryland law already required Community Associations to update the initial reserve study every 5 years. The purpose of a basic “updated reserve study” is to update the prior reserve study by revising, as necessary, the previously estimated replacement costs and remaining useful life estimates while taking into account: the current condition (aging) of the components; any interim repair or replacement work performed and reserve spending that has occurred since the last reserve study; any existing maintenance contracts which may affect needed reserves. Based on this new data, the reserve analyst comes up with an adjusted annual reserve funding contribution amount to ensure reserve funding stays on track.

The law now defines an “updated reserve study,” as a report which:

• • updates the previous reserve study completed 5 years earlier;
  • revises replacement costs, remaining life, and useful life estimates;
  • analyzes repair or replacement work performed and amount spent; and
  • identifies existing maintenance contracts.

MD Condo Act § 11-109.4(a)(3); MD HOA Act §§ 11B-112.3(a)(3); MD Co-op Act § 5–6B–26.1(a)(3).

Reserve Account Funding Plans

The Funding Plan:

All Community Association’ are now required to develop a “funding plan,” in consultation with a reserve specialist, architect, or engineer, for the purposes of determining how to achieve the legally required funding of the Association’s reserve account. MD Condo Act § 11-109.4(f)(1); MD HOA Act § 11B-112.3(f)(1);  MD Co-op Act § 5–6B–26.1(g)(1).

Selection of a Funding Method:

Each funding plan must be based on a one of the following recognized funding methods:

(i) The component method;

(ii) The cash flow method;

(iii) The baseline funding method;

(iv) The threshold cash flow method; or

(v) Any other funding method consistent with GAAP.

MD Condo Act § 11-109.4(f)(2); MD HOA Act § 11B-112.3(f)(2);  MD Co-op Act § 5–6B–26.1(g)(2). The reserve specialist, architect, or engineer will design a funding plan based on the funding method selected by the Association.

Comparison of Funding Methods:

The key difference between these funding methods is the level risk the Association is willing to accept. Each funding method reflects a different balance between risk, predictability, assessment impact, and long-term financial stability. See Cowie Law Group article: “Comparison of Permitted Reserve Funding Methods for Maryland Condominiums, HOAs and Co-ops.” Traditionally, most reserve funding has followed the so-called “component method,” which is considered the most conservative approach. While Maryland law now specifically allows other less conservative funding methods, boards must remember that choosing the least expensive option does not eliminate financial responsibility—it merely shifts risk to future boards and unit owners. Selecting a reserve funding method is a critical financial decision that directly impacts an Association’s long-term stability, disclosure obligations, and risk of future special assessments. The type of funding can also affect the ability of an Association to obtain favorable loans and insurance rates. Boards should ensure that the chosen method is clearly disclosed in the reserve study and annual budget materials and revisited regularly as conditions change. Likewise, boards should keep in mind that reserve funding decisions are evaluated through the lens of fiduciary duty, reasonableness, and foreseeability, especially when Associations face major repairs or litigation.

Funding Plan Priorities (the “prioritized items”):

Funding plans adopted by an Association must prioritize common element / area components necessary for “health, safety, and well-being of occupants.” MD Condo Act § 11-109.4(f)(3); MD HOA Act § 11B-112.3(f)(3);  MD Co-op Act § 5–6B–26.1(g)(3). This includes “ensuring structural integrity” and essential functioning of plumbing, sewer, HVAC, and electrical infrastructure, and “other essential or critical purposes determined by the Association.” MD Condo Act § 11-109.4(f)(3); MD HOA Act § 11B-112.3(f)(3);  MD Co-op Act § 5–6B–26.1(g)(3). Even in instances of “financial hardship” (discussed below”), the “prioritized items” must continue to be funded such that there will be adequate amounts for repair and replacement.

Annual Funding Plan Progress Reviews:

All Community Association governing bodies are now required to regularly review their “progress toward compliance with the funding plan …at each annual meeting.” MD Condo Act § 11-109.4(f)(5); MD HOA Act § 11B-112.3(f)(5); MD Co-op Act § 5–6B–26.1(g)(5). The statute specifically states that “the reserve and the most recent reserve study or updated reserve study” must be “annually review[ed] … to determine whether there is adequate funding in accordance with the funding plan.” MD Condo Act § 11-109.2(c)(4)(i); MD HOA Act § 11B-112.2 (d)(4)(i); MD Co-op Act § 5–6B–26.1(f)(1)(i). Community Associations are not required to commission a new “a reserve study or updated reserve study” as part of performing it annual review unless such a study is otherwise required by law in the ordinary course (i.e, every 5 years following the initial reserve study updated). MD Condo Act § 11-109.2(c)(4)(ii); MD HOA Act § 11B-112.2 (d)(4)(ii); MD Co-op Act § 5–6B–26.1(f)(2).

Permitted 5 Year Borrowing from Reserve Accounts

Associations are now specifically permitted to borrow from their reserve account funds so long as the funds are repaid “within 5 years after their use.” MD Condo Act § 11-109.4(f)(4); MD HOA Act § 11B-112.3(f)(4);  MD Co-op Act § 5–6B–26.1(g)(4). The borrowed funds may be used for purposes other than repair or replacement of the common element and common area components as specified in the Association’s funding plan. Borrowing from reserve funds has been a common practice for cash-strapped Community Associations, but now it is expressly authorized by the law under these conditions.

Amount and Timing Requirements for Annual Reserve Funding

This legislation mandates that the monetary amount of reserves specified in an Association’s annual budget to be placed in the reserve account must equal the funding amount recommended in the most recent reserve study “or updated reserve study” and the Association’s funding plan. MD Condo Act § 11-109.2(c)(1) (i); MD HOA Act § 11B-112.2 (d)(1) (i); and MD Co-op Act § 5–6B–26.1(f)(1)(i)1. Additionally, that monetary amount must be deposited in the Association’s reserve account “on before the last day of each fiscal year.” MD Condo Act § 11-109.2(c)(1)(ii); MD HOA Act § 11B-112.2 (d)(1)(ii); MD Co-op Act § 5–6B–26.1(f)(1)(i)1.

There are two exceptions to the amount and timing requirements: (i) the initial reserve study 5-year catch up exception; and (ii) the financial hardship exception, both discussed below.

5-Year Catch Up Exception for Initial Reserve Study Funding

Community Associations obtaining their first reserve study (the initial reserve study) now have a period of 5-years fiscal years (budget cycles) to meet (“catch up” with) the funding recommendations specified in the initial reserve study in accordance with the Association’s funding plan. MD Condo Act § 11-109.2(c)(2); MD HOA Act § 11B-112.2 (d)(2); and MD Co-op Act § 5–6B–26.1(f)(1)(ii).  The 5 year period commences following the fiscal year in which the initial reserve study was completed. This 5-year grace period is an exception to the legal requirement that the monetary amount of reserves specified in the reserve study must be placed in the Association’s reserve account “on before the last day of each fiscal year.” MD Condo Act § 11-109.2(c)(1) (i) and (ii); MD HOA Act § 11B-112.2 (d)(1) (i) and (ii); and MD Co-op Act § 5–6B–26.1(f)(1)(i)1.

Prior law gave an Association only 3-years from the initial reserve study to reach recommended reserve funding level levels. As such, the new legislation adds an additional 2 years.

2- Year Financial Hardship Exception

Associations facing “financial hardship” now have a statutory mechanism to delay or deviate from their budgeted reserve funding requirements for up to 2 budget cycles.

Financial Hardship Determination:

For this exception to apply, an Association must first declare a financial hardship. This requires the Association’s governing body to make a determination, by a 2/3rds vote, that the Association’s and its members “are experiencing a financial hardship that limits the ability to fund reserves required” to be deposited into the reserve account at the end of each fiscal year, or, in the case of an initial reserve study, required to be deposited within 5 fiscal years. MD Condo Act § 11-109.2(c)(3)(i); MD HOA Act § 11B-112.2 (d)(3)(i); MD Co-op Act § 5–6B–26.1(f)(2)(i).

Financial Hardship Deviation from Reserve Funding Requirement:

Once a “financial hardship determination” is made, an Association “may reasonably deviate from that reserve funding requirement.” Condo Act § 11-109.2(c)(3)(ii)1; MD HOA Act § 11B-112.2 (d)(3)(ii)1; MD Co-op Act § 5–6B–26.1(f)(2)(ii)1. However, the ability to “reasonably deviate” does not apply “prioritized items” in the Association’s funding plan. Even with a financial hardship determination, the Association must still “at least” continue to provide adequate reserve funding for repair or replacement of  the “prioritized items” in its funding plan (i.e., the common elements / areas identified as necessary for health, safety and structural integrity of the community, including essential systems, such as plumbing, HVAC, electrical). MD Condo Act § 11-109.2(c)(3)(ii)2; MD HOA Act § 11B-112.2 (d)(3)(ii)2; and MD Co-op Act § 5–6B–26.1(f)(2)(ii)2.

Requirements for Continuing Deviation from Reserve Funding Beyond 1 Year:

A financial hardship deviation from reserve funding may continue for up to 2 consecutive fiscal years if the statutory procedures are followed. The initial financial hardship determination allows the Association to deviate from the reserve funding requirements for “1 fiscal year [after] the financial hardship determination” is made by a 2/3rds majority vote of the governing body. MD Condo Act § 11-109.2(c)(3)(iii)1; MD HOA Act § 11B-112.2 (d)(3)(iii)1; MD Co-op Act § 5–6B–26.1(f)(2)(iii)1. Thereafter, a financial hardship determination may be renewed by a 2/3rds majority vote the Association’s governing body, which allows the Association to deviate from the reserve funding requirements for one additional fiscal year following the hardship renewal. MD Condo Act § 11-109.2(c)(3)(iii)2; MD HOA Act § 11B-112.2 (d)(3)(iii)2; and MD Co-op Act § 5–6B–26.1(f)(2)(iii)2.

Prior Notice of Financial Hardship Determination:

The Association’s membership (i.e., condominium unit owners, homeowner association lot owners, or co-op members) must be given notice before a financial hardship determination is made. Specifically, a  vote on a financial hardship determination (“initial or renewal) “must be taken only at a regular or special meeting,”  and all Association members must “be given reasonable notice” of the vote “in advance.” MD Condo Act § 11-109.2(c)(3)(v); MD HOA Act § 11B-112.2 (d)(3)(v); and MD Co-op Act § 5–6B–26.1(f)(2)(v).

Efforts to Resolve & Document Financial Hardship Determination:

During the financial hardship, the Community Association must make efforts to resolve the financial hardship, document those efforts, and make records of those efforts available for inspection by its membership. Specifically, the governing body is required to “[m]ake good faith efforts to resolve the financial hardship and resume funding of reserves” annually as required under the funding plan and reserve study. MD Condo Act § 11-109.2(c)(3)(iv)1; MD HOA Act § 11B-112.2 (d)(3)(iv)1; and MD Co-op Act § 5–6B–26.1(f)(2)(iv)1. These good faith efforts must be documented by the governing body and made available for examination and copying. MD Condo Act § 11-109.2(c)(3)(iv)2 and 3; MD HOA Act § 11B-112.2 (d)(3)(iv) 2 and 3; and MD Co-op Act § 5–6B–26.1(f)(2)(iv) 2 and 3.

New Prohibitions Against Regulating “Family Child Care Homes”

HB 785 (enacted as Chapter 375 of the 2025 Legislative Session), effective October 1, 2025

This legislation aims to address the Maryland’s child care shortage by making it easier for individuals to operate “Family Child Care Homes” in residential communities. The law achieves this by overriding Association governing documents and other legal restrictions of Community Associations (condos, HOAs, and Co-ops) that hinder or prohibit the establishment of these businesses. The law also extents to local jurisdictions. The Maryland Chamber of Commerce supported the HB 785 as a critical step to boost workforce participation by increasing the supply of accessible and affordable childcare, especially for infants and toddlers.

What Is a Family Child Care Home?

A “Family Child Care Home” is a residential use in which a homeowner or resident (a “Family Child Care Provider”) provides childcare services for a small number of children in the provider’s primary residence. In Maryland, these homes and providers are licensed and registered by the Maryland State Department of Education. As such these homes are subject to limits on the number of children, health and safety requirements, and ongoing regulatory oversight. There are two types of regulated homes: “Family child care home” (up to eight children) and “Large family child care home” (nine children to 12 children) (jointly referred to herein as “family child care homes”). Maryland Education Article § 9.5–301(e) and (g). Family child care homes are distinct from child care centers because they are operated within a dwelling unit, limited in scale, intended to be compatible with residential neighborhoods and treated under Maryland law as a form of residential use rather than a commercial enterprise

Traditional Treatment of Family Child Care Homes by Associations

Historically, condominiums, HOAs and co-ops frequently prohibited or restricted family child care homes through their governing documents. Common approaches include blanket bans on “businesses” or “commercial activity,” restrictions on increased traffic, signage, or non-resident activity, and enforcement actions based on zoning-style arguments or nuisance concerns. As a result, many Community Associations treat family child care operations as incompatible with residential use, even when the provider was properly licensed by the State.

Shift in Maryland Law in Favor of Family Child Care Homes

In recent years, Maryland lawmakers have taken the position that licensed family child care homes should be protected residential uses, and that community associations should not categorically prohibit them. This new legislation requires condominiums, HOAs and Co-ops to allow family child care homes, while still permitting “reasonable regulation” to address legitimate concerns such as safety, common area use, parking, and noise.

New Restrictions on Association’s Right to Regulate Family Child Care Homes

Community Associations Cannot Ban Family Child Care Homes:

Association governing documents may no longer prohibit or unreasonably restrict the establishment and operation of licensed family child care homes in Maryland. MD Condo Act § 11-111.1(c)(1)(i); MD HOA Act § 11B-111.1(c)(1)(i); MD Co-op Act § 5–6B–22.1(c)(1)(i). Maryland law now dictates that the operation of a “family child care home” or ‘“large family child care home”(up to 12 children) is classified as a permitted residential activity. MD Condo Act § 11-111.1(c)(2); MD HOA Act § 11B-111.1(c)(2); MD Co-op Act § 5–6B–22.1(c)(2).This means general covenants that restrict commercial or business activity cannot be used to ban them, provided they meet state-specific operational requirements. Any existing covenant, bylaw, rule, or restriction that bans family child care homes is now rendered unenforceable.

Use of Common Areas: 

Association governing documents may no longer prohibit or restrict patrons of family child care homes (e.g., parents, children, staff) from using the common elements/areas of the community (e.g., roads and sidewalks), except for reasonable rules applicable to all residents. MD Condo Act § 11-111.1(c)(1)(ii); MD HOA Act § 11B-111.1(c)(1)(ii); MD Co-op Act § 5–6B–22.1(c)(1)(ii).

Capacity Limits: 

Associations are prohibited from limiting the number of children served by a family child care home can care below the capacity authorized by the Maryland State Department of Education (i.e., 8 for a “family child care home” and 9 to 12 for a “large family child care home”). MD Condo Act § 11-111.1(c)(3); MD HOA Act § 11B-111.1(c)(3); MD Co-op Act § 5–6B–22.1(c)(3).

Permitted Reasonable Restrictions Associations May Place on Family Child Care Homes:

Associations may impose the following conditions on family child care homes.

Association Insurance Increases:

Associations may require family child care providers to pay for Association insurance increases “solely and directly attributable” family child care operations on a on a pro rata basis. MD Condo Act § 11-111.1(e)(1); MD HOA Act § 11B-111.1(e)(1); MD Co-op Act § 5–6B–22.1(e)(1).

Common Area Use Fees:

Associations may impose a nominal fee on a family child care providers for use of the common elements/areas not to exceed $50 per year. MD Condo Act § 11-111.1(e)(2); MD HOA Act § 11B-111.1(e)(2); MD Co-op Act § 5–6B–22.1(e)(2).

Prior Notification:

Associations may require a owners/residents to notify the Association before opening a family child care home. MD Condo Act § 11-111.1(f)(1); MD HOA Act § 11B-111.1(f)(1); MD Co-op Act § 5–6B–22.1(f)(1).

Provider Insurance Requirements:

Associations may require a family child care provider to obtain liability insurance in the amount required by State law. MD Condo Act § 11-111.1(g); MD HOA Act § 11B-111.1(g); MD Co-op Act § 5–6B–22.1(g).

Exemption for Age Restricted Communities – Only Applies to Co-ops

Age-restricted Co-ops (e.g., 55+ Co-op communities) are exempt from the new prohibitions on regulating family child care homes:

“This section does not apply to a cooperative housing corporation that is restricted for occupancy to individuals over a specified age.”

MD Co-op Act § 5–6B–22.1(b).

However, this age-restricted community exemption was not extended to condominiums and HOAs. In fact, HB 785 removed language from the statute that had previously exempted age restricted Condos and HOAs from the statutory provision applicable to family child care homes.  See former MD Condo Act § 11-111.1(b)(1) and former MD HOA Act § 11B-111.1(b)(1), both now stricken.

Thus, unlike Co-ops, there is no explicit age-restriction exemption in the statute for Condos and HOAs. It is possible that there was some legislative confusion because the “Fiscal and Policy Note” for HB 785 indicates that the age restricted exemption applies to all types of communities (Condos, HOAs and Co-ops) affected by the statute:

“The bill’s [HB 785’s] provisions do not apply to housing that is restricted for occupancy to individuals over a specified age.”

Fiscal and Policy Note on HB 785. Legislators often rely upon these Fiscal and Policy Notes published by the Department of Legislative Services which are intended to summarize the effect of a Bill as enacted. There is no indication that this quoted language only applies to Co-ops as opposed to Condos and HOAs..

Associations Prohibited from Requiring Owners to Provide Sensitive Information and Data 

SB 540 / HB 755 (enacted as Chapters 522 & 523 of the 2025 Legislative Session), effective October 1, 2025

This legislation limits the ability of  Community Associations to collect “sensitive information,” defined as:

(i) Social Security card or Social Security number;

(ii) Individual Taxpayer Identification Number;

(iii) Birth certificate;

(iv) Racial or ethnic origin;

(v) National origin;

(vi) Citizenship or immigration status;

(vii) Religious or philosophical beliefs; or

(viii) Medical records.

MD Condo Act § 11-108.2(a)(1); MD HOA Act § 11B-111.11(a)(1); MD Co-op Act § 5–6B–23.2(a)(3). Associations may not require their members or occupants, or the guests or children of members or occupant, to provide this “sensitive information” as a condition to using a recreational common area. However, this new law does not prevent Community Associations from requiring a government issued photo identification, such as a driver’s license, as a condition use of a recreational common area. MD Condo Act § 11-108.2(a)(2); MD HOA Act § 11B-112.12(a)(2); MD Co-op Act § 5–6B–23.2(a)(ii).

Election Reforms – Independent Party Requirement

SB 758 (enacted as Chapter 512 of the 2025 Legislative Session), effective October 1, 2025

This legislation changes the way Maryland condominiums and HOA conduct board elections.  Only “independent parties,” may now conduct elections for officers and board members. The legislation is intended to exclude those parties with a potential conflict of interest in the outcome. Significantly, most community management companies, who traditionally handled these elections, are now disqualified under this new law.

The “Independent Party Requirement” – Who is an “Independent Party” Permitted to Conduct Elections

Elections for officers and board members, “including the collection and counting of ballots and certifying of results.” may only be conducted by “independent parties.” MD Condo Act § 11-109(c)(17)(i); MD HOA Act § 11B-118(a)(1). To be a qualify as an “independent party,”, one must not be candidate in the election and must have “no conflict of interest regarding any candidate in the election.” MD Condo Act § 11-109(c)(17)(i)(1)-(2); MD HOA Act § 11B-118(a)(1)(i)-(ii).

Individual owners, community owned management companies, third-party vendors, and commercial technology platforms can all satisfying the independent party requirement if they meet the following additional criteria:

Unit and Lot Owners who Qualify as Independent Parties:

Condominium unit owners and HOA lot owners qualify as an independent party if they don’t campaign as and “electioneer for any candidate,” and are not objected to by more than 25% of eligible voters. MD Condo Act § 11-109(c)(17)(ii); MD HOA Act § 11B-118(a)(2)(ii).

Management Companies who Qualify as Independent Parties:

The Community Association’s property management is not considered an “independent party” and excluded from conducting elections unless owned “in-house” by the Association or its parent Association (i.e., master association). MD Condo Act § 11-109(c)(17)(iii); MD HOA Act § 11B-118(a)(2)(i). This rules out most property management companies as because they are typically third-party vendors hired, but not owned, by the Association. Any involvement of the Association’s non-qualified management company, such as by distributing ballots, collecting and counting votes and certifying results, would allow for election challenges on grounds of violating the statute.

Third-Party Elections Vendors or Election Technology Platforms:

The statute authorizes a Community Association’s to retain third-party vendors to conduct its elections or, alternatively, use commercial technology platforms to conduct elections. MD Condo Act § 11-109(c)(18); MD HOA Act § 11B-118(a)(2)(iii). A third-party vendor or election technology company affiliated with the Association’s existing management company or an owner could present a problem for statutory compliance and allow for election challenges on grounds of violating the statute. Also, if persons using an election technology platform are not “independent parties” this could also spawn litigation.

Other Options: Independent Election Committee or Legal Counsel:

Other options that would satisfy the Independent Party Requirement include appointment of an independent election committee or utilizing the Association’s legal counsel. See “Compliance Tips for Independent Party Requirement” below.

Election Accountability and Immunity from Personal Liability

Individuals conducting elections are legally mandated to ensure fairness and accountability for the election process and results. MD Condo Act § 11-109(c)(19); MD HOA Act § 11B-118(b).  However, should there be a claim of election irregularity, a unit or lot owner designated to conduct an election is not personally liable in conducting the election if they acted “in good faith.” MD Condo Act § 11-109(c)(20); MD HOA Act § 11B-118(c).

Conflicting Election Provisions in Governing Documents

Any provisions in governing documents, rules or regulations, that conflict with these new elections law requirements are now unenforceable and void. MD Condo Act § 11-109(c)(22); MD HOA Act § 11B-118(d).

Common Element Accommodation for Condominium Unit Owners

 Condominium Associations must make reasonable accommodations for unit owners to engage in organizing activities, including reasonable use of common areas, such as a clubhouse conference room, related to governance of the condominium such as campaigning for a candidate. MD Condo Act § 11-109(c)(21)(i). Likewise, boards of directors cannot prevent, or retaliate against, a unit owners for exercising their rights guaranteed under the law or governing document. MD Condo Act § 11-109(c)(21)(i).

Exception to Independent Party Requirement for Smaller, Member-Managed Condominiums.

For Maryland condominiums, the independent party requirement applies to elections:

“for officers or members … other than the full membership of the council of unit owners ….”

MD Condo Act § 11-109(c)(17)(i)(emphasis added). This language can be read to create a “carve out” exception for very small or informal condominiums where all owners (i.e., “the full membership of the council of unit owners”) make decisions together as the governing body. If everyone in the condominium is part of the governing body ( the “full membership”), there isn’t a smaller group among the “full membership” being elected, so the requirement to use an independent party to run the election does not apply. The carveout language does not exist in the amendments to the Maryland Homeowners Association Act. See MD HOA Act § 11B-118(a)(1).

Compliance Tips for Independent Party Requirement

Election challenges remain one of the most common sources of association litigation. As such, until there is more defining caselaw, it is prudent to interpret the Independent Party Requirement broadly to cover most aspects of election process. Although the statute specifically mentions “collection and counting of ballots and certifying of results.” there is no doubt that the practice of “conducting elections” is not limited to these specified activities. Conducting an Election also includes the calling for and collecting of nominations, preparation and dissemination of election materials (e.g., ballots, notices, proxies), etc. To avoid potential challenges to election procedures based on the Independent Party Requirement, it would be prudent to exclude those who do not fall within the definition of “independent parties” from participating in any part of the election process. As such, Associations without “in-house” management have a few options that don’t involve a third-party elections vendor or technology platforms, including:

Qualified Board Members:

If there are enough Board members who qualify as independent parties (i.e. are not candidates, are not campaigning for candidates, do not have other conflict of interest, or are not objected to by 25% of the voting membership), they can conduct the election without involvement of property management or any disqualified board members.

Independent Election Committee:

The Board can appoint an independent election committee to conduct elections in compliance with the law.  The committee could consist of unit owners (including any board members) who will not be candidates in the election or engage in electioneering/campaigning, and do not have a conflict of interest with any candidate.  If committee members later decide to become a candidate, engage in electioneering or develop a conflict of interest, or if 25% of the voting membership objects to the service of any committee member, they would need to be removed from the election committee.  (Objection by 25 % of the voting membership would likely occur by the filing of a petition for a special meeting to vote on the matter in accordance with the governing documents.) The appointment of an election committee should be done in an open Board meeting with advance notice to the unit owners in accordance with the governing documents. Election committees should be appointed in time for them to receive nominations, the call for which must be sent to all unit owners at least 45 days before the notice of the election is sent per the MD Condominium Act.

Legal Counsel:

Alternatively, while property management representatives are precluded from conducting elections by the new law, counsel for the Association is not.  As such, association counsel could be asked to conduct an election or could assist an election committee in doing so.

Boards should work with legal counsel to adopt written policies for conducting elections in compliance with the new law to guide the board and to provide notice to owners of the details about how elections will be conducted.

Books and Records – No Fee for Reviewing Financial Statements:

SB 758 (enacted as Chapter 512 of the 2025 Legislative Session), effective October 1, 2025

This bill prohibits condominium associations and HOAs from charging their owner members any fees for examining financial statements in person or receiving them electronically. The bill amends existing law allowing members to inspect certain association. Although Associations may still impose reasonable charges for copying and delivering of records, no charge may be imposed for in person examination of financial statements where they are maintained or electronic transmission of financial statements. MD Condo Act § 11-116(d); MD HOA Act § 11B-112(b). In practice, this means that owners can inspect financial statements at the manager’s office or in the common area facilities without charge and may request that financial statements be emailed to them without charge, two circumstances where association expense is minimal.

Expanded Consumer Protection Enforcement:

SB 758 (enacted as Chapter 512 of the 2025 Legislative Session), effective October 1, 2025.

Expanded Authority of  Consumer Protection Division to Enforce the Condominium and HOA

The Maryland Attorney General’s office, through its Division of Consumer Protection,  has traditionally had authority to enforce Maryland’s Condominium and HOA Acts to the extent that a violation “affects a consumer.” This legislation  removes the “affects a consumer” limitation and expands the authority of the Division of Consumer Protection of the Office of the Attorney General to enforce any violation of the Maryland Condominium Act or Homeowners Association Act to the full extent of its authority as granted in the Maryland Consumer Protection Act (MCPA). MD Condo Act § 11-130(c); MD HOA Act § 11B-115(c). Additionally, the Division of Consumer Protection is granted authority to adopt regulations to carry out enforcement of the Maryland Condominium and Homeowners Association Act. MD Condo Act § 11-130(d); MD HOA Act § 11B-115(d).

Clarification that the Maryland Consumer Protection Act Applies to Condominiums and HOAs

The definition of “consumer” was also expanded to include a condominium “unit owner,” and an HOA “lot owner,” and not just “an actual or prospective purchaser, lessee, assignee or recipient” of a unit or a lot. MD Condo Act § 11-130(b); MD HOA Act § 11B-115(b).  This is significant because the MCPA applies to “consumers,” including purchasers or prospective purchasers of “consumer realty,” including a residential condominium unit  or HOA home. See, MCPA § 13-101(c) and (d). By specifically amending the Condominium and HOA Acts to state that unit owners and lot owners constitute “consumers,” the legislature is making it clear a that the Maryland consumer protection act applies to residential condominium and homeowners associations and their members, including with regard to the construction, development, marketing, operation, managements and sale of these communities to the public. Under the MCPA, the Attorney General’s office or a private “consumer” may Bring legal claims for violation of the Maryland consumer protection act for unfair or deceptive trade practices. These practices can include misrepresentations, or concealment of material facts, by condominium or HOA developers about the quality or characteristics of a newly constructed condominium or HOA community. Under the Maryland law a condominium association can bring a private claim for violation of the MCPA on behalf of itself or two or more unit owners on matters affecting the condominium. See Cowie Law Group article, Resolving Condominium Construction Defect Claims in Maryland. Additionally, plaintiff who succeeds on its consumer protection act claim may be awarded reasonable attorney’s fees by the court. See Cowie Law Group articles, Maryland Condo Association’s Right To Recover Attorney’s Fees In Condominium Construction Defect Case, and Maryland Court Awards Condominium $6.6 Million for Construction Defects and $500,000 in Attorney Fees.

Required Accessory Dwelling Unit Accomodation for Homeowners Associations

SB 891 / HB 1466 (enacted as Chapters 196 & 197 of the 2025 Legislative Session), effective October 1, 2025

Maryland State Policy Regarding Accessory Dwelling Units

This legislation, known as the Accessory Dwelling Units Act of 2025, was enacted to promote and encourage the creation of Accessory Dwelling Units (ADUs) on properties zoned for single-family homes as part of a State-wide housing strategy to increase affordable housing availability and options, support multigenerational living, and make more efficient use of existing residential land.  ADUs could be a conversion within a primary residence (e.g., renovation of a an existing basement or garage into an apartment) or construction of a smaller house on the same lot as the primary residence, either attached by at least one common wall or completely detached (e.g., a guest house). All Charter Counties and Baltimore City must adopt laws authorizing ADU development. See Maryland Land Use Article § 4–501 through § 4-504.

Effect on Homeowners Associations

This legislation impacts homeowners associations as they are made up of multiple individual residential lots. The legislation specifically prohibits homeowners associations, through HOA declarations, bylaws, rules, or otherwise from imposing unreasonable limitations “on the ability of the property owner to develop or offer for rent an accessory dwelling unit.” Maryland Real Property Article § 2-126(b((1)). Maryland Condominiumand HOA Law Update Maryland Real Property Article § 2-126(b)(2) and (c).

As part of the accessory dwelling units act of 2025, the Maryland homeowners association was amended to incorporate the Act’s definition of “accessory dwelling unit,” MD HOA Act § 11B-101(a-1), and authorize a homeowners association to treat and accessory dwelling unit as a separate lot for purposes of voting, MD HOA Act §11B-111.11, and levying assessments. MD HOA Act § 11B-117(a)(2).  

HOAs must reconcile governing document restrictions with state-mandated ADU protections and revise enforcement authority.

Updated Permissible Restrictions on Owner Installation of Solar Collector Systems

SB 120 / HB 4 (enacted as Chapters 516 & 517 of the 2025 Legislative Session), effective October 1, 2025

Restrictions on Solar System in Areas Where Homeowners have Exclusive Use

Maryland law already protects homeowners’ rights to install solar panels or other solar collection systems on roofs or exterior walls for which they have a right of exclusive use by preventing condominium associations and HOA from imposing “unreasonable limitations” by way of declarations, bylaws, rules, or otherwise. Maryland Real Property Code (RP) MD RP § 2-119(b)(1). This legislation amends that law to provides more certainty for homeowners seeking to present proposals to their architectural committees by defining what type of Association restrictions constitute an “unreasonable limitation.” Specifically, a restriction on the use of solar panels is unreasonable if it: (i) increases the installation cost of the proposed system by over 5%, or (ii) decreases the energy generated by the proposed solar system by 10%.  MD RP § 2-119(b)(2). In short, this law is designed to ensure that owners in communities with rules, such as condominiums and HOAs, generally have a right to go solar. While Associations cannot prohibit solar in areas where a homeowner has exclusive use, they can enforce aesthetic rules as long as those rules don’t make the system prohibitively expensive to install or ineffective.

An owner who wishes to challenge an Association’s prohibition of a solar collection system proposal as an “unreasonable limitation,” must provide documentation prepared by an independent solar panel design specialist who is (i) certified by the North American Board of Certified Energy Practitioners or, (ii) alternatively, has experience designing at least 30 solar collector systems within the prior 3 years as attested by affidavit. MD RP § 2-119(b)(3).

Common Area /Element Restrictions on Solar Systems

Community Associations, however, may prohibit or restrict the installation of solar collector systems or otherwise create reasonable restrictions on the number size, place, or manner of placement or installation of solar collection systems within the common area or common elements served bay the Association, including restricting size number and location of solar panels in common areas and elements. MD RP § 2-119(b)(4)(i) and (ii). This legislation expressly grants board of Directors for a community Association the discretion to install a solar collector system in the common areas or elements, notwithstanding any contrary provisions in the governing documents, if otherwise permitted by law. MD RP § 2-119(b)(3)(iii).

Prior Maryland Case Law

These amendments to the statute appear, in part, to be in reaction to the Maryland Court of Appeals decision in the case of Blood, et ux. v. Stoneridge at Fountain Green Homeowners Association, Inc., where the  court upheld an HOA’s decision requiring a resident to remove solar panels on the front of their home. The court found this was not an unreasonable limitation under the prior, more general version of the statute, because the homeowners were allowed to keep the panels on the rear of their home.

Mandatory Registration for PG County Community Associations

HB 360 (enacted as Chapter 597 of the 2025 Legislative Session), effective October 1, 2025

Condos, HOAs, and Co-ops located in Prince George’s (“PG”) County must now register with the PG County Office of Community Relations and pay all required fees under Maryland Real Property Code (“RP”) § 14-131. Registration must be completed online at the PG County Community Association Registry, renewed on or before January 31 of each year. RP § 14-131(d)(1). As part of the registration process each PG County Community Association must provide contact information for its community property management company. See Common Ownership Community Registration Program Registration Page.

New Provisions:

• For PG County Condos this new law is codified at § 11-109.5 of the Maryland Condominium Act (“MD Condo Act”).
• For PG County HOAs this new law is codified at § 11B-112.4 of the Maryland Homeowners Association Act (“MD HOA Act”).
• For PG County Co-ops this new law is codified at § 5–6B–26.2 17 of the Maryland Corporations and Associations Article (“MD Co-op Act”).

Why this matters:

Community Associations that fail to register may face enforcement consequences including misdemeanor charges and potential fine not to exceed $1000. RP § 14-131(k).

CONCLUSION / RECOMENDATIONS

The 2025 legislative session reflects a continued trend toward increased regulation of community associations, in part resulting from of State priorities with regard resolving family healthcare shortage, issues pertaining to affordable housing availability and efficient use of existing residential real estate, promotion of efficient/clean solar energy, ensuring financial stability of Community Associations through reserve funding, election fairness and transparency, and owner data privacy. Boards and managing agents should not assume existing practices remain compliant after October 1, 2025.

Associations are encouraged to:

• Review governing documents
• Update policies and procedures
• Consult with legal counsel before implementing changes triggered by these new laws

Proper planning now can help avoid disputes, enforcement actions, and costly litigation later.

 

Maryland HOA Lawyers

Washington DC Condominium Attorneys

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