Maryland Reserve Study Requirements: HOA & Condo Deadlines and Funding

Maryland reserve study requirements apply to nearly all residential condominium associations and to homeowners associations whose common-area repair or replacement costs total at least $10,000. Under Real Property § 11-109.4 (condos) and § 11B-112.3 (HOAs), the board must commission an independent reserve study, update it at least every five years, adopt a formal funding plan, and fund reserves in the annual budget at the level the study recommends. The framework was enacted by House Bill 107 in 2022 and significantly amended by House Bill 292 in 2025.

Which Associations Must Comply

Every residential condominium in Maryland is covered. Condominiums used solely for nonresidential purposes are exempt from the budget and reserve provisions of § 11-109.2.¹

For HOAs, two conditions must both be met: the declaration must make the association responsible for maintaining and repairing common areas, and the total repair or replacement costs for all identified components must reach at least $10,000. HOAs that issue bonds to cover capital expenditures are also excluded.² A small HOA of single-family homes with no shared infrastructure beyond a modest common area can fall below the threshold. Any community with a pool, private roads, or aging roofing on shared buildings almost certainly clears it.

Compliance Deadlines

Maryland phased the HOA requirement in by county, and existing associations had timelines based on whether they had already conducted a study.

Prince George’s County: HOAs established on or after October 1, 2020 must comply. Associations formed before that date with a study done on or after October 1, 2016 must update within five years of that study. Those without a prior study were required to complete one by October 1, 2021.
Montgomery County: HOAs established on or after October 1, 2021 must comply. Existing associations with a study done on or after October 1, 2017 must update within five years; those without were required to complete one by October 1, 2022.
All other counties: HOAs established on or after October 1, 2022 must comply.²

For newly established HOAs, the initial study must be completed between 30 and 90 calendar days before the first association meeting where homeowners hold voting control. Condominium associations follow a parallel timeline under § 11-109.4.²

What the Reserve Study Must Contain

As amended by HB 292 in 2025, the study must identify every structural, mechanical, electrical, and plumbing component that the association is responsible for repairing or replacing. The board can set a minimum cost threshold for inclusion, provided that threshold is reasonable relative to the association’s overall expenses and excludes only minor items already covered in the operating budget.³

For each identified component, the study must state:

Remaining useful life, in years, before repair or replacement is needed.
Estimated cost of that repair or replacement.
Annual reserve amount that should be set aside to cover the projected expense.
Physical measurement of the component, using whichever unit fits: square footage, unit count, cubic feet, or similar.³

The measurement requirement is new under HB 292. It makes updated studies easier to compare against prior ones and produces more reliable cost estimates. Typical components include roofing systems, facades, paved surfaces such as private roads and parking lots, elevators, HVAC equipment, plumbing infrastructure, fire suppression systems, swimming pools, clubhouses, retaining walls, and stormwater drainage systems.

The study must be independent, meaning the board cannot prepare it internally. The statute does not require a specific credential.

The Five-Year Update and Annual Review

After the initial study, the board must have an updated study completed at least every five years. An update is not a full redo. It revises replacement costs, remaining life, and useful life estimates based on current conditions; analyzes work already performed and amounts spent since the prior study; and identifies any maintenance contracts in place.²

Between updates, the board must review the reserves and the most recent study each year to confirm funding remains adequate under the adopted funding plan.³ This annual review does not require a professional or a new study; the board looks at the numbers and decides whether adjustments are needed before the next formal update.

Choosing a Funding Plan

HB 292 added a requirement that the board develop a formal funding plan in consultation with the professional who prepared the study.³ The board must select from one of several recognized methods:

Component (full funding). The goal is to keep the reserve balance equal to the accumulated deterioration of all components. When the balance reaches that amount, the association is considered 100% funded.
Cash flow. Models projected expenses and income over a long period, often 30 years, to ensure funds are available when each component reaches the end of its useful life.
Baseline funding. Keeps the reserve balance above zero, with a thin margin and a higher risk of special assessments.
Threshold cash flow. Targets keeping reserves at or above a preset dollar amount or percent-funded level.
Any other approach consistent with generally accepted accounting principles.³

Reserve Contributions and the Annual Budget

Maryland law ties the annual budget directly to the reserve study. For residential condominiums, the reserves line item must match the funding amount recommended in the most recent study, and those funds must be deposited into the reserve account by the last day of each fiscal year.¹ HOAs face the same requirement under § 11B-112.3.

If the most recent study was the initial one, the board has up to five fiscal years to ramp up to the recommended annual funding level. That phase-in exists so jumping from zero reserves to full recommended contributions in a single year does not double or triple assessments overnight.¹

The annual budget must also break out replacement costs for any component with an estimated replacement cost greater than $10,000, as determined by the most recent reserve study.³

Financial Hardship Exception

When a condominium association genuinely cannot meet the recommended reserve funding level, the governing body can declare a financial hardship by a two-thirds majority vote. The declaration allows the association to deviate from the funding requirement for one fiscal year. The board can renew the hardship determination annually, but each renewal requires another two-thirds vote.¹

Even during a hardship period, funding must meet a minimum floor tied to the funding plan. The board must make good-faith efforts to resolve the hardship, keep detailed documentation of those efforts, and make that documentation available for inspection by unit owners.¹

Owner Access and Resale Disclosure

The reserve study must be available for inspection and copying by any unit owner or lot owner. The board must review the study when preparing the annual budget and provide a summary of the study to all owners along with the proposed budget.⁴

For condominium resales, the reserve study report or a summary must be included in the resale certificate provided to prospective buyers, along with a statement of the status and amount of the reserve fund.⁵

Consequences of Noncompliance

Maryland does not impose automatic fines for missing a reserve study deadline. The Attorney General’s Consumer Protection Division handles HOA and condominium governance disputes, including complaints about financial mismanagement and open-records violations, and can mediate, investigate, and take enforcement action.⁶

Homeowners can also pursue legal action directly. Board members owe fiduciary duties to the association, and a board that fails to conduct the required study or fund reserves as the study recommends is exposed to claims of breach of fiduciary duty. The practical consequences of noncompliance often hit harder than any penalty: when a major component fails, the association is left choosing between a large special assessment and a loan that carries debt service for years.

Mortgage Financing Implications

Reserve funding levels affect whether units in a condominium project qualify for conventional mortgage financing. Fannie Mae and Freddie Mac currently require condominium associations to allocate at least 10% of their annual budget to reserves. Effective January 4, 2027, that minimum rises to 15%. Associations can avoid the 15% floor if they have a reserve study conducted or updated within the last three years and are following the highest recommended funding level; baseline funding alone does not satisfy the exception.

When a condominium project fails to meet these thresholds, lenders cannot approve conventional loans for buyers in that community. The result is a smaller buyer pool, lower property values, and owners who struggle to sell or refinance.

1
Maryland General Assembly. Maryland Real Property Code 11-109.2
2
Maryland General Assembly. Maryland Real Property Code 11B-112.3
3
Maryland General Assembly. Maryland Chapter 519 – House Bill 292
4
Maryland General Assembly. Maryland Chapter 664 – House Bill 107
5
Maryland General Assembly. Maryland Chapter 735 – House Bill 1192
6
Attorney General of Maryland. Consumer Protection Division