For years, many Maryland community associations kept dues artificially low by underfunding their reserves — the savings accounts that pay for big, predictable repairs like roofs, balconies, parking structures, and building envelopes. The bill always came due eventually, usually as a sudden special assessment. After the 2021 Champlain Towers South collapse in Surfside, Florida, Maryland decided to force the issue.

The result is one of the strongest reserve regimes in the country, and a live wave of special assessments as long-underfunded buildings confront decades of deferred maintenance. For a Maryland buyer, understanding this law is the single most valuable piece of diligence you can do.

What HB 107 and HB 292 require

House Bill 107 (2022) required Maryland condominiums, cooperatives, and HOAs that maintain common areas — where the components total at least $10,000 — to obtain a professional reserve study and update it at least every five years. The study itemizes the major components, estimates their remaining useful life, and recommends a funding level.

That study requirement, by itself, mirrors what many states already do. What sets Maryland apart is the funding mandate. Under SB 63 and HB 292 (2025, effective October 2025), the association's annual budget must include reserve contributions equal to the amount recommended by the most recent study and its funding plan, and those funds must be deposited into the reserve account by the last day of each fiscal year (Md. Real Prop. §11-109.2 for condos; §11B-112.2 for HOAs). The study and the funding are both compulsory. The gap that states like California leave open — a study with no funding requirement — does not exist in Maryland.

The funding plan and the five-year catch-up

Every association must adopt a formal funding plan, developed with a reserve specialist, engineer, or architect, using one of five recognized methods: component, cash flow, baseline, threshold cash flow, or any GAAP-consistent method (§11-109.4(f)). The method matters to a buyer. Component and full cash-flow methods are more conservative; baseline and threshold cash-flow methods contribute less now and push more risk into future special assessments.

An association obtaining its first study gets five fiscal years to ramp its contributions up to the recommended level — the 2025 law extended this from the original three years. During that catch-up window, regular dues typically rise each budget cycle. If the building you are considering is mid-catch-up, rising assessments are not a possibility; they are the plan.

The bylaw-cap trap

Here is the point that surprises the most buyers: a bylaw cap on dues increases will not save you. HB 107 specifically empowers a board to raise assessments to meet the mandatory reserve-funding level even where the bylaws cap increases. If you are relying on a "dues can't rise more than X% per year" clause for comfort, the reserve mandate overrides it.

Distress signals: hardship votes and reserve borrowing

The law builds in two escape valves, and both are signals worth reading. By a two-thirds governing-body vote with member notice, an association may deviate from full funding for up to two consecutive fiscal years on a documented financial hardship (§11-109.2(c)(3)). A hardship declaration means the community cannot currently fund required reserves — a strong distress signal. Request the documentation.

Separately, since 2025 an association may borrow from its own reserve account if it repays within five years (§11-109.4(f)(4)). Confirm any reserve borrowing and its repayment status; a borrowed-against reserve is not the cushion the balance sheet suggests.

Where the special assessments are concentrated

The reserve mandate is exposing the largest deferred-maintenance bills in the oldest and most weather-exposed stock: Ocean City's 1970s–1990s coastal high-rises, where salt air has corroded balconies and envelopes, and aging Baltimore and DC-suburb buildings. Ocean City in particular has become the cautionary example, with special assessments commonly in the $5,000–$10,000 range and sometimes six figures. A special assessment approved before settlement generally runs with the unit, so the buyer inherits it.

What to request and read

• The full reserve study, not just the resale certificate's summary
• The formal funding plan and the chosen funding method
• Whether the association is in its five-year initial-study catch-up window
• The actual reserve deposits versus the funding-plan amount
• Any two-thirds financial-hardship vote and its documentation
• Any reserve borrowing and its five-year repayment status
• Recent board minutes, where assessments are usually discussed before they are levied

Read together, these tell you whether the building's reserve obligation is funded and stable or ramping and at risk. A building mid-catch-up is not a reason to walk away — but it is a cost you want quantified before your cancellation window closes.

This article describes Maryland's reserve-study and funding requirements in general terms and is not legal, financial, or engineering advice. For a specific building, consult the reserve study, the funding plan, and a qualified professional. CondoSignal reviews the documents you upload and links every finding to the exact page, so you can see reserve, funding, and special-assessment risk before you commit to a purchase.