Maryland HOA Budget Approval

Section 1: Overview — How HOA budgets are approved in Maryland

In Maryland, a homeowners' association does not approve its budget by asking owners to vote it up or down. The board adopts the budget, and the budget takes effect. Two statutes set that pattern. The Maryland Condominium Act, Real Property Title 11, governs condominium budgets; the Maryland Homeowners Association Act, Real Property Title 11B, governs planned-community budgets. And one obligation now drives both: a phased mandate that requires associations to study their reserves and fund them.^1,2

Under each statute the steps run the same way. The governing body — the council of unit owners or its board for a condominium, the board of directors for a homeowners association — prepares a proposed budget, sends it to owners before adoption, and adopts it at an open meeting. Maryland uses no owner ratification vote and no UCIOA-style negative-option rejection.^1,2 The reserve-study and funding requirement phased in county by county and now covers the whole state. It reaches condominiums and homeowners associations alike, and it requires the budget to fund reserves at the level the most recent study recommends; read the figures, the phase-in, and the effective dates below against the current Maryland Code.^3,4

Cooperatives travel a separate track. Cooperative housing corporations follow the Maryland Cooperative Housing Corporation Act, Corporations and Associations § 5-6B-01 et seq., which carries parallel reserve provisions.⁵ Maryland has not adopted the Uniform Common Interest Ownership Act. It keeps two comprehensive statutes plus the cooperative track, and its reserve-funding regime is recent and still changing. The quick-reference table and the per-statute sequence that follow lay out the mechanics, with reserves built in as part of the budget.

Section 2: The budget approval mechanism

2A. Quick-Reference Budget Mechanics Table

This table reflects the Maryland Condominium Act (Title 11) and the Maryland Homeowners Association Act (Title 11B). Cooperatives follow a separate statute (Corporations and Associations § 5-6B-26.1) and appear in 2C. The reserve rows reflect the phased reserve-study and reserve-funding mandate as it stands after the 2025 amendments.

2B. The budget and reserve sequence under each statute

Start with a condominium. Real Property § 11-109.2 sets the sequence. The council of unit owners has a proposed annual budget prepared and submitted to the unit owners at least 30 days before adoption.¹ That budget must provide for income, administration, maintenance, utilities, general expenses, reserves, and capital items.¹ The council — or the body it delegates the job to — adopts the budget at an open meeting, and it must send the adopted budget to the unit owners no more than 30 days after the adoption meeting, by electronic transmission, by posting on the association home page, or in the newsletter.¹ There is no owner ratification step and no petition-driven rejection right; the council's adoption is the operative act. One guardrail applies during the year: an expenditure that would push assessments more than 15% above the previously adopted budget — unless it answers a health-or-safety threat or a significant risk of damage — needs a budget amendment adopted at a special meeting on at least 10 days' written notice.¹

A planned community follows the same shape. Under Real Property § 11B-112.2, the board of directors has a proposed budget prepared and submitted to lot owners at least 30 days before adoption; notice of the meeting where the board will consider the budget goes to every lot owner; the board adopts the budget at an open meeting; and the adopted budget reaches lot owners no more than 30 days after adoption.² The 15% mid-year amendment rule and the 10-day special-meeting notice work the same way.² Neither statute imposes a UCIOA negative-option, and the day-counts match: 30 days before adoption for the proposal, 30 days after for the adopted budget.

Reserves now drive both budgets. Under § 11-109.4 for condominiums and § 11B-112.3 for homeowners associations, a covered community must obtain an independent reserve study from a qualified professional and update it at least every five years.^3,4 The funding obligation lives in the budget sections: the reserves in the annual budget must equal the amount the most recent study recommends, and the association must deposit them in the reserve account on or before the last day of each fiscal year.^1,2 When the most recent study is an initial study, the governing body has to reach the recommended annual funding level within five fiscal years after the year the study was completed; the 2025 amendment — House Bill 292 and Senate Bill 63 — stretched that window from three fiscal years to five for condominiums, homeowners associations, and cooperatives.⁷ The 2025 law also requires the governing body to develop a written funding plan, working with the study's preparer and choosing a recognized funding method, and it allows a two-thirds financial-hardship deviation for up to one fiscal year, renewable by another two-thirds vote.⁷ The phase-in for the initial study depends on county and creation date: communities created before October 1, 2022 outside Prince George's and Montgomery Counties that had not obtained a study since October 1, 2018 had to complete one by October 1, 2023 — the two pioneer counties faced earlier dates — and every five years after that.^3,4 Adopting the budget is not the same as levying the assessment that funds it, or enforcing a lien for nonpayment; lien mechanics run through the Maryland Contract Lien Act.⁸

2C. Cooperatives, variation, and the corporate-law overlay

Cooperative housing corporations answer to the Maryland Cooperative Housing Corporation Act, and the reserve study, the funding plan, the hardship provision, and the five-year initial-funding window all mirror the condominium and HOA tracks under Corporations and Associations § 5-6B-26.1.^5,7 Within each statute, the budget distribution day-counts, the open-meeting adoption requirement, and the reserve-study and reserve-funding obligations are mandatory. They form the statutory floor, and a declaration cannot waive them.^3,4 Other items — quorum levels, special-assessment thresholds, late charges, and assessment allocation — are left to the recorded declaration or bylaws.¹ Many Maryland associations are also incorporated as nonprofit or non-stock corporations under the Corporations and Associations Article. That article supplies corporate formalities such as director duties and meeting procedure, but it sets no budget-approval threshold; the budget rules come from Title 11 or Title 11B, not from the corporate charter.

Section 3: Budget-adjacent obligations

A. Reserves in the budget

The reserve-study and funding mandate is the highest-stakes budget obligation in Maryland, and it applies under both statutes. For condominiums, § 11-109.4 requires a reserve study for residential condominiums, updated at least every five years, and § 11-109.2 requires the budget to fund the amount the study recommends, deposited by fiscal year-end, with the initial-study level reached within five fiscal years.^1,3 For homeowners associations, § 11B-112.3 imposes the study requirement wherever the association maintains common areas whose total repair or replacement cost runs to at least $10,000, and § 11B-112.2 carries the matching funding obligation.^2,4 The study must be available for inspection, reviewed as part of budget preparation, and summarized for owners with the proposed budget; the 2025 law adds the written funding plan and the hardship provisions.^4,7 These are mandatory floors.

B. Special assessments

Neither statute sets a fixed percentage threshold for owner approval of a special assessment; approval, and any owner-vote requirement, comes from the recorded declaration or bylaws.^1,2 What the statutes do impose is the 15% rule: a mid-year expenditure that would raise assessments more than 15% above the adopted budget needs a budget amendment adopted at a special meeting on at least 10 days' notice, under § 11-109.2(e) for condominiums and § 11B-112.2(f) for homeowners associations.^1,2

C. Assessment increase limits

Neither statute caps regular assessment increases by a percentage; Maryland's principal budget constraint is the reserve-funding obligation, not a ceiling.^1,2 The Condominium Act pushes further in the reserve direction. Section 11-110(b)(1)(ii) lets a residential condominium board raise the assessment to cover the reserve funding amount, notwithstanding any declaration, articles, or bylaw provision that restricts or caps assessment increases.⁶ House Bill 107 extended comparable cap-override authority to homeowners associations and cooperatives.⁹

D. Financial review, audit, and disclosure

Neither Title 11 nor Title 11B requires an independent audit tied to the budget cycle. The statutory financial-disclosure duty that touches the budget is the reserve-study review and summary: under § 11-109.4(e) and § 11B-112.3(e), the association must review the study during budget preparation and summarize it to owners with the proposed budget, and its books and records stay available for owner inspection.^3,4 Any audit requirement comes from the declaration or bylaws, not the statutes.

Section 4: Recent legislative and judicial activity

A. Recent bills

Two measures built Maryland's current reserve framework, and both are now law.

B. Recent appellate rulings

No reported decision in the past 36 months squarely construes the budget or reserve-funding mechanics of Title 11 or Title 11B. The regime is recent, and it has not yet produced reported appellate construction. Maryland also renamed its high courts in 2022 — the Appellate Court of Maryland was the Court of Special Appeals, and the Supreme Court of Maryland was the Court of Appeals.¹⁰ One assessment decision still comes close enough to note.

C. Active legislative debates

The General Assembly keeps working on community-association measures. One to watch is House Bill 956 (2026). According to the Maryland General Assembly's bill summary, it would require "the Department of Housing and Community and Development to conduct a study on buildings in the State that are more than 40 years old and contain a condominium; and requiring the Department to report its findings to the General Assembly on or before December 1, 2026" — a subject that sits right next to reserve and structural-funding policy.⁹

Section 5: National positioning and related coverage

Maryland belongs to a growing group of states that require both a reserve study and reserve funding. California reaches the same place through the Davis-Stirling Act, Civil Code § 5550, which calls for a reserve study whenever "the current replacement value of the major components is equal to or greater than one-half of the gross budget," at least "once every three years," reviewed annually. Florida moved after tragedy: Senate Bill 4-D, the Building Safety Act, signed May 26, 2022 in the wake of the June 24, 2021 Champlain Towers South collapse, mandates Structural Integrity Reserve Studies for condominium and cooperative buildings three or more stories tall, and under Fla. Stat. § 718.112(2)(g)(2) it bars associations from waiving structural-component reserves for budgets adopted on or after December 31, 2024. Hawaii sets its own floor: the Condominium Property Act, HRS § 514B-148(b), requires associations to "assess the unit owners to either fund a minimum of fifty per cent of the estimated replacement reserves or fund one hundred per cent of the estimated replacement reserves when using a cash flow plan." Maryland stands apart from the UCIOA negative-option budget family on one side and from states with no reserve requirement at all on the other.¹²

What sets Maryland apart is the route it takes. It reaches the mandate through two separate statutes plus a cooperative track, not a single unified code. So a multi-state operator has to apply Title 11 to condominiums and Title 11B to planned communities, and confirm the $10,000 threshold for the latter. For anyone with Maryland exposure, the practical point is the same: reserve studies and phased funding now drive the budget across both condominiums and homeowners associations. The reserve number sets the floor for the assessment, and the board can raise the assessment to meet it.

HOA Weekly's Maryland Budget Approval coverage updates quarterly as the General Assembly and the Maryland courts act, and the reserve rules in particular are re-verified each quarter because they remain the most actively amended part of the framework. Federal frameworks — FHA, ADA, FDCPA, SCRA, and OTARD — apply to Maryland associations no matter what the state budget framework says.

1. Md. Code, Real Property § 11-109.2 (Annual Proposed Budget), Maryland General Assembly ↩
2. Md. Code, Real Property § 11B-112.2 (Annual Budget), Maryland General Assembly ↩
3. Md. Code, Real Property § 11-109.4 (Reserve Study of Condominium Common Elements), Maryland General Assembly ↩
4. Md. Code, Real Property § 11B-112.3 (Reserve Study of Homeowners Association Common Areas), Maryland General Assembly ↩
5. Md. Code, Corporations & Associations § 5-6B-26.1 (Reserve Study of Cooperative Housing Corporation), Maryland General Assembly ↩
6. Md. Code, Real Property § 11-110 (Common Expenses and Profits; Assessments; Liens), 2025 Maryland Code ↩
7. Senate Bill 63 (2025), Cooperative Housing Corporations, Condominiums, and Homeowners Associations – Funding of Reserve Accounts and Preparation of Funding Plans, enrolled text, Maryland General Assembly; cross-filed with House Bill 292, effective October 1, 2025 ↩
8. Md. Code, Real Property § 14-203 (Maryland Contract Lien Act), Maryland General Assembly ↩
9. House Bill 107 (2022), Chapter 664, Reserve Studies, Maryland General Assembly; see also House Bill 956 (2026), Maryland General Assembly ↩
10. Voter-approved constitutional change renames high courts to Supreme Court of Maryland and Appellate Court of Maryland (Dec. 14, 2022), Maryland Courts ↩
11. Logan v. Dietz, Appellate Court of Maryland, No. 1761, Sept. Term 2021, reported at 258 Md. App. 629 (2023) ↩
12. Reserve Requirements and Funding for Community Associations, Community Associations Institute (state comparison: California Civil Code § 5550; Florida Senate Bill 4-D and Fla. Stat. § 718.112(2)(g)(2); Hawaii HRS § 514B-148(b)) ↩