Bill > HB1041

This bill provides a mechanism for homeowners associations (HOAs) to temporarily deviate from standard reserve funding requirements when experiencing "exigent financial circumstances," which are defined as significant financial hardships caused by unexpected events like natural disasters, fraud, embezzlement, or other catastrophic incidents. Under the bill, an HOA's governing body can create a "reserve recovery plan" that details the financial emergency, its damages, and a strategy to restore proper reserve funding within three calendar years. To qualify, the HOA must: adopt the plan by a two-thirds majority vote within 90 days of discovering the circumstances, make good faith efforts to address the financial issues, maintain detailed documentation, and provide quarterly updates to lot owners. The governing body must also notify lot owners at least 5 days before voting on the plan and provide them with a copy of the adopted plan. If an HOA fails to comply with these requirements or does not restore funding within the specified timeframe, it must return to standard reserve funding requirements. Additionally, the bill establishes that any violation affecting lot owners is considered an unfair trade practice, and lot owners can seek injunctive relief and damages through legal action. The bill will take effect on October 1, 2025.

Transportation and Infrastructure

https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/HB1041?ys=2025RS