The 2023 Legislative Session in Annapolis has ended and the Community Association Institute MD-Legislative Action Committee (CAI MD-LAC) screened more than 3,000 bills introduced and tracked 87 that were of interest to the Community Association community. Effective Oct. 1, 2023, Maryland HB98/SB403 allows detached condominium units to obtain property insurance coverage as HOAs, with unit owners insuring their individual dwellings and the association insuring common areas.
HB98/SB403, Condominiums – Mandatory Insurance Coverage – Alterations
This bill, sponsored by Del. Steven J. Arentz (R) and Sen. Stephen S. Hershey (R) sought to carve out an insurance exception for detached homes that fall under the condominium classification because of building requirements when the developer has built for density; in such cases, single family and/or detached homes that are built close together require the creation of a condominium.
While multi-family, attached units with either horizontal or vertical boundaries will remain subject to §11-114 (a) (1), which requires property insurance on the common elements and units, exclusive of improvements and betterments installed in units by unit owners other than the developer, the owners of detached units built as condominiums will now insure their own units, absolving the Association of the responsibility of insuring those homes under an Association’s Master Policy.
Maryland LAC supported this bill, largely because a detached home has no common elements, though they added within their supporting testimony a recommended amendment to require owners of detached homes to carry their own insurance.
While current law does not require an owner of a condominium unit to carry a condominium unit owners’ policy (law only allows for approval of a reduced majority of 51% if an association wishes to require its members to carry such coverage), the new law includes a requirement for owners of detached condominium units to carry a homeowners insurance policy on the entirety of the unit.
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