OCMD Condo Fee/Assessment Horror Story Repository (HB107)

[RFBfromDE]

Owners associations have three years to fill that fund to the recommended level, and then must maintain that amount of money in the fund each year and replenish any amount spent on building updates.

The law requires associations to update their reserve studies every five years and to fund reserves accordingly.

Local property managers said that Maryland lawmakers pushed for the law following the 2021 collapse of the Champlain Towers South condominium in Surfside, Florida that killed 98 people.

Balle said his building has eight different portions and amenities that need to start getting funded for replacement based on the reserve study, and some items are estimated to have a decade or more years left before they need to be replaced.

The study’s verdict is a special assessment that could be very expensive for all unit owners, he said, with costs likely ranging somewhere between $5,000 to $10,000.

The law does not outline any penalties for not meeting the three-year deadline, nor does it describe any kind of institution that would monitor funding for associations.

Del. Marvin Holmes Jr. (D-23), the lead sponsor of the law, could not be reached in time for comment.

Ocean City condo owners face huge bills after new Maryland law mandates reserve funds

Many Ocean City condo owners are facing five-figure bills in the coming years as resident associations scramble to fill reserve funds that are now mandated by law.

www.oceancitytoday.com

 

[rseymorejr]

Our HOA dues are going to almost double after the first of the year

 

[RFBfromDE]

If they were only $250/$300 that may be expected.

If they were already $800/$1100, yowsa!

Assessment horror stories and underfunding have been an issue since condos were invented.

My favorite part is this however;

The law does not outline any penalties for not meeting the three-year deadline, nor does it describe any kind of institution that would monitor funding for associations.

 

[BartExp]

I am treasurer of our condo association in OC. We have been conservative fiscally. We have had reserves studies done frequently (last two in 2013 and 2020). We are in really good shape should not have a special assessment, since we are already funded to a level that complies with the new law. We will have to renew our reserve study in 2025.

This is going to impact us even though we are currently funded adequately. As I said, our last study was in 2020 and includes a 2.3% inflation rate. Guess what, that ain't good enough. What is total inflation over the last 3 years. Not 2.3% compounded. As an example, we had a new ceiling for our garage in the reserve study at $50K. The ceiling was replaced earlier this year at $120K. To be fair we did upgrade to a better product, but that doesn't account for the total increase.

I know a number of condos in OC that did not keep adequate reserves or even have studies done. A building across the street from mine had a huge water infiltration issue, where the outside shell of the building need to be replaced. A huge job that had little or no reserve on hand. Each unit got hit with a $30K assessment. Reserves are important but many building didn't have them. One reason is that if you sell your unit, you don't get back what you paid into the assessment. In my case I have funded about $10K of the current reserve. If I sell my unit, I don't get that back. The new owner benefits. Now an owner of a building with no reserve wouldn't lose anything, because they didn't fund it to start with. Putting all buildings on the same page by requiring reserves is actually a good thing. One, it will save unfunded building owners from many special assessments (once fully funded) and B, it will put buying and selling units on the same playing field. I didn't fully understand, at the time, why our condo fees were one of the highest in OC (% of cost basis). Now I understand and am happy about it.

 

[BartExp]

The law does not outline any penalties for not meeting the three-year deadline, nor does it describe any kind of institution that would monitor funding for associations.

Guess who is getting sued if a new owner gets hit with a special assessment shortly after buying their condo and association isn't funded to the level of the law.

 

[RFBfromDE]

I am treasurer of our condo association in OC. We have been conservative fiscally. We have had reserves studies done frequently (last two in 2013 and 2020). We are in really good shape should not have a special assessment, since we are already funded to a level that complies with the new law. We will have to renew our reserve study in 2025.

Putting all buildings on the same page by requiring reserves is actually a good thing. One, it will save unfunded building owners from many special assessments (once fully funded) and B, it will put buying and selling units on the same playing field. I didn't fully understand, at the time, why our condo fees were one of the highest in OC (% of cost basis). Now I understand and am happy about it.

I don't disagree with what's being done, just how it is being done.

If industry does not regulate itself adequately, this is typically of what happens.

 

[Melnic]

Our rental in Ocean City was sold a couple years ago but we were at the end of a $1600 year temporary assessment for improvements. The good thing is that they spend a bunch of $ on esthetic improvements just before we sold and made the building look much better.

Our only rental now (mother in law's old condo) is about to increase the HOA dues and there is talk about a special assessment as well. Joining these meetings are painful to the point I don't anymore. We will just increase rent if needed.

 

[t84a]

Guess who is getting sued if a new owner gets hit with a special assessment shortly after buying their condo and association isn't funded to the level of the law.

Probably no one. They can try but a buyer has all the financial information prior to settlement.

 

[t84a]

The townhomes in Sunset Island got hit with a $75k assessment.

 

[Sundazes]

The townhomes in Sunset Island got hit with a $75k assessment.

SO what happens if an owner Doen't have a spare $75K laying around and cant pay?

 

[RFBfromDE]

SO what happens if an owner Doesn't have a spare $75K laying around and cant pay?

They pay when they sell or die. (Lien)

 

[SummitCnty]

The townhomes in Sunset Island got hit with a $75k assessment.

Each?

 

[t84a]

Each?

Yes. They're million dollar townhouses though.

 

[t84a]

SO what happens if an owner Doen't have a spare $75K laying around and cant pay?

Sell or have a lien placed on the property.

 

[JPG]

This is not in the law: "Owners associations have three years to fill that fund to the recommended level, and then must maintain that amount of money in the fund each year and replenish any amount spent on building updates."

The law says this: "The bill requires the governing body of a cooperative, condominium, or HOA, if the most recent reserve study was an initial reserve study, to attain the annual reserve funding level recommended by the reserve study within three fiscal years following the fiscal year in which the initial reserve study was completed."

The differences in the two sentences are significant. The wrong one says that if the reserve study says that if HOA needs to put aside $1,000,000 over 20 years the HOA needs to get to $1,000,000 over 3 years.

The correct language says that if the Reserve Study says that you need to put $50,000/year over 20 years to get to the $1,000,000 you have "3 years" to get to the $50,000 number. There were many HOA that were not putting any money aside in a "Reserve Account" to cover the repair/replacement of HOA property, so the State passed this law to "force" HOAs to put money in a separate account for maintenance on HOA owned property (clubhouse, pool, playgrounds, top coating roads, fixing sidewalks, etc). This money is not for normal grass cutting, paying electric for street lights, etc.


Reserve studies show how much should be put aside annually over a period of time (usually 30 years). The study is updated every 3-5 years and the annual amount to be put aside will change.

 

[t84a]

Most of the condos in Ocean City have been neglected for decades. Most of these high special assessments are legitimate.

 

[303_enfield]

The townhomes in Sunset Island got hit with a $75k assessment.

Won’t fix the problems that place has. An it’s not just because the place was built on the old town dump.

 

[t84a]

Won’t fix the problems that place has. An it’s not just because the place was built on the old town dump.

Of course, Ryan Homes was able to skirt the class action lawsuit.

 

[303_enfield]

Of course, Ryan Homes was able to skirt the class action lawsuit.

Happens when the town lets the builder self inspect. Then you have the stupid management company that agreed not to sue RH for anything else if they fixed leaks.
Funny thing was, after 10 years of litigation, when the hardy board was removed you didn’t see any vapor barrier or flashing.

You can still smell the mold just driving around SI.

 

[Bountied]

Yes. They're million dollar townhouses though.

So they can probably swing $75k.