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§ 5-6B-26.1. Reserve studies

West's Annotated Code of MarylandCorporations and AssociationsEffective: October 1, 2022

West's Annotated Code of Maryland
Corporations and Associations
Title 5. Special Types of Corporations (Refs & Annos)
Subtitle 6b. Maryland Cooperative Housing Corporation Act (Refs & Annos)
Effective: October 1, 2022
MD Code, Corporations and Associations, § 5-6B-26.1
§ 5-6B-26.1. Reserve studies
“Reserve study” defined
(a) In this section, “reserve study” means a study of the reserves required for future major repairs and replacement of the common elements of a cooperative housing corporation that:
(1) Identifies each structural, mechanical, electrical, and plumbing component of the common elements and any other components that are the responsibility of the cooperative housing corporation to repair and replace;
(2) States the normal useful life and the estimated remaining useful life of each identified component;
(3) States the estimated cost of repair or replacement of each identified component; and
(4) States the estimated annual reserve amount necessary to accomplish any identified future repair or replacement.
Timing for reserve studies for cooperative housing corporations established in Prince George's County on or after October 1, 2020, in Montgomery County on or after October 1, 2021, or in other counties on or after October 1, 2022
(b)(1) This subsection applies only to a cooperative housing corporation established in:
(i) Prince George's County on or after October 1, 2020;
(ii) Montgomery County on or after October 1, 2021; or
(iii) Any county other than Prince George's County or Montgomery County on or after October 1, 2022.
(2) The governing body of the cooperative housing corporation shall have an independent reserve study completed not less than 30 calendar days before the first meeting of the cooperative housing corporation at which the members other than the owner have a majority of votes in the cooperative housing corporation.
(3) The governing body shall have an updated reserve study completed within 5 years after the date of the initial reserve study conducted under paragraph (2) of this subsection, which shall be updated at least every 5 years thereafter.
Timing for reserve studies for cooperative housing corporations established in Prince George's County before October 1, 2020, in Montgomery County before October 1, 2021, or in other counties before October 1, 2022
(c)(1)(i) This paragraph applies only to a cooperative housing corporation established in Prince George's County before October 1, 2020.
(ii) If the governing body of a cooperative housing corporation has had a reserve study conducted on or after October 1, 2016, the governing body shall have an updated reserve study conducted within 5 years after the date of that reserve study and at least every 5 years thereafter.
(iii) If the governing body of a cooperative housing corporation has not had a reserve study conducted on or after October 1, 2016, the governing body shall have a reserve study conducted on or before October 1, 2021, and an updated reserve study at least every 5 years thereafter.
(2)(i) This paragraph applies only to a cooperative housing corporation established in Montgomery County before October 1, 2021.
(ii) If the governing body of a cooperative housing corporation has had a reserve study conducted on or after October 1, 2017, the governing body shall have an updated reserve study conducted within 5 years after the date of that reserve study and at least every 5 years thereafter.
(iii) If the governing body of a cooperative housing corporation has not had a reserve study conducted on or after October 1, 2017, the governing body shall have a reserve study conducted on or before October 1, 2022, and an updated reserve study at least every 5 years thereafter.
(3)(i) This paragraph applies to a cooperative housing corporation established in any county other than Prince George's County or Montgomery County before October 1, 2022.
(ii) If the governing body of a cooperative housing corporation has had a reserve study conducted on or after October 1, 2018, the governing body shall have an updated reserve study conducted within 5 years after the date of that reserve study and at least every 5 years thereafter.
(iii) If the governing body of a cooperative housing corporation has not had a reserve study conducted on or after October 1, 2018, the governing body shall have a reserve study conducted on or before October 1, 2023, and an updated reserve study at least every 5 years thereafter.
Requirements for reserve study; qualifications of person preparing reserve study
(d) Each reserve study required under this section shall:
(1) Be prepared by a person who:
(i) Has prepared at least 30 reserve studies within the prior 3 calendar years;
(ii) Has participated in the preparation of at least 30 reserve studies within the prior 3 calendar years while employed by a firm that prepares reserve studies;
(iii) Holds a current license from the State Board of Architects or the State Board for Professional Engineers; or
(iv) Is currently designated as a reserve specialist by the Community Association Institute or as a professional reserve analyst by the Association of Professional Reserve Analysts;
(2) Be available for inspection and copying by any unit owner;
(3) Be reviewed by the governing body of the cooperative housing corporation in connection with the preparation of the annual proposed budget; and
(4) Be summarized for submission with the annual proposed budget to the unit owners.
Components of budget if study indicates need to budget for reserves
(e) To the extent that a reserve study conducted in accordance with this section indicates a need to budget for reserves, the budget shall include:
(1) For the capital components, the current estimated:
(i) Replacement cost;
(ii) Remaining life; and
(iii) Useful life;
(2) The amount of accumulated cash reserves set aside for the repair, replacement, or restoration of capital components as of the beginning of the fiscal year in which the reserve study is conducted and the amount of the expected contribution to the reserve fund for the fiscal year;
(3) A statement describing the procedures used for estimation and accumulation of cash reserves in accordance with this section; and
(4) A statement of the amount of reserves recommended in the study and the amount of current cash for replacement reserves.
Powers and duties of governing body of cooperative housing corporation
(f)(1)(i) Subject to subparagraph (ii) of this paragraph, the governing body of a cooperative housing corporation shall provide funds to the reserve in accordance with the most recent reserve study and shall review the reserve study annually for accuracy.
(ii) If the most recent reserve study was an initial reserve study, the governing body shall, within 3 fiscal years following the fiscal year in which the initial reserve study was completed, attain the annual reserve funding level recommended in the initial reserve study.
(2) The governing body of a cooperative housing corporation has the authority to increase an assessment levied to cover the reserve funding amount required under this section, notwithstanding any provision of the articles of incorporation, bylaws, or proprietary lease restricting assessment increases or capping the assessment that may be levied in a fiscal year.

Credits

Added by Acts 2020, c. 138, § 1, eff. Oct. 1, 2020. Amended by Acts 2021, c. 433, § 1, eff. Oct. 1, 2021; Acts 2022, c. 664, § 1, eff. Oct. 1, 2022.
MD Code, Corporations and Associations, § 5-6B-26.1, MD CORP & ASSNS § 5-6B-26.1
Current through legislation effective through May 9, 2024, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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