These laws are meant to keep condo and HOA properties safe and well-maintained. Being aware of the changes will help you prepare for anything that might come up.
A few years ago, a condo building in Surfside, Miami Beach, tragically collapsed because of long-standing structural problems that weren't fixed. To keep condo fees low, the board ignored these issues, and sadly, 98 people lost their lives.
In response, 12 states, including Maryland and Virginia, have created new reserve study laws to help prevent such disasters.
What Are Reserve Study Laws?
These laws require condos and some homeowners' associations (HOAs) to regularly inspect their buildings. A qualified inspector will check for any issues that need fixing now or in the next five years. The condo or HOA must have enough money set aside in a reserve fund to cover these repairs. After any repairs, the reserve fund must be kept at that same level or higher to ensure future problems can be addressed.
How Could This Affect You?
For many condos, these laws won’t cause much change. However, buildings that haven’t kept up with repairs could face big costs. For example, one condo in Maryland ignored water damage in its underground garage for years. When the problem was finally addressed, it cost $5 million, and each owner had to pay $25,000.
While that’s an extreme case, it shows how not keeping up with maintenance can lead to huge expenses. Boards might raise condo fees or require extra payments to meet the required reserve amounts. There are two years left for properties to comply with the new laws.
What Should Condo Owners Do?
If you own a condo or are part of an HOA, it’s important to know about these new laws and think about how they might affect your finances. Some owners won’t see much impact, while others might face higher costs, which could make it harder to afford their condo.
These laws are meant to keep condo and HOA properties safe and well-maintained. Being aware of the changes will help you prepare for anything that might come up.