MARYLAND CLIENT ADVISORY: Maryland Amends Insurance Requirements for Condominiums

On April 24, 2023, Governor Wes Moore signed into law an amendment known as House Bill 98, relating to property insurance coverage for condominiums.  The new law will take effect on October 1, 2023.

Currently, condominium associations must maintain property insurance covering the common elements and units, exclusive of improvements and betterments in the units.  At present, though there are different types of condominium dwellings (e.g. attached, detached and multifamily), all condominium associations and unit owners must have the same type of insurance.  Under the new law, condominium associations for attached and multifamily units will be required to maintain property insurance covering common elements and units, exclusive of improvements and betterments.  However, condominium associations for detached units will only need to maintain property insurance covering the common elements, and not the units themselves.  Owners of detached condominium units must maintain property insurance on the unit.

The new law also establishes a sequence for property insurers to follow when issuing payments.  For attached and multifamily condominium associations, the proceeds from a policy must first be paid to repair common elements.  If there are funds remaining after common elements are repaired in attached and multifamily condominium associations, then unit owners can be compensated so long as their units have been completely repaired.

The new law will be codified in Section 11-114 of the Maryland Code, Real Property Article.  You can find the Bill here, and the Fiscal and Policy Note here.  Similar legislation was introduced in 2021 and 2022, but did not pass.

Thomas, Thomas & Hafer, LLP is a regional civil litigation firm with over 90 lawyers in twelve offices throughout the Mid-Atlantic region.  Questions regarding this advisory can be directed to Marcelo Perez, an associate in the firm’s Washington, DC office, at (202) 945-9503 or mperez@tthlaw.com.