A new Maryland law requiring condominium associations to set aside money for future repairs and replacements is causing sticker shock for some Ocean City condo owners. The law, which went into effect October 1, mandates that associations set aside a percentage of their yearly budgets into a reserve fund.
The New Law
The Maryland Condominium Act now requires associations to conduct reserve studies to determine how much money needs to be set aside annually. The studies look at roof replacements, parking lot repairs, and other major common area components to estimate future repair and replacement costs. Based on the studies, associations must fully fund the recommended reserve amounts.
Rising Assessment Fees
For some older Ocean City condo complexes that previously had no or underfunded reserves, meeting the new requirements means assessment fees for owners will rise sharply. At one complex built in the 1970s, individual owner fees are increasing by over 50%, according to the new budget and reserve study. Other associations are facing 25-40% hikes. Owners argue the increases are too steep, but associations have no choice under the new law.
The higher fees are frustrating owners, but supporters say the law is needed to protect condo values and prevent special assessments down the road. The impact on property sales and rentals in Ocean City remains to be seen.