Common Ownership Communities (COCs) refer to condominium associations and homeowner associations. The Department of Legislative Services estimates that approximately 1 million Marylanders live in nearly 7,000 such organizations. Maryland’s COCs differ by size, resources and services provided. And their members differ by income, race, age and just about every other relevant demographic. The issues they face also vary widely across the state by region, spanning areas including Deep Creek in Western Maryland, Baltimore City, Charles County, the D.C. suburbs and Ocean City.
The recent tragedy of the collapse of a condominium building in Surfside, Florida, will surely produce a large number of proposals in the 2022 legislative session designed to prevent similar incidents in Maryland and to impose stricter regulations on COCs. One example is cited in The Sun’s July 11 editorial supportive of legislation that would require COCs to conduct a reserve study every five years and to fully fund its recommendations. Such a bill (House Bill 313) was considered in the 2021 session as was another bill (House Bill 367) that would have created a state board to register, collect fees from and impose certain requirements on COCs and their boards. That proposal allowed for a 12% annual increase of an initial fee imposed on COCs by the proposed board.
Although neither bill would have prevented an incident similar to that of Surfside, such claims will be made. Legislators should understand that one size will not fit all COCs because there are significant differences among them. COCs should not be lumped together in dealing with the safety issue nor regulated similarly, as a blanket requirement for reserve studies suggests. Condominiums of several stories, for example, are quite different from attached townhomes and unattached single-family homes in HOAs. The infrastructure (i.e., elevators, heating systems, etc.) of high-rise condominiums is much more complex and extensive than that of townhomes.
COCs also differ in how they fund infrastructure repairs and other capital improvements. Some plan for future costs and set aside funds on a regular basis in anticipation of them. Others rely on special assessments when needs arise, which keeps monthly assessments affordable. Both approaches are legitimate. The method of assessment and status of reserves should not be dictated by the government.
As the 2021 mandated reserve study bill was written, it would impose an unnecessary cost on many (perhaps the majority) of COCs, would be a boon for certain engineering firms (as defined by the bill) locking out others with fewer years of experience, and would create significant financial hardship for many COCs and their members.
Rather than act on legislative proposals that may harm rather than help COCs and that may not receive a thorough review in committee hearings, especially by homeowners who are most affected by them, the following should be considered when trying to ensure the safety and security of those living in a COC.
Convene a 2022 summer study group to thoroughly review the need for oversight of COCs and any need to address the issue of the safety of COC structures. In doing so, distinguish between condominium and homeowner associations and distinguish between associations with and without high-rise structures and other risk elements.
Place the responsibility for regulating COCs at the local level, not state government, and leave responsibility for determining the safety of buildings to county government. County government knows best the issues affecting local COCs and the need for their regulation. Local building inspectors know best the risks inherent in local environmental areas as compared to engineering firms that may or may not have experience in the locale. County inspections likely would be more focused and completed more frequently than expensive 5-year reserve studies, which look at many items unrelated to safety. In fact, the primary focus of reserve studies is financial, not safety.
COCs are another form of government. They have power to tax, regulate and punish their members. They often provide public services such as handling sewage, enforcing building codes, managing retention ponds and conservancy areas, repairing roads, removing snow, and providing amenities like recreation and open space. These services are funded by assessments paid by property owners, which save the county and other taxpayers money.
In effect, members of COCs are double taxed and receive no recompense for their excess taxation. The summer study group, with county governments, should consider how this inequity might be resolved as it grapples with the safety issue.
Arthur T. Johnson (firstname.lastname@example.org) has been president of his homeowners association in Baltimore County for 12 years.