Relating to Real Estate

As previously published on Maryland Condo Law Blog.

Legislation enacted during the 2026 session of the Maryland General Assembly, and signed into law by Governor Moore, will make significant changes to insurance requirements affecting condominium unit owners.  SB747, cross filed with HB469, will amend Section 11-114 of the Maryland Condominium Act with regard to a unit owner’s responsibility for damages originating in their unit.  It will also require unit owners to maintain certain levels of insurance coverage on their unit that is in addition to that required to be provided under the condominium’s insurance.

A condominium council of unit owners is generally required to maintain property insurance, pursuant to Section 11-114(a)(1), on both the common elements and the units, with coverage on the units being “exclusive of improvements and betterments installed in the units by unit owners other than the developer.”  (In a condominium composed entirely of similar detached units, the council is only required to provide property insurance for the common elements).  Under the current version of the statute, unit owners are not required to have their own insurance, although Section 114(e)(1) acknowledges that the council’s policy “does not prevent a unit owner from obtaining insurance for his own benefit,” and Section 11-114.2(a) provides that “[t]he bylaws of a condominium may require each unit owner to maintain a condominium unit owner insurance policy on the unit.”

Presently, Section 11-114(g)(2)(iii)1 provides that, where damage to a portion of the condominium originates in a unit, that unit owner “is responsible for the council of unit owners’ property insurance deductible not to exceed $10,000.”  The new law will substantially modify this limitation on unit owner liability by potentially raising the amount for which they may be responsible depending on the amount of the deductible under the council’s policy.  Under amended Section 11-114(g)(2)(iii)1. a unit owner in whose unit the damage originated will be responsible for the lesser of:

• The total cost of repair or replacement of the damaged components.
• The amount of the council of unit owners’ deductible as specified in council of unit owners’ property insurance policy; or
• $25,000.

Accordingly, the maximum cap on unit owner responsibility will essentially be increased from $10,000 to $25,000.  The new law, under Section 11-114(g)(2)(iii)2, also will require the council of unit owners to annually inform the unit owners in writing of these responsibilities and the amount of the deductible under the council’s policy.

A further significant amendment is contained in what will be new Section 11-114.3.  Specifically, Section 11-114.3((b) mandates that unit owners, (in a condominium not composed entirely of similar detached units), “maintain a condominium insurance policy or a substantially similar property insurance policy on the unit” providing:

•  Coverage for the council of unit owners’ property insurance deductible or a portion of the deductible under Section 11-114;
• Loss assessment coverage of at least $25,000; and
• Dwelling or building property coverage of at least the greater of (1) $25,000; or (2) the amount necessary to repair and replace:
• Improvements and betterments made by the current owner or acquired from any previous owner other than the developer; and
• Upgrades conveyed to the unit owner that are the responsibility of the unit owner to insure under the bylaws of the condominium.

Under Section 11-114.3(c), “[t]he bylaws of a condominium may not require a unit owner to maintain an insurance policy the includes coverage amounts in excess of the requirements under” Section 11-114(b).  As a result, bylaws that currently require greater coverage than called for under Section 11-114.3(b) will need to be modified.  Additionally, Section 11-114(d) requires the unit owners to provide the council with evidence of the insurance required under Section 11-114(b).

While approved legislation normally takes effect by October of the year it is enacted, it is provided that the effectiveness of this new law is delayed until October 1, 2027 in order to allow time for the required insurance coverages to be secured.

For more information on this topic, contact Raymond D. Burke. 

Raymond D. Burke
410-576-4003 • dburke@gfrlaw.com