Maryland Change in Condominium Law

In an April 2008 decision by the Maryland Court of Appeals, it was held that the Maryland Condominium Act did not require the master insurance policy of the condominium association to cover damage to an individual condominium unit. In essence, it became the responsibility of the individual condominium unit owner to cover any damage done to the owner's property or individual unit.

Erie Insurance Exchange filed a motion for reconsideration with the Maryland Court of Appeals to have the decision reversed on the Tuckerman case. The motion for reconsideration was denied by the court.  The court also denied the request for a delay, which was supported by the Maryland Insurance Administration, in the effective date of the decision.

The Maryland General Assembly recently passed two pieces of legislation correcting the Maryland condominium law:

Link To House Bill 287

Link to Senate Bill 201

Both HB 287 and SB 201 were signed by the governor on May 19, 2009.

The effective date of both pieces of legislation is June 1, 2009.

 What this legislation does:

 1)  If the condo declarations and bylaws defer to the MD Condo Act for insurance purposes: the new law states that the unit is insured under master policy, except for improvements/ betterments.

► This takes the unit owner back to the situation before the Anderson case and the Special Court of Appeals decision

2)  Need for additional coverage for deductible assessment up to $5,000 for all claims:

·         where cause of damage originates from the unit,

·         regardless of negligence

► Previously, there had to be a provision in the bylaws.

► Erie Insurance Provides $5,000 of coverage for loss assessment in their condominium policy.

3)  Condo associations must notify unit owners

·         of the amount of the condo association's master policy deductible;

·         of the unit owner's responsibility for the condo association's master policy deductible, up to $5,000, when the cause of damage originates from the unit.