This is a busy time of year for Board Members and Property Managers, as many are working n their budgets for next year. We have a few tips to guide you through this process.
Maryland Clients - Please do not forget to comply with the laws regarding the adoption of your budget. As such, your Board should prepare and submit an annual proposed budget to all owners within your community thirty (30) days before the budget is adopted. The proposed budget must include your community's income and contain line items for administrative costs, maintenance costs, utilities, general expenses, reserves and capital expenses. The budget must be adopted at an open meeting. The proposed budget and notice of the open meeting to discuss the budget may be sent to each owner by electronic transmission, posting the notice on the home page of the community's website, or via newsletter. If the community is a homeowners association, notification by electronic means to all owners regarding the budget is specifically authorized by the Maryland Homeowners Association Act. If the community is a condominium, notice by electronic means would be permitted to those owners who have opted-in to receive communication electronically.
The law also requires that any expenditure that would result in an increase in the amount of the owner's annual assessments for the current fiscal year by more than 15% of the budgeted amount previously adopted must be approved by an amendment to the budget adopted at a special meeting. However, if the expenditure in question is required because of a condition that, if not corrected, could reasonably result in a threat to the health or safety of the owners or a significant risk of damage to the community, no amendment to the budget is required irrespective of the amount. If an amendment to the budget is required--necessitating a special meeting of the Board or the owners, as the case may be, pursuant to your community's governing documents--the owners must receive at least ten (10) days' written notice of that special meeting.
District of Columbia Clients - Please follow the procedures, if any, set forth in your community's governing documents regarding the adoption of your budget. If your community's governing documents do not address the procedures to adopt a budget, we recommend that you follow the requirements set forth above for our Maryland clients, as D.C. does not have any laws that address the adoption of a community's budget.
I will be teaching a class on November 10, 2018 for the Chesapeake Chapter of CAI titled "Navigating Covenant & Rules Enforcement in 2018: Including HUD & FHA Registration of Suspensions and Privileges". Please visit the website for the Chesapeake Chapter of CAI for more details and to register.
Should you have any questions or concerns, please do not hesitate to contact me or any other attorneys here at Nagle & Zaller. Good luck with budget season!