Condominiums and Homeowners Associations - New Owner Fees - Limitations
Summary
HB1506 limits certain fees that condominium associations and homeowners associations may charge to new purchasers at closing. For both condominium unit sales and HOA lot sales, the bill caps an initial capital contribution or similar new-owner fee at no more than three times the amount of the monthly assessment paid by an existing owner at the time of closing. The bill also requires resale certificates, packages, or disclosure statements to clearly identify the fee by name and state its amount, along with any other settlement fees.
The bill defines “master planned community” as a large-scale residential development with homes, commercial spaces, and amenities that functions similarly to a municipality, and it exempts such communities, including senior age-restricted communities that provide municipal-like services to multiple condominiums, from the fee cap. The measure applies to new owners who are not the original purchasers or initial unit owners, and it takes effect October 1, 2026.
Impact
HB1506 amends the Real Property Article by adding new sections governing condominium and homeowners association fee practices, specifically Sections 11–135.1 and 11B–120. It creates a statewide limit on certain upfront fees charged to new owners at closing and adds disclosure requirements for resale documents. The bill affects condominium associations, HOA boards, developers, and homebuyers by restricting how much can be collected as a new-owner or initiation fee and by increasing transparency in settlement disclosures. It does not apply to master planned communities that provide municipal-like services, preserving their existing fee structures.
Sentiment
The bill appears to have broad support. It received a favorable committee report with amendments, was adopted by the House, and passed third reading unanimously in the House by a vote of 131-0. The available record shows no recorded opposition in the vote history, suggesting general agreement with the consumer-protection and disclosure goals of the measure.
Contention
The main policy issue is the balance between protecting buyers from high upfront association charges and preserving the financing and operational flexibility of community associations. The bill’s exemption for master planned communities, including senior age-restricted communities that provide services similar to municipalities, suggests concern that a one-size-fits-all cap could disrupt communities that operate more like local governments. Another point of possible contention is the definition of the capped fee and how associations label it, since the bill requires disclosure of fees called new owner fees, initiation fees, or capital contribution fees.