Maryland HOA Audit Requirements: What Condo and HOA Boards Must Know
In Maryland, a condominium must obtain an independent CPA audit when owners of at least 5 percent of the units request one, no more than once every 12 months, under Real Property § 11-116. The Homeowners Association Act (Title 11B) has no comparable audit rule, so an HOA's audit or review obligation usually comes from its governing documents.
What Maryland Law Actually Says
Maryland treats condominiums and homeowners associations under two separate statutes in the Real Property Article. The audit rules differ between them.
Condominiums: the 5 percent audit right
The Maryland Condominium Act, Real Property § 11-116, requires the council of unit owners to keep books and records in accordance with good accounting practices on a consistent basis. On the request of unit owners of at least 5 percent of the units, the council must cause an audit of the books and records to be made by an independent certified public accountant. An audit is not required more than once in any consecutive 12-month period, and its cost is a common expense.
In practice, this means a relatively small group of owners can require a full audit, not merely a review or compilation. Boards that already commission an annual audit are usually well positioned when a request arrives.
Source: Md. Code, Real Property § 11-116
HOAs: records access, no statutory audit rule
The Maryland Homeowners Association Act, Real Property § 11B-112, requires that books and records kept by or on behalf of the association be available to lot owners for examination or copying during normal business hours after reasonable notice. It does not contain an owner-petition audit right like the condominium rule.
For a Maryland HOA, the obligation to obtain an audit, review, or other CPA engagement generally comes from the declaration, bylaws, board resolutions, or lender and insurer requirements. If you are unsure what your documents require, check your governing documents and consult counsel.
Source: Md. Code, Real Property § 11B-112
Related Financial Duties That Affect Your Audit
Auditors and reviewers read these provisions alongside your governing documents because they shape the budget, reserves, and disclosures in your financial statements.
Annual budget (§ 11-109.2 / § 11B-112.2)
The governing body must prepare and submit a proposed annual budget to owners at least 30 days before adoption. The budget must cover income, administration, maintenance, utilities, general expenses, reserves, and capital items. An expenditure that would raise assessments for the current year by more than 15 percent of the adopted budget requires a budget amendment at a special meeting.
Reserve studies (§ 11-109.4 / § 11B-112.3)
Residential condominiums, and HOAs responsible for common areas (subject to stated exceptions), must obtain a reserve study from a qualified preparer and update it at least every 5 years. Budgeted reserves must match the most recent study unless the board makes a financial hardship finding by a two-thirds vote. Deadlines vary by county and formation date.
Financial statements on request
Under § 11-116 and § 11B-112, on written request the association must send financial statements within 21 days if prepared within the prior 3 years, or within 45 days if older. Owners generally may not be charged to examine them in person or to receive them electronically.
Audit, Review, or Agreed-Upon Procedures?
When owners of 5 percent of the units invoke § 11-116, the statute calls for an audit by an independent CPA. Outside that situation, Maryland boards choose among three engagement types based on their governing documents and risk:
- Audit. The highest level of assurance. The CPA confirms cash and reserve balances with banks, tests assessments receivable and disbursements, and issues an opinion on whether the statements are fairly presented. See our HOA audit services.
- Review. Limited assurance based on inquiries and analytical procedures, with no opinion. Often suitable for smaller HOAs whose documents permit it. Learn more about compilation and review services.
- Agreed-upon procedures. The board selects specific areas, such as reserve transfers or delinquency records, and the CPA reports findings without an overall conclusion. See agreed-upon procedures.
For a side-by-side explanation, read audit vs review vs compilation. Note that a review or compilation does not satisfy an owner request for an audit under § 11-116.
What a Maryland Condo or HOA Audit Covers
Common interest realty association audits focus on the areas where owners' money is most at risk.
Reserve funds and the reserve study
Reserve balances are confirmed with banks and custodians, and contributions are compared with the budget and the most recent reserve study required by § 11-109.4 or § 11B-112.3. Reserve spending is traced to board approvals and capital items.
Assessments and delinquencies
Assessment income is tested against the assessment roll, and the allowance for uncollectible assessments is evaluated against aging, payment plans, liens, and collection activity.
Budget compliance
Actual results are compared with the adopted budget, and significant mid-year increases are checked against the 15 percent special-meeting rule in § 11-109.2 or § 11B-112.2.
Management company activity
Bank reconciliations, management fees, and disbursements processed by the management company are tested against the management agreement and board approvals.
Required disclosures
The financial statements are evaluated for required disclosures, including information about future major repairs and replacements.
A Practical Checklist for Maryland Boards
- Identify whether you are a condominium (Title 11) or an HOA (Title 11B). The audit rules differ.
- Read the declaration and bylaws for any clause requiring an annual audit, review, or independent accountant.
- If you are a condominium, track owner audit requests and whether owners of at least 5 percent of the units have joined.
- Confirm the date of your most recent audit, since § 11-116 limits required audits to one per consecutive 12-month period.
- Keep your reserve study current and make sure the budget funds reserves as §§ 11-109.2 and 11B-112.2 require.
- Check lender, insurer, and fidelity coverage requirements for audited or reviewed statements.
- Where the statute or your documents are unclear, consult association counsel before deciding.
Serving associations in Virginia too? Compare the rules in our Virginia HOA audit requirements guide, or explore our full audit and assurance services.
This page summarizes selected provisions of the Maryland Code, Real Property Article, for general information. It is not legal advice. Statutes change, and your governing documents may impose additional requirements.
Maryland HOA and Condo Audit FAQs
Common questions from Maryland board members, treasurers, and community managers.
Received an Audit Request or Unsure What You Need?
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