2013 VIRGINIA COMMON INTEREST COMMUNITY LEGISLATION A Gentle Shove Towards Disclosure

2013 VIRGINIA COMMON INTEREST
COMMUNITY LEGISLATION
A Gentle Shove Towards Disclosure
Virginia Legislative Action Committee
• Committee of CAI - Membership comes from 3 Virginia Chapters
• Mission:
To be recognized in Virginia as the
spokespersons on common interest
community association issues.
CVA
SEVA
• Purpose:
To monitor and influence
legislation affecting Virginia
community associations and the
500,000 owners living in
common interest communities.
WMMCAI
VALAC
Who VALAC
Lobbies?
Governor
General
Assembly
2013 SESSION OVERVIEW
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SHORT SESSION
CONVENED – JANUARY 9
ADJOURNED – FEBRUARY 23
RECONVENED (VETO) SESSION – APRIL 3
2013 SESSION OVERVIEW
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2575 BILLS INTRODUCED
324 BILLS CONTINUED FROM 2012
TOTAL BILLS = 2899
1526 BILLS PASSED
1370 BILLS FAILED
GOVERNOR AMENDED 80+ BILLS
6 BILLS VETOED BY GOVERNOR
2013 SESSION OVERVIEW
• ALMOST 30 BILLS FOLLOWED
• 19 FAILED BILLS
• Unless otherwise noted, once Signed by the Governor
– BILLS BECOME EFFECTIVE JULY 1, 2013
2013 SESSION OVERVIEW
Late Charges
Resale Disclosure
Home-Based Businesses
Declarant Rights and Responsibilities
Stormwater Facilities
ASSESSMENT COLLECTION
Late Charges
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Authorizes associations to impose a late fee of not
more than 5%:
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For assessments (or installments) more than 60 days
past due;
Except to the extent the declaration or condominium
instruments (or rules/regulations pursuant thereto)
provide otherwise.
RESALE DISCLOSURE
Association Disclosure Packets and
Resale Certificates must include:
A statement indicating any known project
approvals currently in effect issued by
secondary mortgage market agencies
(House Bill 1807).
RESALE DISCLOSURE
Association Disclosure Packets and
Resale Certificates must include:
A statement setting forth any restriction,
limitation or prohibition on the right of a
unit (lot) owner to install or use solar
energy collection devices on the unit (lot)
owner's property (House Bill 2305).
FORECLOSURE
NOTICE OF SALE UNDER DEED OF TRUST
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Notice must be provided to common interest
community associations from Trustee or Substitute
Trustee within 60 days from sale;
Notice must include:
• Property Address;
• Owners Under Deed of Trust;
• Name and Contact Info of Notice Provider; and,
• Name and Address of New Owners.
NOTICE OF MEETINGS
In the event of cancellation of any
meeting where directors are elected,
notice of a subsequent meeting must
provide that the meeting purpose is for
the election of directors (House Bill
1711).
HOME-BASED BUSINESSES
• Except to the extent the declaration provides
otherwise, property owners associations shall not
prohibit the operation of a home-based business in a
lot owner’s residence.
• Association may restrict:
• Time, place and manner of the Business
Operation; and
• Size, place, duration and manner of signs.
• Must comply with local ordinances (House Bill 2200).
DECLARANT CONTROL PERIOD
• Upon approval of 2/3 of non-declarant
owners in a condominium, Declarant
Control Period may be extended to 15 years
(formerly 5 years).
• Provides for election of a Warranty Review
Committee for handling claims based on
statutory warranty against structural defects
(House Bill 2275).
STORMWATER FACILITIES
Effort to require development of stormwater
facilities to meet minimum state standards, not
more stringent local standards (associations must
subsequently comply with more stringent
standards) (House Bill 2190).
TOWING
Increases from $125.00 to $135.00 the
maximum hook-up and initial towing fee for
towing a passenger car from private property
without the owner’s consent UNLESS local
ordinance sets a different limit (House Bill
2202).
AUTOMATED EXTERNAL DEFIBRILLATORS
A person who maintains an AED on property
he owns or contracts is not civilly liable for
personal injury resulting from use in an
emergency UNLESS the injury results from
gross negligence or willful or wanton
misconduct (House Bill 1988).
DANGEROUS AND VICIOUS DOGS
• Authority for animal control or law
enforcement officials to apply for a
summons by magistrate.
• Officer may confine dog – if owner willfully
fails to comply.
• Clarifies distinction between dangerous
and vicious dogs.
• Owner to care, pay for care when in custody
(House Bill 1562).
FAILED BILLS
HB1405 –
HB1479 –
HB1761 –
HB2257 –
SB1125 –
Requiring equal maintenance of private roads.
Failure to include agenda in meeting
notice renders all action taken at meeting
null and void.
Prohibiting associations from waiving
assessment obligation for any reason.
Clarifying authority to seek legal action in
General District Court to enforce covenants and
restrictions.
Requiring specific items that must be
insured under master insurance policy.
RECENT CASE LAW
RECENT CASE LAW
SHADOWOOD CONDOMINIUM
• Challenge in Fairfax County Circuit Court
• Condominium Unit Owners Association authority to
assess charges for:
1. Failure to submit certain paperwork as part of
Association’s unit owner status report; and
2. Rules violations.
SHADOWOOD CONDOMINIUM
• Condominium association initially
brought action to enforce assessed
charges against Fairfax County
Redevelopment & Housing Authority
(FCRHA).
• On Motion for Summary Judgment,
Fairfax County Circuit Court ruled in
favor of FCRHA.
SHADOWOOD CONDOMINIUM
• On appeal, Virginia Supreme Court
found no reversible error and upheld the
Circuit Court’s decision.
• The Supreme Court based its decision
primarily on a master deed provision.
SHADOWOOD CONDOMINIUM
• Section (F) (6) of the Shadowood Master Deed
provides
no common expenses or other sums
shall be assessed…other than for the
maintenance, repair, replacement or
improvement of the general common
elements.
• Similar Bylaw provision.
• Conclusion: Association has no authority to
assess charges for rule violations.
SHADOWOOD CONDOMINIUM
• The Fly in the Ointment:
Footnote # 2 of the Supreme Court’s decision.
• Supreme Court opines that § 55-79.80:2 of the
Virginia Condominium Act, by its plain terms
– is “permissive” in nature;
– does not confer authority to an association beyond that in
the Association governing documents.
• The Court does not decide whether the statute could
be applied retroactively to condominium instruments
that predated enactment of the statute.
SHADOWOOD CONDOMINIUM
Concerns for Associations
• Does Footnote #2 really mean what it seems to
mean?
• Must recorded condominium instruments expressly
provide authority for the Association to assess
charges for rule violations?
• If so, resolutions adopted by the Board may not be
enough to confer assessment authority.
• If no authority, associations may not assess and
collect rule violation charges.
SHADOWOOD CONDOMINIUM
More Concerns for Associations
• Fair Debt Collection Practices Act
complications for Association debt
collectors.
• What will the Supreme Court decide
about retroactive application of the statute
to pre-existing condominium instruments?
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
• Another parking space case pitting garage
townhome owners against non-garage
townhome owners.
• Board adopted parking policy:
− Assigned two parking spaces to each townhome
without a garage.
− No space assigned to townhomes with garages.
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
Declaration provisions:
• Every Owner has a right and easement of
enjoyment in and to the Common Area
• Easement granted to each Owner was subject to
Association right to:
− Establish rules governing the parking lots within the
Common Area; and
− Designate a maximum of two parking spaces for
exclusive use of the Owner of each Lot.
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
• Owners of garage townhomes challenged the
preferential assignment of parking spaces to
townhomes without garages.
• Post-challenge the Association attempted to
amend the Declaration to create the new
designation of Reserved Common Areas.
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
Trial Court Ruled:
• Attempted Declaration Amendment was
invalid (issues included inadequate notice; use
of proxies; and, amendment effected an
improper forfeiture of easement rights).
• Parking Policy likewise invalid because policy
did not assign parking spaces equally to all
owners.
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
• Association appealed to Virginia Supreme
Court
• Certeriori was granted
• The Court determined:
– Purported Amendment invalid;
– Parking Policy invalid.
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
Lessons Learned
• Inherent in the use of the terms “Common
Areas” and “in common” is the concept of
equality.
• Inclusive in the ability to assign up to two
parking spaces is the lesser included ability to
assign one and/or none.
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION V. BATT
More Lessons Learned
• Association should adhere strictly to
amendment procedures contained in
recorded governing documents.
• Associations should adhere strictly to the
assignment of parking provisions, if any,
contained in recorded governing documents.
Assessment Collection Issue
• Increased scrutiny of assessment collection
procedures and authority.
• Attention to accuracy of accounting.
Assessment Collection Authority
Governing Document Authority must be clear:
• Late Charges and Interest
• Rule Enforcement Charges
• Administrative Charges
• Recovery of Attorneys’ Fees and Costs
ASSESSMENT COLLECTION
RECOMMENDATIONS
• Budget for collection costs (including
attorney’s fees).
• Review governing documents to confirm
authority.
• Consider governing document amendments
to establish authority.
2013 VIRGINIA COMMON INTEREST
COMMUNITY LEGISLATION
A Gentle Shove Towards Disclosure