CA Alert: 2007 Changes to Virginia Resale Certificate Laws
On July 1, the 2007 amendments to the Virginia laws related to charges for resale certificates go into effect. During its just concluded session, the Virginia General Assembly amended the Virginia Condominium Act (the “Condominium Act”) and the Virginia Property Owners Associations Act (the “POAA”) provisions related to charges for resale disclosure certificates. This Alert describes the permissible charges for preparing and providing resale disclosure certificates and will also discuss the time at which these charges may be imposed.
By laws that have existed for a number of years, unit owners associations or their agents must provide these certificates to association members selling their Virginia condominium unit or property subject to a homeowners’ association declaration of covenants. Until this year, the maximum permissible charge for providing the certificates to selling owners has been $100. Now, in some circumstances, selling owners can be charged as much as $325.
The resale certificate provisions of the Condominium Act [Section 55-79.97, Code of Virginia 1950, as amended] and of the POAA [Section 55-512, Code of Virginia 1950, as amended] are identical. The 2007 amendments to both Acts are also identical. This Update sets out a summary of the provisions of the Acts, as amended, with respect to both permitted charges and time of payment, followed by a more detailed description of the statutory provisions on both permitted charges and time of payment.
- Maximum charge by an association - 10 cents a page; total of $100
- Maximum charge by a management company - $325
- Rush fee (3 days delivery) - $25 [seller must agree]
- Mailing/delivery costs [seller must agree]
- Costs incurred at the request of purchaser [seller must agree]
Time of Payment
- Association\management agent may require payment before providing certificate
- Association may elect to collect at settlement
- Association must pay management agent when certificate provided.
A. General Rule. A community association may charge the actual costs of preparing and providing a resale certificate. However, the maximum charge may not exceed 10 cents per page or a total of $100.
B. Exception to General Rule. A community association may charge a reasonable fee exceeding the 10 cents per page, $100 maximum and up to a maximum of $325, provided three conditions are met:
- The fee reflects the actual costs of preparing and providing the statement;
- The fee is established in a contract with a management company; and
- The fee is disclosed in the association’s website or the management company’s website.
Each of these requirements must be met in order for the charge to exceed the maximums under the general rule. In the event of a dispute, the burden is on the association to demonstrate that the three conditions are satisfied.
C. Additional Permitted Charges - In certain circumstances additional charges, in addition to those described above may be permissible. These charges are permissible only if there is an express agreement with the unit seller consenting to the charges. These charges are:
- A rush fee not to exceed $25 for providing certificate within three days of request ;
- Actual costs of mailing or delivery requested by the unit seller. [Note, that both a request from the seller and an express agreement for the charge is necessary.]
- Actual costs incurred at the request of the purchaser. [Again, an express agreement with the seller is necessary.]
D. Other Details About Charges
- No charges for the preparation or provision of a resale certificate other than those described above are permitted.
- The maximum permitted charges under the general rule and under the exception adjust annually based on increases in the Consumer Price Index for all items, all urban consumers as published by the Bureau of Labor Statistics. The adjustment presumably will be as of July 1st each year as the amendments become effective as of July 1, 2007.
- The statutory provisions may not be varied by contract.
- The purchaser is not liable to pay the charges for the certificates.
- Neither the association nor its management agent may require payment by cash or certified funds unless the seller is more than 30 delinquent in paying assessments or has made a payment by NSF check within the prior six months.
Time of Collection of Charges
- Payment by Seller - The Acts permit, but do not require, that payment for resale certificates be received before the certificate is provided. However, the provision makes this discretionary. Consequently, even though the certificate must be provided within fourteen days of its request, if an association chose to do so, the payment for the certificate could be made at settlement on the sale of the unit.
- Payment by Association - Unless an association’s governing documents state otherwise, if the certificate is provided by a management agent, the association must “promptly pay” the charge for the certificate to the management agent and assess the the seller’s unit for the amount of the charge.