CLIENT ALERT: "Just the Facts" - Virginia Common Interest Communities: 2010 Legislative Changes

Date: July 23, 2010

The 2010 General Assembly session proved to be an active one here in Virginia. While a number of bills were introduced at the beginning of this session that would have directly or indirectly impacted common interest communities in Virginia, only a few bills were actually approved by the General Assembly and signed by the Governor. The new laws amend the Virginia Property Owners' Association Act, the Virginia Condominium Act, the Common Interest Community Management statutes, the Virginia Nonstock Corporation Act, and the Virginia Flood Protection and Dam Safety statutes. These new laws all took effect on July 1, 2010, unless otherwise noted herein. Below is a brief summary of the legislation that directly or indirectly impacts common interest community associations.

Use of Technology
Virginia Property Owners' Association Act
Virginia Condominium Act

House Bill 1058 - This bill adds a new Section 55-515.3 to the Virginia Property Owners' Association Act and a corresponding new Section 55-79.71:1 to the Virginia Condominium Act. The bill provides that unless the declaration of a property owners association or the condominium instruments of a condominium association expressly provide otherwise, any notice required to be sent or received, or any signature, vote, consent or approval required to be obtained under the respective governing documents or any provision of the applicable statute may be accomplished by using the most advanced technology available at that time, if such use is a generally accepted business practice.

The statutes essentially provide a means, subject to the limitations found in a community association's governing documents, in certain cases for use of technology in implementing the provisions of the governing documents or the provisions of the statutes when dealing with notices, signatures, votes and consents or approvals. In addition, it permits the use of electronic signatures whenever a signature is required under the governing documents or the statutes. It also addresses voting rights, which may be accomplished by electronic transmission or other equivalent technology, provided that a record is created as evidence thereof, and as long as such record would be required to be maintained in a non-electronic form.

Finally, it does impose certain limitations. Community associations must provide reasonable non-technology alternatives to conduct business if a person does not have the capability or desire to conduct business using electronic transmission or other equivalent technological means. The statutes also do not permit the use of technology for notices relating to enforcement actions, assessment liens or foreclosure proceedings in the enforcement of assessment liens.

Display of the Flag of the United States
Virginia Property Owners' Association Act
Virginia Condominium Act

House Bill 956 and Senate Bill 151 - This bill amends Section 55-513.1 of the Virginia Property Owners' Association Act and Section 55-79.75:1 of the Virginia Condominium Act. The amendment to the statute basically incorporates provisions of the federal Freedom to Display the American Flag Act of 2005, by amending the statute to provide that no property owners' association or unit owners' association shall prohibit or otherwise adopt or enforce any policy restricting a unit owner or property owner from displaying upon property to which the owner has a separate ownership interest or right of exclusive possession or the use of the flag of the United States whenever such display is in compliance with the federal law, or any rule of custom pertaining to the proper display of the flag.

This statutes goes on to recognize, however, that a property owners association or condominium association may establish reasonable restrictions as to the size, place, duration, and manner of placement or display of the flag on such property provided that the restrictions are necessary to protect a substantial interest of the respective community association. In addition, the statute further provides that if an action is brought by a community association for violation of a flag restriction, the community association shall bear the burden of proof that the restriction as to the size, place, duration and manner of placement or display of such flag are necessary to protect a substantial interest of the community association.

Fees for Disclosure Packets
Virginia Property Owners' Association Act

House Bill 702 - The bill amends Section 55-509.4 and Section 55-509.7 of the Virginia Property Owners' Association Act. The bill clarifies that for property owners' associations that are not professionally managed, all fees for providing the required disclosure packet shall be collected at the time of delivery of the disclosure packet and shall be an assessment against the lot and collectible as any other assessment. The bill also contains technical amendments.

Parking Regulations
Virginia Property Owners' Association Act
Effective Date: July 1, 2011

House Bill 1102 - This bill adds a section numbered 55-513.01, relating to the Property Owners' Association Act. This statute shall not take effect unless reenacted by the 2011 Session of the General Assembly. The bill provides that to the extent a declaration gives the board of directors the authority to adopt rules and regulations relating to the parking of motor vehicles by lot owners, such rules may establish a parking space designation plan which makes parking spaces available to less than all of the lot owners, and that if such a plan is adopted, the common expenses attributable to such parking spaces may be specially assessed against the lot owners involved.

Common-Interest Community Ombudsman Complaint Process
Common Interest Communities Statutes

House Bill 191 and Senate Bill 270 - The bill amends Section 54.1-530 of the Code of Virginia. The amendments provide that each community association must adhere to the written procedures established pursuant to this subsection when resolving member and citizen complaints. The procedures shall include, but not be limited to, the following: (1) a record of each complaint shall be maintained for at least one year after the community association acts upon the complaint; (2) the community association shall provide complaint forms or written procedures for people who wish to register written complaints; (3) the forms or procedures shall include the address and telephone number of the association or its common interest community manager to which complaints shall be directed and the mailing address, telephone number, and electronic mail address of the Office of the Common Interest Community Ombudsman; and (4) the forms and written procedures shall include a clear and understandable description of the complainant's right to give notice of adverse decisions pursuant to this section.

In order for this statutory section to take effect, regulations must be enacted establishing Ombudsman complaint review procedures. While proposed regulations have been introduced, the regulations have not yet been finalized. We anticipate that regulations may be adopted later this year.

Common Interest Communities - Licensing Requirements Exemption and Board Member Qualifications
Common Interest Communities Statutes

House Bill 468 - The bill amends Sections 54.1-2347, 54.1-2348, and 54.1-2349 of the Code of Virginia, relating to common interest communities and the powers and duties of the Common Interest Community Board. The bill provides that a resident of a common interest community, who is providing bookkeeping or record keeping services for a common interest community for compensation, is exempt from the manager licensing requirements, provided that the fidelity bond maintained by the community association insures the community association against losses resulting from theft or dishonesty committed by such person.

The bill also amends the qualification provisions for service on the Common Interest Community Board. As you will recall, there are three citizen members of the Board. The statute, as amended, now requires that one of the citizen members, at the time of the person's appointment, must be serving or have served on the governing board of a community association that is not professionally managed at the time of appointment.

Virginia Nonstock Corporation Act - Technical and Clarifying Amendments
Virginia Nonstock Corporation Act

Senate Bill 131 - The bill amends Sections 13.1-803, 13.1-804, 13.1-810, 13.1-813, 13.1-823, 13.1-842, 13.1-845, 13.1-847, 13.1-847.1, 13.1-855, 13.1-866, 13.1-878, 13.1-883, and 13.1-939 of the Code of Virginia and adds a section numbered 13.1-844.2, relating to the Virginia Nonstock Corporation Act. The bill, among other things, (i) expands the governing of electronic transmission of notices and other communications; (ii) provides that notice to a member that is sent by U.S. mail is effective upon deposit in the U.S. mail; currently, such mailings to members are effective five days after mailing; (iii) require words in communications to be in the English language, unless otherwise agreed; (iv) permits the board of directors to establish separate record dates for determining members who are entitled to notices of, and to vote at, meetings; (v) allows members to participate remotely in members' meetings; (vi) repeals the existing provision that limits the power of the board of directors to alter the board's size to an amount not greater than 30 percent of its existing size; (vii) confirms the authority of a board of directors to require the corporation to provide indemnity, including advancement and reimbursement; (viii) authorizes a corporation to obligate itself to provide indemnification, and advance funds to pay for or reimburse expenses, in advance of the act or omission giving rise to a proceeding; and (ix) corrects cross-references.

Stormwater Management Facilities Liability
Flood Protection and Dam Safety Statutes

House Bill 1100 - This bill amends § 10.1-603.12:3 of the Code of Virginia, relating to stormwater management facilities. The statute establishes a process for a community association to transfer or assign the maintenance and repair of a stormwater management facility located on a community association's property to the state or local governing body, thereby creating limited immunity for liability for any claims arising out of the stormwater management facility. The statute provides that in order for the immunity established to apply, (i) the common interest community must cede such responsibility by contract or other instrument executed by both parties and (ii) the Commonwealth or the governing body of the political subdivision shall have accepted the responsibility ceded by the common interest community in writing or by resolution. As set forth in the statute, maintenance, repair, and replacement shall include, without limitation, cleaning the facility, maintaining adjacent grounds which are part of the facility, maintaining and replacing fencing where the facility is fenced, and posting signage indicating the identity of the governmental entity which maintains the facility. Acceptance or approval of an easement, subdivision plat, site plan, or other plan of development shall not constitute the acceptance by the Commonwealth or the governing body of the political subdivision required to satisfy the requirements of this legislation; thus, we suggest that a community association review its current easement, subdivision plat, site plan, or other plan of development to determine the scope of its current responsibilities with respect to these facilities. The immunity granted by this statute shall not apply to actions or omissions by the common interest community constituting intentional or willful misconduct or gross negligence.

Please feel free to contact any of the attorneys of our Community Association Industry Group should you have any questions regarding the legislation that was enacted this year.