Community Associations Update - July 2014

Date: July 16, 2014

"Just the Facts" Virginia Common Interest Communities 2014 Legislative Changes
By: Kevin A. Kernan, Esq.

As a result of the 2014 General Assembly Session, a number of bills were approved by the General Assembly and signed by the Governor, many of which directly or indirectly impact common interest communities in Virginia.

The new laws amend the Virginia Property Owners’ Association Act, the Virginia Condominium Act, and other statutes that may affect common interest communities. These new laws will take effect on July 1, 2014. Below is a brief summary of the legislation that directly or indirectly influences common interest community associations.

Solar Panels in Community Associations
Virginia Condominium Act

Senate Bill 222 – This bill amends Section 67-701 of the Virginia Code and clarifies that a community association may prohibit or restrict the installation of solar energy collection devices on an association’s common elements, but may not prohibit an owner from installing a solar energy collection device on his or her own property unless the association's recorded declaration establishes such a prohibition. Please note that this statute does permit an association to establish reasonable restrictions concerning the size, place, and manner of placement of solar energy collection devices. Any such restrictions must be included as a statement in an association’s resale certificate or disclosure packet.

Compliance with Declaration
Virginia Condominium Act
Virginia Property Owners Association Act

House Bill 530 – This bill amends Section 55-79.53 of the Virginia Condominium Act and Section 55-515 of the Virginia Property Owners Association Act. It clarifies that the association itself must comply with the lawful provisions of its declaration and the Virginia Condominium and Property Owners Acts. It now permits an action to be filed by an aggrieved unit owner against the association. The bill also authorizes the court to award reasonable attorney fees to the prevailing party, whether it is the association or the aggrieved unit owner.

Notice for Requests to Examine Association Records
Virginia Condominium Act
Virginia Property Owners Association Act

House Bill 550 – This bill amends Section 55-79.74:1 of the Virginia Condominium Act and Section 55-510 of the Virginia Property Owners’ Association Act. It provides that, notwithstanding any provision of law to the contrary, the right to examine association books and records may now be exercised upon five business days' written notice for a professionally managed association and ten business days' written notice for a self-managed association. Previously, the right of examination could be exercised by providing only five calendar days’ notice, regardless of how the association was managed. The notice still requires a reasonable rationale for the request and the specific association books and records such person is requesting to examine.

Late Fees
Virginia Condominium Act
Virginia Property Owners Association Act

House Bill 566 - This bill amends Section 55-79.83 of the Virginia Condominium Act and Section 55-513.3 of the Virginia Property Owners’ Association Act. The bill clarifies that, unless the association’s declaration or its rules or regulations provide otherwise, late fees assessed against an owner for nonpayment of assessments that are at least sixty days overdue may not exceed 5% of the monthly assessment. The bill also contains some technical amendments.

Merger of Developments; Judicial Reformation of Declaration
Virginia Condominium Act
Virginia Property Owners Association Act

House Bill 690 – This bill amends Section 55-79.71:2 of the Virginia Condominium Act and Section 55-513.2:1 of the Virginia Property Owners Association Act. It provides a process for the merger of two or more associations and a process for seeking judicial reformation of the declaration to resolve matters, such as ambiguities or inconsistencies that are the source of legal disputes, clerical errors and mathematical mistakes. The reformation procedure includes, among other requirements, at least thirty days' notice to the owners and the mortgagee and provides for a right to the mortgagee standing to participate in the reformation proceedings.

Rules Enforcement
Virginia Condominium Act
Virginia Property Owners Association Act

House Bill 791 – This bill amends Section 55-79.80:2 of the Virginia Condominium Act and Section 55-513 of the Virginia Property Owners’ Association Act. The bill provides that an association may file or defend a legal action in the general district court or the circuit court seeking relief, including injunctive relief that arises out of a violation of an association’s governing documents or duly adopted rules and regulations. Before any legal action, or other action as permitted by this statute is taken, the owner must be given a reasonable opportunity to correct the alleged violation via written notice of the alleged violation to the owner at the address required for notices of meetings. If the violation remains uncorrected after written notice of the violation has been provided, the owner shall be given an opportunity to be heard and to be represented by counsel before the board or such other tribunal as the governing documents specify. It is not clear whether the Courts will require an owner to be given a separate notice of violation for each separate instance of a repeated violation. Nevertheless, the association must provide an owner at least one opportunity to correct a violation before issuing a notice of hearing.

It is important to note that the statute, as amended, requires an association to inform the owner, in the notice of hearing, of all actions the association may take to remedy the violation, including seeking the Court’s intervention.

In the event of an action before the Court, the bill also amends Section 16.1-106 of the Code of Virginia to provide a right of an appeal from general district court to circuit court. It also allows the prevailing party to recover court costs and reasonable attorney fees. Under present law, only the association is entitled to recover such fees and costs.

Purchaser’s Right of Cancellation
Virginia Condominium Act

House Bill 899 – This bill impacts the sale of condominium units by declarant entities to purchasers. Specifically, this bill amends Sections 55-79.88 and 55-79.90 of the Virginia Condominium Act. The bill reduces a purchaser's right of cancellation from ten to five calendar days from the contract date of the disposition or delivery of the current public offering statement, whichever is later. The bill also requires the purchaser's right to cancel the purchase contract to be set forth on the first page of the purchase contract in boldface print and not less than 12-point font.

Allowable Fees
Virginia Condominium Act
Virginia Property Owners Association Act

House Bill 900 – This bill amends Sections 55-79.97 and 55-79.97:1 of the Virginia Condominium Act and Sections 55-509.3, 55-509.4, and 55-509.6 of the Virginia Property Owners Association Act. It allows for overnight delivery of the resale certificate or disclosure packet. It also precludes an association or common interest community manager from charging an inspection fee unless specifically authorized by statute, nor may an additional fee be charged for access to the association's or common interest community manager's website.

The bill also provides that if a resale certificate or disclosure packet is provided in electronic format, a total fee not to exceed $125 is authorized for an electronic copy to the seller and purchaser, their authorized agents, and not more than one other person designated by the requester.

Please contact any of the attorneys in this firm’s Community Association Section if you have any questions regarding the new statutory changes.

2014 Maryland Legislative Update
By: Julie Dymowski, Esq.

This was another busy year in Annapolis. The bills that passed and will become law are as follows:

Pit Bulls. The new law eliminates the strict liability standard for a person who has the right to control the presence of a pit bull on the property (i.e., the Association), which had been established in the Court of Appeals’ decision Tracey v. Solesky. In effect, the new law places the responsibility for a pet bite or other injury on the owner of the dog and returns to previous common law liability for Associations. The law went into effect on April 8, 2014, when signed by the Governor. If your Association had revised its Rules on pit bulls following the Tracey case, you should contact our office for modifications.

Cooperative Housing Act Amendments. Various provisions existing in the Maryland Condominium and Homeowners Association Acts were added to the Maryland Cooperative Housing Act. These provisions include open meeting requirements for the Board and Committees, defining closed meeting topics, allowing members to request an audit of the Cooperative’s books and records, providing for a late fee for late payment of an assessment, establishing a dispute settlement mechanism that includes a hearing procedure for violations, allowing for distribution of information by a member to other members, and establishing a procedure to be followed prior to eviction of a delinquent member. These amendments will take effect on October 1, 2014.

Foreclosure of Liens. In 2013, legislation was passed that limited an Association’s lien to outstanding assessments and legal fees related to the lien. Although great efforts were made in 2014 to expand the amounts to be covered by a lien, in the end the law was broadened only to allow for the addition of interest to the lien. This law will take effect on October 1, 2014.

Keep an Eye On: Some of the bills that did not pass this year, but may be reintroduced next legislative session, include manager licensing, smoking bans, rental restrictions, and resale certificate and disclosure changes.