"Just the Facts" - Virginia Common Interest Communities 2011 Legislative Changes

Date: July 11, 2011

The 2011 General Assembly session was an active one in Virginia. A number of new provisions will directly or indirectly impact common interest communities in Virginia. The new laws amend the Virginia Property Owners' Association Act, the Virginia Condominium Act, the Common Interest Community Management statutes, and the Virginia Nonstock Corporation Act. The sections of the law that are affected by the changes are listed; unless otherwise noted, the references are to the Virginia Code. These new laws took effect on July 1, 2011, unless otherwise noted in the summaries below.

Virginia General District Courts May Now Hear Covenant Enforcement Matters
Virginia Property Owners' Association Act
Virginia Condominium Act
Sections 16.1-77, 55-79.80:2, and 55-513. This statute has a significant impact on community associations because the Virginia General District Courts have jurisdiction to order an owner to abate or remedy covenant violations. The General District Court can also enter default judgment against an owner based on the association's sworn affidavit. Prior to the enactment of this statute, only the Circuit Courts had the authority to award equitable relief. This required an association to bring actions in the higher court, which were more costly and time consuming. General District Courts are the preferred venue because matters are decided quickly. It is important to keep in mind that General District Courts are not courts of record, which means that any matter litigated in the General District Court may be appealed to the Circuit Court where the matter will be litigated from the beginning without review of the lower court rulings. Prior to filing a covenant enforcement action, we recommend that you talk to the association's lawyer.

Charges for Access to Association Books and Records
Virginia Property Owners' Association Act
Virginia Condominium Act
Effective July 1, 2012
Sections 55-79.74:1 and 55-510: Beginning next year, community associations will not be able to charge owners for copies of books and records of the association unless the Board of Directors formally adopts a schedule of charges. Such a schedule must be provided to owners when they seek access to the books and records. The schedule of charges must: (i) specify the charges for materials and labor, (ii) apply equally to all members in good standing, and (iii) be provided to such requesting member at the time the request is made.

Time Period for Assessing Resale Disclosure Fees Reduced to 45 Days
Virginia Property Owners' Association Act
Virginia Condominium Act
Sections 55-79.97:1 and 55.509.6: This change reduces the time period when an owner can pay for their resale disclosure package. Prior to this legislation, an owner had to pay for the resale disclosure package at settlement, or within 90 days of settlement. Now, the owner must pay for the resale disclosure package at settlement, or within 45 days from the issuance of the resale disclosure package. The statute also requires that the resale disclosure packet state that all fees and costs for the production of the disclosure packet are the personal responsibility of the owner and will be assessed against the unit or lot and be collected like any other assessment.

The statute also provides that the costs must be assessed within one year of delivery of the disclosure packet.

Deadline Extended for Employee Certification by CICB
Virginia Property Owners' Association Act
Common Interest Communities Statutes
Virginia Common Interest Community Statute Sections 54.1-2346, 54.1-2347, 54.1-2349, 54.1-2353, 55-79.74:1, 55-79.97:1, 55-509, 55-509.3, 55-509.6, and 55-509.7. This statute extends the deadline for common interest community managers (with principal responsibility for management services or those managers who supervise employees who participate directly in the provision of management services) to obtain a certificate from the Common Interest Community Board. The new law extends the deadline for obtaining the certificate to July 1, 2012.

Professional Managed Communities
Virginia Property Owners' Association Act
Section 55-509 of the Virginia Property Owners' Association Act has been changed. This statute, as amended, defines a "professionally managed" association to include one that has engaged: (i) a common interest community manager to provide management services to the community or (ii) a person, as an employee, for compensation to provide management services to the community, other than a resident of the community who provides bookkeeping, billing, or recordkeeping services for that community. The new definition impacts Section 55-509.6 of the Virginia Property Owners' Association Act, which provides that a professionally managed association may assess certain fees for the inspection of the property, and the preparation and issuance of a disclosure packet.

Limitation on Association for Resale Packets
Virginia Property Owners' Association Act
This new legislation (Section 55-509.3 of the Virginia Property Owners' Association Act) states that neither associations nor the management companies can impose fees for the production and delivery of resale disclosure packets that are not specifically authorized in the Virginia Property Owners' Association Act, an association's Declaration, or as otherwise provided by law.

Notice Requirements for Pesticide Applications
Virginia Property Owners' Association Act
Section 55-510.3. This statute requires that property owners associations provide posted notice to lot owners of all pesticide applications on common areas at least 48 hours prior to the application. The statute mirrors the requirements in the Condominium Act. In order to better insure compliance with this new Code section, we recommend that associations include the notice requirement in contracts with their landscaping contractor and/or other companies that may apply pesticides.

Buyer's Right to Terminate Sales Contract
Virginia Condominium Act
Section 55-79.97: The statute as amended now states that a purchaser of a condominium unit may cancel a sales contract within 3 days of being notified that the resale certificate will not be available, and the amendments define when a resale certificate shall be deemed not to be available. Specifically, a resale certificate is not available when: (a) a current annual report has not been filed by the unit owners' association with either the State Corporation Commission pursuant to § 13.1-936 or the Common Interest Community Board pursuant to § 55-79.93:1, (b) the seller has made a written request to the unit owners' association that the resale certificate be provided and no resale certificate has been received within 14 days in accordance with subsection C of the statute, or (c) written notice has been provided by the unit owners' association that a resale certificate is not available.

Section 55-79.97(F) was also amended to make it clear that a resale certificate need not be provided if there is a disposition of the unit by a sale at an auction when a resale certificate was made available as part of the auction package for prospective purchasers prior to the auction.

Common Interest Community Manager Licenses
Common Interest Communities Statutes
Sections 54.1-2346, 54.1-2347, 54.1-2353, 55-79.74.1; 55-79.89, 55-79.90, 55-79.98, 55-79.99, 55-391.1, 55-396, and 55-399. The most important aspect of this bill is the extension of the expiration date for provisional common interest community manager licenses. The expiration date has been extended from June 30, 2011, to June 30, 2012. The amendments to the statutes also clarify, among other things, the CIC Board's authority to promulgate regulations necessary and proper to accomplish its purpose.

Increased Jurisdiction of the Virginia General District Courts
Sections 8.01-195.4, 16.1-77, 43-34, and 46.2-644.03: This statute increases the jurisdictional monetary limit of the Virginia General District Courts from $15,000 to $25,000. Any actions for damages in excess of $25,000 must be filed in the Circuit Court. The increase in the jurisdictional amount is unlikely to have a direct impact on community associations because assessment collections cases are usually filed before the delinquency exceeds $15,000. However, associations may be indirectly impacted from this legislative change because the number of cases brought in the General District Courts is expected to increase. This could result in a backlog of cases on the court's docket. In turn, there may be a delay in the time for assessment collection cases to be concluded.

No Banquet License Required For Alcohol to Be Served At Association Gatherings
Section 4.1-200. This statute exempts common interest communities from the requirement of obtaining a banquet license in order to serve alcoholic beverages at its private parties or meetings that are limited in attendance to members and their guests. The bill requires that (i) the alcoholic beverages shall not be sold or charged for in any way, (ii) the premises where the alcoholic beverages are consumed are limited to the common areas regularly occupied and utilized for such private meetings or private parties, and (iii) no more than four such meetings or parties may be held in any calendar year.

Immunity of Officers of Community Associations
Virginia Nonstock Corporation Act
Section 13.1-870.2. This statute exempts officers and directors of tax exempt organizations (including community associations) for acts taken in their official capacities even after the termination, cancellation or discontinuance of the association.