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Piedmont & Tidewater Committee Newsletter - February 2020

Date: February 6, 2020

Editor's Note


Whiteford, Taylor & Preston’s Piedmont & Tidewater Committee of Community Association attorneys focuses on legal issues specific to the Fredericksburg and Richmond areas.  This particular newsletter addresses Servicemembers and home businesses within your associations. 
 
Each member of the Piedmont & Tidewater Committee is a frequent speaker and author who mixes substance with local history and a touch of humor to tackle questions frequently asked from community associations in your neighborhood.  This particular newsletter is designed to provide things boards should ask legal counsel about before responding to these issues when they arise.   

Meet the Piedmont & Tidewater Committee

   
 

Chad Rinard
crinard@wtplaw.com
703.280.3380

 

Marla J. Diaz
mdiaz@wtplaw.com
703.280.9131
 
 

Kathleen W. Panagis
kpanagis@wtplaw.com
804.977.3303

Is That a "Residential Purpose"? Using Virginia Statutes and Municipal Ordinances to Clarify Restrictive Covenants on Non-Residential Uses

Almost invariably, a limitation on use of units or lots for “residential purposes only” is one of the first covenants found in governing documents.  But, where should one look to in determining what qualifies as permissible “residential purposes” when your association’s restrictive covenants say nothing more?  Virginia courts do not favor restrictions on the use of real property and construe restrictive covenants strictly, resolving substantial doubt or ambiguity in favor of the free use of property and against restrictions. [1]  Nevertheless, they have been willing to enforce covenants limiting the use of lots “for residential purposes.” [2]  The tricky part is understanding whether an owner is using the lot for a non-residential purpose.

Fortunately, an abundance of Virginia law provides supporting answers.  Virginia statutes, to which all common interest communities are subject and municipal ordinances of the city or county in which an association is located, may both apply, and either may supplement covenants by defining conduct that is non-residential or business usage of property.

The operation of a business from a residence is intuitively a non-residential use.  An owner that obtains a license, advertises or conducts business from a property is not using the property for “residential purposes only.” [3]  The definition of a business, under Virginia law, is a much lower threshold than most residents realize.  A person spending any regular amount of time, attention and labor to earn a livelihood or profit has a business. [4]  Issues associations frequently face, such as exterior storage of equipment, parking commercial vehicles, customers taking residents’ parking spots, and traffic increases during rush hours, are all characteristics of a business within an association.

In many cities and counties in Virginia, an association can also make use of local ordinances to better define a “business” or “non-residential” use of property and can, in some cases, take advantage of local government enforcement authority to prevent such non-residential use of lots.  An association’s liberal citation of city or county ordinances to enforce covenants or draft rules and regulations particularly about home businesses is highly recommended to prevent non-residential uses of the property and maintain the residential nature of the community.  It is a much less risky defense for an association to impose on its residents the same standards that the city or county in which an association lies does.  Each city or county in Virginia has these standards.  Below is a survey of them to give definition to the seemingly innocuous covenant limiting use of residences to residential purposes only.   

Stafford County

Stafford County, created in 1664, is home to the Aquia Creek sandstone used to construct the U.S Capitol and White House.  The sandstone quarry is now defunct and preserved as a County park, but the rest of the County thrives.   

Helpfully, Stafford County ordinances draw a distinction between home businesses and home occupations. [5]  Each of the three types of “home businesses” allow a different number of employees, customer visits, parking for customers, and storage of merchandise, equipment or materials. [6]   For associations, this is valuable because the ordinances makes clear the kind of conduct that constitutes a “business” use of the property.  Conversely, the definition of a “home occupation,” which allows no employees other than family members, no customer visits, no substantial increase in vehicular trip generation by the home occupation, requires that the property be used principally as a resident, and prohibits the storage of goods or merchandise for sale on the property, provides a clear picture of what constitutes “residential use” of a property. [7]  To be sure, these ordinances do not supplant an association’s covenants on home businesses or residential use, but supplement them well when those covenants lack sufficient detail.[8]

City of Fredericksburg

The City of Fredericksburg is the site of so much American history as a host of the colonial-era Presidents from Virginia, the drafting place of the Virginia Statue of Religious Freedom and of course the Civil War battle that bears its name.   The City has done well to preserve its fascinating history.  Ironically, not all history has been preserved in its original form - the City’s 100-year-old high school is now a condominium. [9]

For condominium residents “still in school” and other property residents, the City permits them to have certain home occupations in many of its zoning districts.[10] The ordinance only allows certain types of home occupations and only one non-resident employee is permitted and exterior signage and storage is prohibited.[11]  Customer parking is also restricted.  A resident may file an application with the City to have a home occupation, which limits parking to only the space or spaces on his or her lot shown on that application.[12]  The City will not interject itself into issues between associations and residents about customer parking, but the latter’s application to have a home occupation may be useful tool for an association to deter vehicles parked in spaces not shown on that application.[13]  An association can rely upon the home occupation limitations to bolster its prohibitions on non-residential uses of the lot.

Spotsylvania County

Spotsylvania County also has a rich history as the civil war was fought in the area not once, but twice.  Of much more recent vintage, these battle sites are contentious issues among preservationists and developers.  Laudably however it was a developer who saved the area of the Slaughter Farm Pen fight from subdivision.[14]      

On lots in the County’s subdivisions that have been dedicated, Spotsylvania differentiates between home businesses as either home enterprises or home occupations.[15]  This distinction for a home business operated in the County can either prohibit or restrict the number of employees, and quantity of signage, outside storage and parking the business may have.[16]  These restrictions change too based on the zoning district in which an association lies.[17]  The County readily defers control to an association’s covenant that is more restrictive than its own Ordinances.[18]  No County ordinance may be used to repeal a covenant, nor may a less restrictive covenant excuse an owner's failure to comply with a County Ordinance either.[19]

Henrico County

Henrico County is the successor of Henricus, Virginia’s second English settlement behind Jamestown.[20]  It too regulates home businesses.    

The County permits a home occupation to be operated from a dwelling unit provided the business is customary for one run from a home and the use is incidental to the residence.[21] The home occupation must be conducted by the resident(s) only, and clients may come by appointment only rather than be drawn from the general public.[22]  The ordinance also contains limitations on the area of the home that can be used for the home occupation and a prohibition on group activities and exterior displays of the occupation.[23]  The County clarifies its Ordinances are only minimal standards, which an association’s covenants can improve upon.[24] Accordingly Henrico associations are encouraged to adopt rules and regulations about home businesses rather than rely on the spare by comparison standards in the County’s Ordinances.

City of Richmond

Lawyers writing about the law in the City of Richmond cannot escape without a quip about its most famous lawyer, John Marshall, right?  Nope.[25]  Richmond, built on the James River fall line, i.e., the point ships can no longer traverse due to too shallow depths, deserves comment as many of its warehouses for cargo heading down the James have been converted into…condos.[26] 

In those condos, as well as every other residence in the city limits, Richmond regulates home occupations.[27]  Exterior storage of non-residential items is prohibited, and the hours a client or customer may park in a residential area is limited too.[28]  If a City Ordinance and association’s covenant differ, the more restrictive controls.[29]  To wit, the renovated Tobacco Row condominiums are more restricted now than the original warehouse buildings two centuries ago.  

Chesterfield County

Chesterfield County split from Henrico County in 1749.[30]  Coincidently, we are sure, Chesterfield’s Ordinances on home businesses are different and much more defined than Henrico’s Ordinances mentioned above.

Chesterfield County describes home businesses as either a “business from home” or “home occupation,” but the terms appear to be a distinction with no consequence.  Defined the same, they expressly exclude the operation from a residence businesses such as motor vehicle repair, tourist homes, kennels and beauty parlors.[31]  For home businesses the County permits, they are nonetheless prohibited from having employees other than residential family members, and storing business commodities or equipment outside.[32]  Home businesses may not have more than two clients at any one time, or more than one commercial vehicle at any time.[33] The County’s Ordinances cannot abolish any association’s covenants, and acknowledge that covenants may impose more restrictive standards than they can.[34]  With far less detailed Ordinances on home businesses, perhaps it’s time for Henrico to take a thing or two back from Chesterfield. 

City of Norfolk

It is difficult to pass on a comment about General MacArthur’s legacy on the City of Norfolk, but frankly discussing beer is more fun.  Anheuser-Busch built a plant in Norfolk in 1888.[35]  To those now living on the City’s riverfront in this once brewery, and now renovated condominium, cheers!

For those living there and all other residences in the city limits, Norfolk permits home occupations that are an accessory use of a dwelling unit.  Customers and employees in the residence are prohibited in most zoning districts but some districts allow an owner to obtain a Conditional Use Permit that allows them in limited circumstances.  Exterior signage, storage of materials and equipment, and certain business such as vehicle repair, are prohibited.[36] While the City will not enforce the standards of an association’s covenants, it does require covenants at a minimum to match the City’s Ordinances.[37]

City of Virginia Beach

The City of Virginia Beach lends itself to a comment about its history of pirates but anytime attorneys are writing about them there is an easy joke about there being a distinction of no consequence.  So the Knights’ Templar will do, whose early twentieth century club in the City is now…a condominium building.[38] 

For those residents and all others, Virginia Beach permits the operation of home occupations from dwelling units subject to several limitations.[39]  Increases in traffic, front yard parking and signage for home occupations are generally discouraged.[40]  Nuisances, and certain types of business such as auto repair and tourist homes, are prohibited too.[41]  The air of mystery surrounding the Knights’ Templar may still exist, but the air of mystery around home businesses in Virginia Beach condominiums, well not so much.    
  
State-wide Restrictions

The state also has restricted home businesses in ways that its cities and counties can only supplement, if not supplant.[42] Far be it from the state legislature however to compile its legislation on home businesses in any one Title of the sixty seven in the Virginia Code.  So here are those found do far. 

Virginia Code § 15.2-2291 (A) says eight individuals with mental illness, intellectual disability, or developmental disabilities residing together is residential.  Twenty-one short Titles later, Section 36-105.4 says occupancy standards restricting the maximum number of occupants to two persons per bedroom is presumed to be reasonable, and presumptively residential.  Nineteen Titles after that, Section 55.1-1821 does not permit home businesses to be prohibited by rules and regulations adopted by a property owners’ association but only by declaration.   Associations may restrict however the time, place, and manner that a home business is operated, the latter of which provides a basis for considering everything mentioned previously in this article.  And, as first mentioned, Section 58.1-3700.1, only three Titles later, defines the activity that constitutes a business.  So we strongly encourage boards to consult with legal counsel to balance the state and city or county authority available to it to supplement or enforce its association’s covenant limiting use of a lot or unit to residential use only.      

***
Whiteford, Taylor and Preston’s Community Association attorneys have a Piedmont & Tidewater Committee who specialize representing associations including Marla Diaz in Richmond and Chad Rinard in Fredericksburg.  Ed O’Connell is a mentor to each.  Our friend, Kathleen Panagis, an attorney who represents associations in the Virginia Beach area, contributed to this article.  If you would like to discuss your association’s legal needs in any of these areas with us, please do not hesitate to call.
[1] Schwartzschild v. Welborne, 186 Va. 1052, 1058, 45 S.E.2d 152, 155 (1947).
[2] Deitrick v. Leadbetter, et al., 175 Va. 170, 8 S.E.2d 276 (1940); Scott v. Walker, 274 Va. 209, 645 S.E.2d 278 (2007).
[3] See, e.g., Deitrick, 175 Va. at 174-75.
[4] See Va. Code Ann. § 58.1-3700.1 (stating advertising and tax returns can establish a business use).  See also, City of Portsmouth v. Citizens Trust Co., 219 Va. 903, 906, 252 S.E.2d 339, 341 (1979)(stating a common law definition of “engaging in a business” in accord with § 58.1-3700.1). 
[5] Stafford County Ordinance § 28-35.
[6] Stafford County Ordinance § 28-25.
[7] Stafford County Ordinance § 28-25.
[8] Stafford County Ordinance § 22-45.
[9] Kent, Then & Now: Fredericksburg ¶ 95 (2010).
[10] Fredericksburg Ordinance §§ 72-42.5 & -84.
[11] Fredericksburg Ordinance § 72-42.6 (D).
[12] Id.
[13] Fredericksburg Ordinance § 72-15.2
[14] Cummings, Images of America : Spotsylvania County  ¶ 121 (2011).
[15] Spotsylvania County Ordinance § 23-2.1.4.
[16] Spotsylvania County Ordinance § 23-5.4.2.
[17] See Spotsylvania County Ordinance § 23-6.1.1, et seq.
[18] Spotsylvania County Ordinance § 23-2.1.3.
[19] Spotsylvania County Ordinance § 20-2.1.2.
[20] Spears, Images of America : Richmond Landmarks ¶ 117 (2012).
[21] Henrico County Ordinance § 24-13(d).
[22] Id.
[23] Id.
[24] Henrico County Ordinance § 24-2.
[25] That’s a future article. 
[26] Spears, Images of America : Richmond Landmarks ¶ 63 (2012).
[27] Richmond Ordinance § 30-694.1.  See also § 30-1220 (40).
[28] Id.
[29] Richmond Ordinance § 30-1070. 
[30] Spears, Images of America : Richmond Landmarks ¶ 126 (2012).
[31] Chesterfield County Zoning Ordinance § 19.1-570.
[32] Chesterfield County Zoning Ordinance § 19.1-53.
[33] Id.
[34] Chesterfield County Zoning Ordinance § 19.1-1 (B)(4).
[35] Yarsinske, Norfolk Through Time ¶ 51 (2015).
[36] Norfolk Zoning Ordinance Article 4.3.3 (E)(1)(j).
[37] Norfolk Zoning Ordinance Article 1.5.3
[38] Yarinske, Images of America : Virginia Beach, Jewel Resort of the Atlantic ¶ 22 (1998).
[39] City Zoning Ordinance of the City of Virginia Beach §§ 110 & 234.
[40] City Zoning Ordinance of the City of Virginia Beach § 234.
[41] Id.
[42] Va. Code Ann. § 15.2-1425.

Protections Afforded to Your Neighbors in the Military: The Servicemembers Civil Relief Act for Community Associations

Community associations, as a general rule, have greater success in collecting delinquent assessments if they act promptly to collect such amounts from the delinquent owner.  Federal law, however, makes this more difficult and time consuming when the delinquent owner is a military service member.  The same law can delay any lawsuit involving a servicemember, including those brought for covenant enforcement.  Associations are not without enforcement options when dealing with service member owners, but should prepare themselves for legal proceedings to take longer and involve greater cost.  To avoid or reduce these difficulties, associations should consider using their internal procedures to resolve delinquencies and covenant disputes with service members before proceeding with a lawsuit.
 
Intuition says that the call of duty to defend the country should transcend the obligations created by covenants, mortgages, and, seemingly meager by comparison, the collections resolution.  The law agrees.  Congress enacted the Servicemembers Civil Relief Act (the “Act”) to protect those who are deployed without the opportunity to handle their financial affairs.[1]  Congress likely anticipated a coming war when enacting the Act, first known as The Soldiers' and Sailors' Civil Relief Act of 1940, on October 17, 1940.[2] In little more than a year, Japan and Germany declared war on the United States, which within days lead the United States to reciprocate and enter World War II on December 11, 1941.  The War ended, but the Act remained.  Virginia associations have been subject to the Act since their inception, and have always needed to be aware that their servicemember members have far more rights, especially if a lawsuit is filed, than their civilian neighbors.[3]      
 
The Act affects any civil case in which an association may be involved, whether as a creditor with a claim for unpaid assessments, or as a complainant seeking an injunction from a covenant violation.[4] In any action an association commences, it must file an affidavit saying whether the defendant is in the military and the facts supporting such conclusion before a court will grant the association any relief.[5] To establish the status of service of a defendant, an association can obtain and rely on the Military Status Verification available on the Department of Defense Manpower Data Center website. [6]  

If the affidavit establishes that a defendant is in the military and the defendant fails to make an appearance in the case, the court will appoint an attorney to represent the servicemember before allowing the case to proceed.[7] That attorney is charged with reaching out to the defendant servicemember to determine if a deployment or other military service prevents the defendant from participating in the court proceeding.  The attorney or the court must move to stay the case at least 90 days if there is a defense to the action, which cannot be presented without the presence of the defendant or the attorney could not contact the defendant or determine if the defendant has a meritorious defense to the lawsuit.[8] The stay can then be extended in the court’s discretion as needed to accommodate the defendant’s military service.[9] Even if the court grants a default judgment after the stay, that judgment may still be vacated if the defendant’s deployment materially affected the service member’s ability to make a meritorious defense before judgment was entered.[10] While the materiality can be a nebulous concept, especially if the defendant had leave from military duty at the time of the default judgment, at least one Virginia court burdened the defendant with showing his or her whereabouts at the time of judgment and proving that military service truly prevented participation and defense of that suit. [11]

Even if a defendant service member has notice of a case or has appeared in it, the case may still be stayed, albeit in much more limited circumstances.[12] In this instance, the defendant or the court first must move to stay the case at least 90 days if there are facts submitted supporting the defendant’s military duties materially affect his or her ability to appear in court, and the defendant’s commanding officer also submits a letter that the defendant’s duty prevents him or her from appearing in court and leave is not authorized for that purpose.[13] The court then decides whether there is a material effect on the defendant’s ability to appear before granting the stay.  The U.S. Supreme Court has held that a court must consider not only whether a defendant servicemember has the ability to attend the trial but also adequate time and opportunity to prepare his or her defenses. [14] If a request for an extension of stay is denied after a defendant has appeared, an attorney is appointed for him or her.[15]

The Act’s impact is not limited to the increased procedural requirements for getting a judgment against a defendant service member.  Substantively, the Act grants additional rights a defendant in the military that may affect obligations owed to associations.  A court may waive any fine or penalty if payments were materially affected by service.[16] If, for example, military service prevented the timely payment of assessments, the court may strike any late fees on the service member’s account.  Garnishments may be stayed too, preventing collection of judgments that have already been entered against the service member.[17]

A court’s authority to reduce late fees and other penalties under the Act does not, however, create an obligation on the association to forego such remedies prior to trial.  Associations should continue to apply late fees and penalties consistent with their governing documents and collection resolutions.  The court will determine, after the filing of the suit, if such fees and penalties should be waived based on the defendant’s military service.  Further, a court’s authority to waive fees and penalties does not extend to waiving assessment obligations or other financial obligations that a service member has to the association under the governing documents.[18]

A defendant in the military may waive any of the rights under the Act provided the waiver is contained in a document separate from the one that creates liability, which for an association is its covenants, and the defendant signs the waiver while in the service, not before.[19]  It is unlikely, however, that a service member would give up the protections offered by the Act.  Given these protections available to service members as part of a court proceeding and the increased expense they represent for the association, boards and managers should give consideration to using internal procedures to bring service members into compliance.  Greater efforts to reach out to the service members and get them started on payment plans or increased opportunities to correct covenant violations often yield compliance by the service members faster and less expensively than possible in light of the Act.

Military bases span Virginia from Arlington and Quantico to Newport News and Chesapeake.  Our neighbors who serve we thank and with this article hope to educate associations and service members alike on handling lingering obligations when deployments occur. 

***
Whiteford, Taylor and Preston’s Community Association attorneys have a Piedmont & Tidewater Committee who specialize representing associations including Marla Diaz in Richmond and Chad Rinard in Fredericksburg.  Ed O’Connell is a mentor to each.  Our friend, Kathleen Panagis, an attorney who represents associations in the Virginia Beach area, contributed to this article.  If you would like to discuss your association’s legal needs in any of these areas with us, please do not hesitate to call. 
[1] Perhaps without the citation to Article I, Section 8 of the U.S. Constitution that is due, Congress clearly intended the Act to provide for national defense.  50 U.S.C.A. § 3902.  
[2] On December 19, 2003, Congress amended the name of the Act to its present day iteration.  Pub. L. No. 108–189, 117 Stat. 2835, et seq. (2003). 
[3] In Virginia, the Horizontal Property Act was passed in 1962, the Condominium Act in 1974 and the Property Owners’ Association Act in 1989. 
[4] 50 U.S.C.A. § 3931 (a).
[5] 50 U.S.C.A. § 3931 (b)(1)(A).  See also, Citibank (South Dakota), N.A. v. Birrell, 60 Va. Cir. 189, 190-91 (2002).  
[6] www.servicememberscivilreliefact.com.  See Financial Pacific Leasing, Inc. v. Blackwater Transport, Inc., 2014 WL 12662305 *2 (E.D. Va. 2014).  In the alternative, the association can affirm the defendant’s service status cannot be determined subject to filing a bond if the court requires.  50 U.S.C.A. § 3931 (b)(1)(B) & (b)(3).
[7] 50 U.S.C.A. § 3931 (b)(2).
[8] 50 U.S.C.A. § 3931 (d).  See also, Raftery v. Bruner, 1 Va. Cir 43, 44 (1965).
[9] Presumptively, the stay can be extended in court proceedings for foreclosures too.  See, Higgins v. Timber Springs Homeowners Ass'n, Inc., 126 So.3d 394, 396-97 (Fl. 2013) 
[10] 50 U.S.C.A. § 3931 (g).
[11] Flynn v. Great Atlantic Management Co., Inc., 246 Va. 93, 96, 431 S.E.2d 327, 329 (1993); Williams v. Williams, 184 Va. 124, 126, 34 S.E.2d 378, 379 (1945).
[12] 50 U.S.C.A. § 3932 (b)(1).
[13] 50 U.S.C.A. § 3932 (b)(2).  See also, Lackey v. Lackey, 222 Va. 49, 52, 278 S.E.2d 811, 812 (1981)(holding that service on board a Navy ship on sea duty coupled with the inability to leave the ship was a material effect).
[14] Boone v. Lightner, 63 S.Ct. 1223, 1229 (1943).
[15] 50 U.S.C.A. § 3932 (d)(2).
[16] 50 U.S.C.A. § 3933 (b)(2).
[17] 50 U.S.C.A. § 3934 (a).
[18] There is no case of which these authors are aware that assessments are “in the nature of a mortgage,” which if true may allow a defendant in the military to request an interest rate to be reduced to 6%, or a stay of a non-judicial foreclosure. 50 U.S.C.A. § 3937 (a)(1) & § 3953 (a).  See also, Gentle Winds Management Corp. v. Short, 20 V.I. 41, 43-44 (1983).
[19] 50 U.S.C.A. § 3918 (a).

Ordinances Every Board In Stafford County Should Know


Need some clarity on ordinances in Stafford County?  Check out our detailed PowerPoint for guidelines by clicking, READ MORE.