Suspension of Community Privileges: Virginia
A community association's ability to suspend an owner's voting privileges and community privileges, such as parking, pool, and/or fitness center access, is a powerful tool associations can use in getting the attention of owners who are in violation of association governing documents. This tool is typically used when an owner is delinquent in paying his or her assessments and can serve as a deterrent for non-payment as well as an effective means of assessment collection. It is important to note, however, that before an association can proceed with suspending an owner's voting and/or community privileges, it must carefully review its Declaration, Bylaws, and applicable statutory codes in order to determine whether it has the requisite authority to suspend such privileges, and if so, what procedures must be followed.
In Virginia, before suspending an owner's privileges, the board of a property owners' association must review its Declaration and Bylaws and a condominium association must review its condominium instruments (collectively, “Governing Documents”) to determine whether it has the authority to suspend privileges, and if so, which ones. This section will discuss the current requirements of the Virginia Property Owners' Association Act (§ 55-513) and the Virginia Condominium Act (§ 55-79.80:2) and the case law interpreting those statutes, as well as the impact of a new requirement imposed by House Bill No. 791, which has been passed by both Houses and is pending before the Governor.
Even in the absence of express authority to suspend privileges in the Governing Documents, associations previously interpreted the Virginia Property Owners' Association Act and Condominium Acts to mean that an association could suspend privileges if it had that authority under its rules and regulations. Specifically, the current versions of Section 55-513(B) of the Virginia Property Owners' Association Act and Section 55.79:80:2(A) of the Virginia Condominium Act provide, in relevant part, that the association
shall also have the power, to the extent the declaration (or condominium instruments) or rules and regulations duly adopted pursuant thereto expressly so provide, to (i) suspend a member's right to use facilities or services, including utility services, provided directly through the association for nonpayment of assessments which are more than 60 days past due, to the extent that access to the lot (or unit) through the common areas (or common elements) is not precluded and provided that such suspension shall not endanger the health, safety, or property of any owner, tenant, or occupant. (emphasis added)
However, two cases tend to suggest that an association is not permitted to suspend an owner's privileges simply by passing rules and regulations. In a case that garnered much attention and is analogous to suspending privileges solely through the use of rules and regulations -- Farran v. Olde Belhaven Towne Owners Association -- the court reviewed an association's decision to impose covenant violation charges pursuant to Section 55-513 of the Virginia Property Owners' Association Act. In the Farran matter, the board adopted a resolution authorizing the imposition of charges against owners who violated the association's restrictive covenants.
The Court held that the board's resolution was invalid because the association's declaration did not expressly authorize it to adopt a rule or regulation imposing a fine, even though the declaration did expressly provide the board with rule-making authority. The result of this case was damaging for the association because the plaintiffs were awarded significant attorneys' fees.
In Shadowood Condominium Association, et al. v. Fairfax County Redevelopment and Housing Authority, the association's board also adopted rules through a resolution allowing the imposition of violation charges against non-compliant owners pursuant to a Virginia Condominium Act section. In this case, the Virginia Supreme Court ruled that the assessment of violation charges against non-compliant owners by means of a resolution was beyond the permissible scope of the association's authority as defined in its declaration. The Virginia Supreme Court held that, although the association had rule-making authority, the specific language of the declaration for Shadowood Condominium prohibited the assessment of other sums except those related to general common elements. As such, Shadowood Condominium lacked the authority to assess covenant violation charges. Although the Shadowood case involved a condominium association, virtually identical language pertaining to the assessment of covenant violation charges for a homeowners association is found in Va. Code. Ann. § 55-513 of Virginia Property Owners Act.
It is important to note that the Farran and Shadowood opinions are not directly on point since these cases deal with covenant charges and not suspensions. Nevertheless, these cases tend to support the conclusion that an association can only take actions that are specifically allowed to it by its Governing Documents. Before suspending an owner's privileges, associations should scrutinize their Governing Documents to verify they have the requisite authority to do so. Without the presence of such authority, associations face potential risk. It is important to note that legislation introduced this year and passed by the House and Senate, but not yet approved by the Governor, does not expand an association's authority to suspend privileges (or impose covenant charges). Rather, the legislation provides that the authority must still come from the express language contained in an association's Governing Documents.
Should an association be in the fortunate position of having Governing Documents that do contain express language allowing it to suspend an owner's privileges, the association, at a minimum, must follow the statutory due process procedures that are imposed by the current versions of the Virginia Property Owners' Act and Condominium Act [§ 55-513(B) and § 55-79.80:2(B), respectively]. The owner must be given an opportunity to be heard and to be represented by counsel before the board of directors. A notice of this hearing, including the possibility that privileges will be suspended, must be given at least fourteen (14) days in advance of the hearing date. At the hearing, the owner and his/her attorney, if present, are permitted to address the board regarding the delinquent account. The board then must decide whether to suspend the owner's privileges. Within seven (7) days of the hearing, a hearing result letter must be hand delivered or mailed to the owner. In addition to the due process procedures required by statute, it is important the association also follow any additional due process procedures that may be contained in its Governing Documents.
Commencing July 1, (and assuming the pending legislation becomes law), associations will be required to take an extra step in addition to the requirements that are already in effect and any requirements imposed by their Governing Documents. Specifically, § 55-513(C) of the Virginia Property Owners' Association Act and § 55-79.80:2(B) of the Virginia Condominium Act will state, in part, that
Before any action authorized in subsection B (or A, if a condominium) is taken, the member (or unit owner, if a condominium) shall be given a reasonable opportunity to correct the alleged violation after written notice of the alleged violation to the member at the address required for notices of meetings pursuant to § 55-510 (or § 55-79.75, if a condominium). If the violation remains uncorrected, the member (or unit owner) shall be given an opportunity to be heard and to be represented by counsel before the board of directors or other tribunal (or executive organ or such other tribunal, if a condominium) specified in the documents.
So, before sending an owner a Notice of Hearing for an alleged violation, an association is required to send an Initial Notice of Violation to an owner giving the owner a reasonable opportunity to correct the alleged violation. Only if the violation remains uncorrected can the association proceed with issuing a Notice of Hearing, which shall advise the owner of his or her opportunity for a hearing and to be represented by his or her counsel at the hearing. As is presently required by law, the Notice of Hearing must also tell the owner the potential actions that the board could take, such as suspension of privileges, and it must be sent out at least fourteen (14) days in advance. Lastly, within seven days of the hearing, a Hearing Result letter must be sent to the Owner informing him/her of the board's decision.