MEMORANDUM

NEW LAWS EFFECTIVE JULY 1, 2010 

Below are new Virginia laws regarding community association operations that are effective July 1, 2010 .

• Self-managed homeowner associations (associations not managed by a common interest community manager) can require payment for a resale disclosure at the time the packet is delivered.

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB702

• America Flag display rights of homeowners have been expanded.  While they still allow associations to have reasonable restrictions as to “size, place, duration and manner” of the flag display, the statute now requires an association to prove those restrictions are protecting a “substantial interest of the association.” 

 http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+SB151

• The authority of the Community Association Ombudsman has been clarified to limit it to review of violations of statutes by associations, not interpretations of provisions of community association governing documents.

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB191

• Associations may be able to use electronic means of providing and receiving notices and of voting, depending upon the language of the association’s governing documents.

 http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB1058

• Court costs for filing and serving suits has increased.  This will slightly increase association losses fees when they cannot recover these from a delinquent owner.

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+SB329

• A new law makes it clear that a resident who provides bookkeeping type services to his or her  association will not be required to be licensed as a common interest community manager as long as he/she is covered by the association’s fidelity bond

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB468

Below are more details regarding most of these new statutes.  Please do not hesitate to contact us if you would like one or more Community Association Statutory Handbooks for 2010. Segan, Mason & Mason, P.C. is going “green” and producing this year’s “statutory handbook” exclusively on a compact disc.

NEW LAWS APPLICABLE TO BOTH CONDOMINIUM AND HOMEOWNERS ASSOCIATIONS

1.           Court Fee Increase

              The cost of filing and serving a legal action has increased, but not as dramatically as first proposed.   Initially defeated in the General Assembly, the measure was resurrected as part of the scramble for money in the budget bill.   The original proposal would have had a potentially greater impact on community associations collecting assessments or judicially enforcing their covenants.  But, aggressive opposition whittled the fee increase to a fraction of the original amount or only a few dollars more than is currently being charged.

              http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+SB329

                            Action you should take

              A slight adjustment—if any—may be required in the budget for court awarded fees lost to bankruptcy or foreclosure.  Otherwise, Associations should be relieved it was not worse.

2.           Complaints and the Ombudsman

The Assembly fine tuned existing language requiring community associations to adopt a complaint process and ratified provisions that effectively limited the jurisdiction of the Office of the Community Association Ombudsman and the Common Interest Community Board to statutes, rather than the governing documents of an association.  Statutes and governing documents are expected to be intertwined, particularly if one defers to or otherwise incorporates the other.  

              The Assembly declined to expand the jurisdiction of these state bodies.  Decisions about whether a board-on-board fence is appropriate or in harmony, for example, may continue to rest with the community association.  Covenant procedures mandated by state statutes, by contrast, are on the Ombudsman’s menu for review.

              http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB191

                            Action you should take:

              While it is difficult to know for sure—proposed regulations governing the complaint process have not yet been signed by Governor Bob McDonnell—their execution and issuance is believed by many to be imminent.    Contrasting political ideologies about the role of government or a reaction to the narrow scope of the regulations could still cause the draft to be tossed down a rabbit hole.  Community associations may wish to examine their existing procedures so that the anticipated adjustment is quick and seamless.  A copy of the proposed regulations may be found at: 

3.           Electronic Communication

              Community associations continue to edge to the future, sometimes with ancient governing documents in tow, with a statute encouraging electronic voting, notice and consent.  Integrating any existing limitations in the recorded documents with even present-day technology may present a challenge.  The statute may be an opportunity for some and a compass for others.                       http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB1058

Action you should take:

              Ask whether your community would be better served by access to electronic communication, notices and voting.  If so, you may wish to consult with counsel to determine what can be accomplished. 

4.           United States Flag Display

              Following another legal dispute about the display of the United States flag, the Virginia General Assembly acted to harmonize the existing statutory language with the federal Freedom to Display the American Flag Act of 2005.  In addition, the community association is now required to prove that any restrictions as to the size, place, duration and manner of display are necessary to protect a “substantial interest” of the association.  

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+SB151

                            Action you should take:

              The association policy towards the American flag need not be “don’t tread on me”, but associations may wish to tread lightly.  Long before any restrictions regarding American Flag display are issued—the association needs to be completely convinced that the restriction is necessary to protect a substantial interest of the association.  It should also be aware that these statutes—both state and federal—pertain only to the flag of the United States and not to flags of a member’s favorite football team, college or political candidate.

NEW LAWS APPLICABLE TO HOMEOWNERS ASSOCIATIONS

5.           Resale Disclosure Packets

This measure clarifies a timing issue.  Homeowner associations “not managed by a common interest manager” will be able to demand payment of the preparation fee in exchange for the resale disclosure packet.  Any unpaid fee shall be deemed an assessment against the lot.  If the fee is not paid, the association may have the option of filing a lien or a civil action for the unpaid resale package fee.

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB702

Action you should take: 

Collection of resale disclosure packet fees will hopefully require less monitoring and financial losses will occur less frequently in this exchange of money for a resale packet.  This injection of statutory clarity may signal a return to the “old law” or justify never having changed the procedures in the first place.   This statute does not affect condominiums or any association managed by a common interest community manager.

6.           Storm Water Liability

  The General Assembly enacted restrictions on the liability of a community association for injuries incurred on storm water facilities.  They do not protect the association from negligence or willful misconduct.  And there are severe limitations—chiefly that the local government must agree in writing to an assignment of a liability.

http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB1100

Action you should take: 

Continue to be diligent and prudent.  Until the local government executes a written agreement for the assignment of liability, nothing has changed.

VIRGINIA HOUSING COMMISSION

              Several proposals—including some leftovers from the recent Session—have taken a detour through the Virginia Housing Commission and are expected to emerge from these hearings in the 2011 Virginia General Assembly, as follows:  (1) restrictive covenants and natural drying devices (clotheslines) (Senate Bill 221—Senator Linda T. Puller), (2) provisional manager licenses (HB 439—Delegate David J. Toscano), (3) annual report fee adjustment (HB 348—Delegate Vivian E. Watts), (4) monetary charges for violations (HB 496—Delegate L. Scott Lingamfelter), (5) restrictions on parking rules (HB: 812— Delegate Robin A. Abbott) and (6) developer control (Senate Bill 419—Senator Jill Holtzman Vogel), (7) restrictive covenants and solar panels (House Bill 881—Delegate  Mamye E. BaCote) and (8) nonjudicial lien foreclosure (Senate Bill 411—Senator  Jill Holtzman Vogel).  Copies of the bills referenced above may be found at:   http://leg1.state.va.us/

Common Area Parking – Not Effective Until July 2011 if re-enacted

This statute attempts to reverse the precedent established by earlier case decisions of the Virginia Supreme Court regarding reserved parking spaces and homeowner associations.  Where the Declaration grants the board authority to make rules governing the common area, the board may carve up the common area into reserved parking spaces available to less than all of the members.  The Court has held that a general rulemaking authority, when coupled with a member’s easement interest, is not enough.  There must be specific power to create reserved parking spaces granted to the Board.  The statute is not effective until reenacted by the 2011 General Assembly.

     http://leg1.state.va.us/cgi-bin/legp504.exe?101+sum+HB1102

Action you should take: 

Don’t do anything until July of 2011, if the General Assembly readopts this.