Condominium Act and Property Owners Association Act
Q.I am a new member of my community association's Board of Directors and I am trying to do what's right to do a good job. I need a copy of the Condominium Act and the Property Owners Association Act. Can you tell me what the Acts cover and where I can get a copy? Any other suggestions you have would also be appreciated.
A. You are taking the right first step in becoming educated about the community you are leading. You can acquire a copy of either the Virginia Condominium Act or the Virginia Property Owners Act from www.cai-valac.org. Look under the Statutes link. If your association is incorporated you will also want to download the Virginia Nonstock Corporation Act while you are on the site. If you would rather have printed copies, contact the Department of Professional and Occupational Regulation Post Office Box 11066, Richmond, Virginia 23230.
There are several key provisions in these laws that affect daily operations - the following are some of the important ones:
*All property buyers are entitled to a disclosure statement from the association. The statement must include information about capital expenditures, assessments, reserves and the budget, as well as copies of the current declaration, bylaws and regulations. The unit buyer must request the package. The association, which has 14 days to provide it, may charge up to $100 for doing so. The package is given to the unit's seller, who is responsible for getting it to the buyer. The buyer then has three (3) days to review the statement and decide to proceed with the purchase. The penalty for failing to deliver the disclosure package on time is up to $500. Buyers may cancel a contract before closing if they have requested the package and have not received it. The Act also requires the sales contract to state whether the property is subject to the Act. This is a good opportunity to educate a probable new homeowner about your association.
*Under the Acts, the Board of Directors may adopt rules unless its documents specifically reserve that right to the members as a whole. The Board may also impose charges for rule violations. Such charges are limited to $50 for a single event violation, such as a loud party, or $10 a day for a continuing violation, such as an improper fence. These charges are treated as assessments and may be collected in the same manner.
*The Board is also charged with drafting the budget for the operations of the association. Also, the Board is allowed to levy special assessments in addition to other assessments. Special assessments are typically made for a major capital repair, new facilities or some type of unanticipated major expense. Some association declarations restrict the power to levy special assessments. Owners in these associations can repeal or change such assessments if a majority of them vote to do so at a duly called meeting within 60 days of the assessment being announced.
*The Acts also establish a lien for assessments. This means that all assessments are a lien on each unit (in a condominium) or lot (in a homeowners association) and the association can foreclose if owners don't pay their assessments. Your job is to make sure everyone is paying as they should and obtaining professional help to accomplish this task if necessary.
*Under the Acts, the community association must maintain certain records, including detailed receipts of expenditures affecting the property's operation. These records must be made available during business hours to owners whose dues are paid up, as long as they request such access in writing five (5) days in advance and a reasonable purpose for the request is stated. The association may charge owners for the cost of providing the documents.
The Acts contain many other details. Every association should have a current copy of the Acts and watch for changes in the law each year. A number of years ago, the three Virginia Chapters of CAI formed a Legal Action Committee which monitors legislation and seeks sponsors for legislation affecting community associations. You can check out the General Assembly results later this Spring on its website, www.cai-valac.org. A good resource for information regarding community associations is the Community Associations Institute (CAI) - view the website at www.caionline.org or call 888-CAI-4321 for a copy of their catalog of educational materials. CAI is the largest organization in the United States representing the interests of community association members and professionals. There is also a local chapter of CAI which can be reached at 757-558-8128 or www.sevacai.org. If your association is not currently a member of CAI, you should seriously consider joining the association. Additionally, DPOR now has a staff member established as a community association liaison to help folks like you get the information you need. Her number is 804-367-2942.
In addition it is important for you to obtain and read thoroughly a recorded copy of your declaration, bylaws, plat and plans.
What obligation does an HOA board have to notify the association members that it is being sued by one of the members? Can/must the board reveal the suing member's name to the rest of the association?
RESPONSE:
There is no obligation to send notice to existing members over a suit filed by another owner. It is public record and you may certainly disclose its existence if you so choose. I would, of course, include no comment on the merits of the lawsuit or share any information you may have discussed with legal counsel. You DO have an obligation to disclose the existence of any active suit in the disclosure packet to prospective purchasers. Good luck.
Jeanne S. Lauer, Esquire
Does an association have 14 days or 14 business days from the date a resale disclosure package is ordered and paid for to deliver it to the seller? If the association fails to provide the disclosure package within the 14 days, what are the penalties and remedies?
RESPONSE: The subject of resale certificates in Virginia is regulated by Code Section 55-79.97. The Code does not specify calendar days or business days, so the answer to your question would be that the certificate is to be provided within 14 calendar days.
There are several consequences of the Association's failure to deliver the resale certificate:
As to the Buyer, he retains the right to back out of the purchase contract with no liability. However, this right to get out of the contract only lasts until the closing date, and once the Buyer goes through with closing he has waived his right to receive the resale certificate.
As to the Association, 55.79.97(H) states that the Association's failure to provide a resale certificate by the deadline means that the Association is later prevented from enforcing any previous violations of the unit that would/should have been disclosed in the certificate (such as unpaid dues, architectural violations, etc.). Furthermore, the Code states that the Association may be liable to the Seller for actual damages (up to $500) sustained by the Seller by reason of its failure to provide the resale certificate.
Note, however, that this liability is on the Association only if it fails to provide the resale certificate within the deadline only if the request has been properly made the by the Seller and any fees required have been paid.
As to the Seller, he is now subject to the purchase contract being cancelled by the Buyer right up until the day of closing. He may have a limited right to sue the Association for damages (up to $500).
Of all of these undesirable consequences, the most serious may be to the Association, which loses its right to enforce previous violations. For example, if the Seller owed $3,000 in prior monthly and special assessments, and also previously put up a detached garage in violation of the condo documents, and the Association fails to deliver a resale certificate when required, then the Association loses its right to go after the Buyer for the past due fees, and also loses its right to make the new owner (Buyer) take down the violating garage after closing.
Directors should therefore always keep a close eye on resale certificate requests, and make sure that whoever is in charge of producing the certificates (whether it is the property manager or other Board members) is not simply recycling old forms, but is instead taking a close look at the particular unit and whether or not there are any old debts or violations.
Greg Montero
Does VA law require the HOA board to conduct a reserve study or just to have a reserve? If yes, how often? Must the study be conducted by a 3rd party to be legal? We are a small townhome association with minimal maintenance and common property and highly self-reliant. We'd rather handle this ourselves but we obviously also follow the law.
Thanks,
Michael
RESPONSE: The Property Owners' Association Act, in Section 55-514.1, requires that your Association conduct a reserve study at least once every five (5) years, and that it review the reserve study at least once per year. The law goes on to say that if your study reveals the need for reserves, only then are you required to maintain an account for capital reserves in your budget.
The law does not specify who must conduct the reserve study. If your Association truly requires minimal common maintenance (i.e., only the sign at the entrance of the neighborhood), then there is violation of law for you to create a reserve study yourselves that does not indicate the need to create reserves. However, if your Association has any common buildings or structures with any significant replacement costs (i.e., pool, clubhouse, streets owned by the Association, etc.), then you probably should hire a professional company to perform the study.
Gregory J. Montero, Esquire
Under Virginia's Nonstock Corporation Act, Section 13.1-865 (Action without meeting of the board of directors), if a director denies consent, are the remaining directors permitted proceed to a vote on a pending motion?
RESPONSE: You pose an interesting question which is frequently a source of confusion due to the conflict between the statute you cite and the requirements of the Condominium Act and the Property Owners Association Act.
Even if all directors were in favor of the "action without meeting" described in 13.1-865, to take such action would be in violation of Section 55-79.75(B) of the Condominium Act, which we commonly refer to as the "open meeting requirement." This particular law in the Condo Act was created to prevent Boards from running the Association behind the owners' backs, and requires that everything, subject to a few exceptions, be discussed and decided in open sessions which all owners must be invited to attend. Therefore, you should not be making decisions or taking actions as a result of phone conversations, emails, or casual/informal meetings among the Board which are not officially convened without the owners' knowledge.
When it comes to rules that apply to a Board of Directors of a condo association, the Condo Act "trumps" the Non-Stock Corporation Act, and on this specific issue the Condo Act prohibits closed/secret meetings and decisions (except for a small and specific list of circumstances under which the Board can meet and discuss in private, which circumstances are described in 55-79.75(C)). Therefore, you are advised not to attempt using the "action without meeting" procedure described in 13.1-865, whether or not all Board members gives their consent, unless it is for one of the special circumstances described in 55-79.75(C) which allows for the board to convene in an closed session, with no other members present, to discuss certain subjects lasted in the statute.