Virginia Condominium & Homeowners Association Lawyer

BOARD MEMBER AND MANAGERS CHECKLIST

2010 CHANGES TO VIRGINIA LAWS

AFFECTING COMMUNITY ASSOCIATIONS

Earlier this year there were new laws passed by the Virginia General Assembly to amend the laws that govern community associations. The Community Association Law Team at Inman & Strickler, PLC provides the following checklist of actions your community association should consider in order to utilize or comply with changes to Virginia laws that became effective July 1, 2010.

The Community Association Law Team will be participating in the SEVA CAI Chapter's Annual Legislative and Legal Update which will be held in Newport News on June 11, 2010.  This is an all day event packed with excellent legal material of a timely nature. Learn about new laws passed by the Legislature, court cases decided regarding community associations, and the latest trends in various areas of association operations.

We have recently learned of a relatively new Federal law which gives some protection to tenants who reside in homes owned by folks who don't pay the mortgage resulting in foreclosure UNTIL December 31, 2012. Below is a summary published on the Federal Deposit Insurance Corporation (FDIC) website:

For the average person, these words are usually harbingers of doom. But for common interest communities and the professionals associated with them, they are simply an annual chore. For a number of years the law has required residential condominiums and homeowners associations to file annually with the Virginia Department of Professional and Occupational Regulation. Recent changes to the law have added professional management companies as entities required to file as well. The online link to verify compliance can be visited here. The same link allows you to check the status of many professionals, including contractors doing work at your home, and is a terrific source of information.

We bring you news on two popular topics; Insurance and collections.  Two of our team members, Jeanne Lauer and Mike Inman, recently participated as presenters in an enjoyable association Leadership Retreat sponsored by two Virginia CAI chapters at the Boars Head Inn in Charlottesville and hope to repeat the experience next year – as do most who attended. It was a first time event which was well organized and executed. Much credit goes to our local Chapter Executive Director, Rebecca Woodring.

Collection of Assessments 101 - Owner Bankruptcy Did You Know?

Section 523 (a) (16) of the Federal Bankruptcy Act excepts from the debtor's discharge all assessments which become due and payable after the debtor's bankruptcy papers are filed. In other words the law allows you to pursue collection of an owner's delinquent assessments if they became due after his bankruptcy filing. The Board should pursue such assessments by exercising acceleration options and record liens every 90 days as provided by the Condo Act and the POA Act. This will give you a secured debt and the ability to foreclose when and if the time is right. In these financially stressful times these rights should be pursued to insure the financial health of the association if there is a reasonable chance of recovery and realization of a reasonable net amount after all costs to collect.

Mike Inman has been selected to join an exclusive group of attorneys evaluated by other attorneys who are long time practitioners of community association law and members of the Community Association Institute (CAI). Attorneys selected for the College are those who have spent considerable time writing articles and giving presentations on community association law topics over a period of years.  Mike has been presenting in seminars on Community Association topics for over 20 years and has been a presenter for the Virginia State Bar on the topic of Creating Condominiums in Virginia. He has also written a chapter on community association law for a Virginia State Bar Continuing Legal Education publication: Real Estate Transactions in Virginia. He serves on the Virginia Legislative Action Committee for the Community Associations Institute.

We got big changes in Washington recently but we got big changes from Richmond in July! We are all grappling with the implementation of the new laws affecting associations contained in HB 516 which became effective on July 1. This law impacts numerous aspects of the operation of community associations.  In this blog we will deal with two aspects of the law – Resale Packets and Complaint Procedures.  Mike Inman is serving on two state committees which are working on the implementation of the law - a committee of the Common Interest Community Board known as the Regulatory Review Committee and a committee of the Virginia Housing Commission known as the HB 516 Work Group.  As a result he is keeping on top of developments relative to the new laws and the publishing of regulations which are intended to implement them.

Resale Packets

One of the biggest changes affecting you is the creation and administration of Resale Packets. 

Do you have issues with your neighbors?  In the September 2008 Edition of Richmond Magazine, Mike Inman gives his expert opinion and weighs in on a common neighborhood issue - noise. 

You can read the article by clicking on the below link to a pdf file. 

Article from Richmond Magazine, September 2008 Issue.

Once again we bring you a smorgasbord of information for you to digest!  In this edition we will talk about leasing restrictions, tree encroachments, and a new lawyer in our group.

NEW ADDITION TO COMMUNITY ASSOCIATION LAW TEAM

First, let us tell you how pleased we are to have Steve Lauer join our Community Association Law Team. Steve is husband to our long time member and CAI Board Member, Jeanne Lauer.  Steve has been in both private practice and the corporate world since obtaining his law degree in 1990 from William & Mary Law School.   Most recently he worked for an international legal research organization analyzing court decisions.  He has attended several seminars in preparation for joining our team and has proven to be a quick study as he has gotten involved in some of the work for our association clients.  Steve is also big on soccer as a coach and local organizer of youth soccer for many years.

§ 55-79.83:1. Reserves for capital components.

A. Except to the extent otherwise provided in the condominium instruments and unless the condominium instruments impose more stringent requirements, the executive organ shall:

1. Conduct at least once every five years a study to determine the necessity and amount of reserves required to repair, replace and restore the capital components;

2. Review the results of that study at least annually to determine if reserves are sufficient; and

3. Make any adjustments the executive organ deems necessary to maintain reserves, as appropriate.

B. To the extent that the reserve study conducted in accordance with this section indicates a need to budget for reserves, the unit owners' association budget shall include, without limitations:

1. The current estimated replacement cost, estimated remaining life and estimated useful life of the capital components;

2. As of the beginning of the fiscal year for which the budget is prepared, the current amount of accumulated cash reserves set aside, to repair, replace or restore the capital components and the amount of the expected contribution to the reserve fund for that fiscal year; and

3. A general statement describing the procedures used for the estimation and accumulation of cash reserves pursuant to this section and the extent to which the unit owners' association is funding its reserve obligations consistent with the study currently in effect.

(2002, c. 459.)

§ 55-514.1. Reserves for capital components.

A. Except to the extent otherwise provided in the declaration and unless the declaration imposes more stringent requirements, the board of directors shall:

1. Conduct at least once every five years a study to determine the necessity and amount of reserves required to repair, replace and restore the capital components;

2. Review the results of that study at least annually to determine if reserves are sufficient; and

3. Make any adjustments the board of directors deems necessary to maintain reserves, as appropriate.

B. To the extent that the reserve study conducted in accordance with this section indicates a need to budget for reserves, the association budget shall include, without limitation:

1. The current estimated replacement cost, estimated remaining life and estimated useful life of the capital components;

2. As of the beginning of the fiscal year for which the budget is prepared, the current amount of accumulated cash reserves set aside, to repair, replace or restore capital components and the amount of the expected contribution to the reserve fund for that year; and

3. A general statement describing the procedures used for the estimation and accumulation of cash reserves pursuant to this section and the extent to which the association is funding its reserve obligations consistent with the study currently in effect.

(2002, c. 459.)

Our association has a swimming pool which is fairly popular with our owners, many of whom have small children. We are concerned about safety and legal liability and whether or not we are protected by our rules and our insurance policy. What are the essential practices and rules that will keep us out of legal trouble? How much do we have to worry about our insurance company saying "sorry, you're not covered for that"?

A:You are surely right to be concerned about these risks because every year associations are the target of claims for injuries in and around the swimming pool. Our sources tell us that about 70% of associations have pools and it is well known that the real estate/development community believes they are an essential amenity to insure strong buyer interest. We have seen some associations close and remove pools due to inadequate use so as to eliminate a significant expense and risk, however many pools, like yours, are a desirable and highly utilized feature of the community.

Boards of directors must recognize that pools are dangerous in various ways and seek to establish rules and practices that will minimize the risks. This is essential to be exercising adequate fiduciary responsibility which will avoid legal liability in the event of a bad accident. The various municipalities set their own standards in many ways, including chemical requirements, self inspection, record keeping, equipment, fencing and city inspections. These regulations only establish minimum requirements but go a long way toward eliminating substantial risk. You may have special circumstances which require a greater level of care, such as an inordinately high number of young children. This may dictate having more lifeguards or longer lifeguard hours. You must also insure that depths are indicated along the side of the pool.

The primary benefit of hiring legal counsel to assist a Condominium or Homeowners Association is that it should save the association money in the long run, analogous to preventative maintenance. Problems will always exist, but timely advice from an experienced law firm can help an association reduce or avoid potential problems and, ultimately, the financial liabilities associated with those problems.

Please be reminded that all associations must provide an annual report to the Virginia Real Estate Board as required by Section 55-79.93(1) of the Virginia Condominium Act and Section 55-516.1 of the POAA. This creates a state database for all associations and is available to the public.