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:

Under the Protecting Tenants at Foreclosure Act:

• All tenants must receive a 90-day notice before being evicted as the result of a foreclosure.
• With some exceptions, the law requires that in the event of foreclosure, existing leases for renters are honored to the end of the term of their lease.
• The stated exceptions are for tenants without a lease, tenants with a lease terminable at will under state law, or where the owner acquiring the property will occupy it as a primary residence. In these cases, the tenants must receive a minimum of 90 days notice to vacate the property.
• This law does not affect the requirements of any state or local law that provides longer time periods or other additional protections for tenants.
• The new law does not require any agency to issue implementing regulations; these protections apply to foreclosures after May 20, 2009.
• FDIC examiners will monitor and enforce compliance with the requirements of this law in the same manner as other consumer protection laws and regulations.

TITLE VII—PROTECTING TENANTS AT

FORECLOSURE ACT

SEC. 701. SHORT TITLE.

This title may be cited as the ‘‘Protecting Tenants at Foreclosure

Act of 2009’’.

SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.

(a) IN GENERAL.—In the case of any foreclosure on a federally related mortgage loan or on any dwelling or residential real property

with PUBLIC LAWS

PUBLIC LAW 111–22—MAY 20, 2009 123 STAT. 1661

after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to—

(1) the provision, by such successor in interest of a notice

to vacate to any bona fide tenant at least 90 days before

the effective date of such notice; and

(2) the rights of any bona fide tenant, as of the date

of such notice of foreclosure—

(A) under any bona fide lease entered into before the

notice of foreclosure to occupy the premises until the end

of the remaining term of the lease, except that a successor

in interest may terminate a lease effective on the date

of sale of the unit to a purchaser who will occupy the

unit as a primary residence, subject to the receipt by the

tenant of the 90 day notice under paragraph (1); or

(B) without a lease or with a lease terminable at will

under State law, subject to the receipt by the tenant of

the 90 day notice under subsection (1),

except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time

periods or other additional protections for tenants.

(b) BONA FIDE LEASE OR TENANCY.—For purposes of this section,

a lease or tenancy shall be considered bona fide only if—

(1) the mortgagor or the child, spouse, or parent of the

mortgagor under the contract is not the tenant;

(2) the lease or tenancy was the result of an arms-length

transaction; and

(3) the lease or tenancy requires the receipt of rent that

is not substantially less than fair market rent for the property

or the unit’s rent is reduced or subsidized due to a Federal,

State, or local subsidy.

(c) DEFINITION.—For purposes of this section, the term ‘‘federally-related mortgage loan’’ has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.

2602).

SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.

Section 8(o)(7) of the United States Housing Act of 1937 (42

U.S.C. 1437f(o)(7)) is amended—

(1) by inserting before the semicolon in subparagraph (C)

the following: ‘‘and in the case of an owner who is an immediate

successor in interest pursuant to foreclosure during the term

of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner—

‘‘(i) will occupy the unit as a primary residence;

and

‘‘(ii) has provided the tenant a notice to vacate

at least 90 days before the effective date of such

notice.’’; and

(2) by inserting at the end of subparagraph (F) the following:

‘‘In the case of any foreclosure on any federally-related

mortgage loan (as that term is defined in section 3 of the

Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of

123 STAT. 1662 PUBLIC LAW 111–22—MAY 20, 2009

assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional protections for tenants.’’.

SEC. 704. SUNSET.

This title, and any amendments made by this title are repealed,

and the requirements under this title shall terminate, on December 31, 2012..

Sometimes we have the unhappy duty of telling a client that the proxy they have sent out (or, worse, used) for a member meeting was invalid due to lack of compliance with the Virginia Condominium Act, or simply doesn't constitute a proxy.   It seems that many folks think that a proxy is something that is simple to do and should not require professional assistance.  Unfortunately that is not the case.  There are also a couple myths about proxies that we need to dispel...

Sometimes folks will confuse a proxy with an "absentee ballot" and attempt to give an owner who is not going to be present the ability to vote for a slate of directors in advance. While this is efficient and seems logical, it is does not comply with most bylaw requirements. 

Most bylaws allow the use of proxies as does the Va Condo Act and the Nonstock Corporation Act.  The Condo Act contains the most specifications for a proxy including certain statements that must be included on the proxy form.

The result of not complying with the requirements for each association is that the proxies are invalid and cannot be used. Consequently it only makes sense to spend the nominal amount of legal fees to get your attorney to provide a proxy that is compliant with all requirements that affect your particular associations.

A proxy may be "instructed" or "uninstructed".  An instructed proxy dictates to the proxy holder how to vote on a given issue that is coming before the membership at the meeting.  An uninstructed proxy gives the proxy holder complete freedom to vote for the grantor as he or she sees fit on any issue.

Myths:

1. All proxies are the same...you only need one form on your computer and you are good to go. Obviously based on the foregoing that is not the case. A special proxy needs to be prepared for each meeting in light of the purpose and issues coming before the membership.

2. Proxies can only be given to other owners. Not the case, unless restricted in that manner by the bylaws, which often do have that restriction. Otherwise a proxy can be given to anyone you choose who can be present at the meting...your sister, your best friend.

Hopefully this short article has helped to highlight the traps for the unwary with regard to proxy voting.  Please let us know if we can help you on this topic.

1. What authority does a Condo or HOA Board have to censor the content of:

(a) a community newsletter?
(b) a community website?
(c) notices posted on a community notice board?

2. What authority does a Board have to prohibit Owners (or other Residents) from puttng notices or flyers (relating to community matters)on or uder doors in the community?

The answers to these questions nicely highlight certain laws that apply to help facilitate communication among members of both Condominium Associations and Property Owners Associations.

The question refers to a "community" newsletter. I interpret this to mean an official and authorized publication of an Association. Seen in this light, then the question is equivalent to "Who is authorized to act officially on behalf of an Association?" Generally speaking, the answer to this question is that a Board is authorized to exercise the powers of an Association, except to the extent that the governing documents or a specific statute require approval of a certain percentage of the membership to in order to take some actions.

If the Association is a nonstock corporation, then Virginia Code § 13.1-853 applies. This states:

All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its board of directors, subject to any limitation set forth in the articles of incorporation or in an agreement authorized by § 13.1-852.1.

If the Association is not incorporated, normally the governing documents specify how Association power s are exercised. In the case of a Condominium, Virginia Code § 55-79.73, a section of the Virginia Condominium Act says:

The bylaws shall provide whether or not the unit owners' association shall elect an executive organ. If there is to be such an organ, the bylaws shall specify the powers and responsibilities of the same and the number and terms of its members.

Often, governing documents grant certain powers to a Board in broad and general terms, in addition to some more specific grants of authority. I believe it is likely you would find that the Board of most Associations is authorized, either pursuant to Virginia Code § 13.1-853 or pursuant to a general grant of powers, to control the content of a community newsletter. Almost certainly, I do not believe you will find that individual members have a right to insist that particular information be included in the newsletter.

This technically answers the first question, but it does not mean that an Association can prevent a member from distributing information about the Association's business to other members. In fact, both a Condominium Association and a Property Owners' Association are required by statute to provide a reasonable, effective, and free method, appropriate to the size and nature of the Association, for owners to communicate among themselves and with the Board regarding any matter concerning the Association. For condominiums, the applicable statute is Virginia Code § 55-79.75:1; and for Property Owners' Associations, it is Virginia Code § 55-510.2. So, you must be allowed to communicate, it just does not have to be in the official newsletter.

1(b) and (c). What about the content of a community website or notices posted on a community notice board?

In both of those cases, I believe the same reasoning would apply as applied in the case of an official newsletter. Additionally, note that the community notice board is probably in the common area, so the question of control of the notice board could be influenced by the authority to regulate the use of the common area. However, because the Association must comply with the requirement of the law cited above regarding "reasonable, effective, and free method" of communication, it would seem that owners should be permitted to express opinions about association business either through the newsletter, the bulletin board, or the website, unless there is another means available to meet the Association's obligation under the law.

2. What authority does a Board have to prohibit Owners or other Residents from putting notices or flyers relating to community matters on or under doors in the community?

I am not aware of a general statutory authority, applicable to all common interest communities, that would give a Board authority to prohibit the actions you've described. Therefore, you must consult the governing documents of the particular Association to determine if any specific authority is granted or if some power granted generally is broad enough to encompass authority to prohibit those actions. Note that the front door, particularly of a condominium, might be part of the common area, in which case the ability to regulate the use of the common area likely would include authority to prevent the posting of papers on the door. Also, I would want to check local ordinances to be certain that the local government has not regulated the door-to-door delivery of unsolicited communication. Finally, particularly in a Property Owners' Association, door-to-door delivery likely would require entry onto each owner's private property, and therefore you would need to observe any warnings individual owners may have posted regarding trespassing.

In light of the requirement mentioned in 1(a) above that all Associations provide a reasonable, effective, and free method of communication among the owners, the answer to this final question should be largely academic, unless you live in a small community in which door-to-door delivery would be preferable to whatever method of communication is provided by the Association.
 

Insurance Company Required to Cover Members’ Fire-Damaged Homes

FACTS:   A fire that started in one condominium unit spread to adjoining units, causing substantial fire and smoke damage. The insurer made payments to the association that covered damages to certain structural elements of the building, but did not cover individual members’ damage to the interior of their units. Both parties argued over the extent of property coverage required by the association’s governing documents. A trial court ruled in favor of the members requiring coverage of their unit damage by the master policy; the insurer appealed.

RULING:   A North Carolina appeals court agreed with the lower court’s decision.

REASONING:   The association’s governing documents required the association to purchase insurance coverage for the type of damage incurred by the members. The court noted that the association’s lawyer interpreted the governing documents in the same manner in a letter to the insurer’s attorneys.

Also, the court stated that it would be an absurd requirement that every member be named individually as an insured, which would require constant revision of the policy as units are purchased and sold. The named insured is the condominium association, and the association is comprised of every person owning even a partial interest in a condominium within the association.

Craig v. Sandy Creek Condo. Assn., North Carolina, June 2009. This information is an excerpt from a piece that was published in the Community Association Insider.

Fair Debt Collection Practices Act Local Federal Court Case

  The FDCPA is a particularly challenging statute in its application to management companies and we have been consulted about it a number of times in the past by our association clients.

          There is currently a case involving this statute pending in the local federal district court. There is an issue as to whether or not an association management firm is a debt collector under the statute. This is not a settled issue and is not clear in the Federal statute. According to a recent Memorandum Opinion issued in the case, the Judge was considering a request by the plaintiff seeking class-certification for two additional classes of plaintiffs.  Basically, the current single plaintiff wanted to add more plaintiffs to the case.  The management company, as part of its opposition to the plaintiff's request, argued that it was pointless to add plaintiffs to the case because the Amended Complaint could not survive a motion to dismiss (if one were filed), because the management company was not a "debt collector."

          The Judge concluded that the evidence provided "at this stage" of the proceedings was insufficient to support a denial of the plaintiff's Motion to Amend, and the plaintiff was granted permission to file an Amended Complaint. 

          In short, the decision made on the motion to add parties to the suit does not make clear how this federal court, much less any other federal court, ultimately will view the issue of whether management companies should be considered as "debt collectors" under the FDCPA.  In fact, ultimately this court could dismiss the claim on the ground that the management company was not acting as a debt collector.

          We will be following this case and will give you updates as it makes its way through the court. In a 2003 case in the local federal court, a management company was found not to be a debt collector based on the facts on that case, which were different from the facts on the current case.

          Should you have any questions on this matter, please do not hesitate to contact us. If you wish not to receive communications such as this in the future, simply reply to the sender of this email and advice us of this, and we will be glad to remove you from our recipient list.

I live in a condominium townhouse and recently placed a “For Sale” sign in my yard. I was notified by the Association Manager that my sign was not allowed and would have to be removed.  She also sent me the “guidelines” for all signs which has all sorts of information about the size of the sign, what it can say, whether it can be hand-painted, etc. When I bought this house I know there were lots of signs that don’t sound like they were alright under the guidelines. Are they serious?

Yes, they are probably serious and we are finding more and greater restrictions on yard signage all the time. The Virginia Code does not address the issue specifically. It generally provides that an Association may “Grant or withhold approval of any action…. which would change the exterior appearance of any unit or of any other portion of the condominium…” (Virginia Code § 55-79.80) and signs do change the exterior appearance of a residence or condominium area. I know we have said this many times before, but for the best answer, you have to look at the governing documents for your Association and see if it allows such restrictions. Ask your manager or a member of the Board and they can probably point you right to the source of the authority.

As for whether the sign restrictions are being applied consistently, this is also a matter that you can take up with management or the Board but it won’t necessarily excuse you from compliance. You don’t say whether you bought directly from the developer, but if you did, the rules were probably written with a special exception for them. This is both legally acceptable and pretty common. Good luck with the sale of your house.

Jeanne S. Lauer

RESALE DISCLOSURE – SOMETIMES NOT ALL IT SHOULD BE

One topic that seems to always provide interesting fact situations requiring a fair amount of analysis is resale certificates. One reason is that the Legislature keeps messing with the law. There is an amendment of some type virtually every year and 2008 was a banner year for amendments to these provisions. I suspect that many folks who need to know and are subject to the new statutes enacted last year are still not aware of all their requirements and nuances.

We had the following question posed to us on our website (some editing was done):

“Hello.  I purchased a house in an HOA community in Virginia on January 9, 2009. 

The SELLING Real Estate Agent ORDERED a Resale Package from the Association.

Three months after settling into our new home, we were surprised to see $225.00 added to our Home Owners Association Dues Bill.

I called the number on the bill and was told that the SELLING Real Estate Agent ORDERED the resale package and then did not pay for it, so they were charging ME.

This is something I DID NOT order, nor did I receive, so I told them I would not pay it.

I paid my normal dues.  To my surprise, they applied part of my dues to the $225.00 and are now claiming that I am not paying my dues on time and they are charging me $25 late fees per month.

Recently I received a letter via certified mail from the manager: Notice of Intent to Accelerate Installments and File Lien.

The letter lists the association's attorney with a phone number.

I bought this house, which was a foreclosure, and got a great price, but I feel that this has marked me because the Association regularly charges $200K more for houses here then I paid.  I feel I am being retaliated against because I got a great deal on a house. Could you please help?”

So what we have here, judging solely by the facts presented by the writer, is the request for a packet by a real estate agent, compliance with that request by the Association and a subsequent failure to deliver the packet to the buyer, which is in fact now the responsibility of the Association. 

We must now wonder whether the Association provided as required by Section 55-509.6 C of the POA Act and Section 55-79.97:1(C) of the Condominium Act a schedule of fees to the person who requested the packet at the time of the request. Perhaps such a schedule could also have instructions on payment and notification of the settlement agent with regard to collection of the fee.   In this case it is possible that the settlement agent was neither advised of the resale packet nor the requirement to collect a fee. There is no mechanism of which we are aware by which the settlement agent can learn about the requirement for collection if the agent is not informed by the person who obtained the packet. In this case, it would seem the real estate agent should have informed the settlement agent of the need to collect the Association’s fee. In this case the buyer would not have known to look on the settlement statement to ensure that the fee was paid (such an awareness would be uncommon to say the least) because he never received the packet. One would think that in most cases the packet is received and that the buyer’s agent is aware of the packet and could then ensure that the settlement statement reflects collection of the fee for the packet from the seller.

As most of you probably know the amendments of 2008 upset the prior course of dealing whereby payment for the packet was required at the time it was obtained from the Association or the management agent; now payment is to be obtained at settlement or by collection from the lot owner if payment is not received by the association within 90 days of the issuance of the packet.

So what is the homeowner who has received a bill from the Association for the packet supposed to do? The issues we see are as follows:

1.      Did the Association do all that it was supposed to do to comply with the statute and, therefore; have the right under the statute to place a lien on the lot then seek to collect it?

2.      If so, does a homeowner who did not receive the packet have to pay the association to get the lien removed?

3.      If the Association failed to adhere to its obligations strictly under the statute, is it precluded from collecting on the lien?

4.      What action can the homeowner take to have the lien removed?

5.      If the lien is not permitted, how can the association obtain payment? Who are the possible responsible parties?

This fact situation illustrates that the new law passed in 2008 has some flaws which need to be monitored. We solicit your input on any experiences you have had with resale packets which you think may help determine the effectiveness and suitability of this new law. 

This situation also illustrates another unfortunate fact: some home buyers do not appreciate the need for obtaining and reading the disclosure packet. This buyer expresses no interest in obtaining the documents….only to avoid payment,  of course, the seller should have paid for the packet. We believe that resale disclosure is critical to successful living in a community association – without it buyers are at risk of moving into a new home with rules and covenants under which they do not wish to live. This will benefit no one.

I understand that the elected Board members are the only persons able to make motions and vote on them at a "Board Meeting." Is it true that at a "Membership Meeting”, either Annual or Special, that the members have the right to vote on issues affecting them, such as election results, budget proposals or even reversing or rescinding actions the Board may have taken?

In short, the association members are not just an audience to the Board at such "membership" meetings, it is actually their meeting, which is usually Chaired by the President of the Board, with all the rights to vote and make and second motions.  Am I correct in this assumption?

Answer:

You are correct that the issues which are discussed and voted on at meetings of the board of directors are subject to discussion only by board members. However, the Virginia Code does allow homeowners to be present and there must be some time allotted at each such meeting for owners to address the board about any issue pertaining to the association.  This is generally referred to as the “owners forum.”  Time limits may be imposed.

The manner of conducting annual and any special meeting of members/owners are largely dependent on the provisions of the Bylaws for your particular Association. For example, in almost all cases the Bylaws will provide that the members have the right at the annual membership meeting to vote for election of the Board Members whose terms are expiring.  Also, together the Declaration and Bylaws likely will set out what powers the Association has as a whole, and which, if any, of those powers can be exercised by the members exclusively, rather than the Board.

Unlike Board meetings, there are no hard and fast rules about how the agenda is developed, what the level of comment and discussion is to be allowed from the individual members and whether there are votes taken on those items. You are most likely to find information related to Board and Member meetings in your Bylaws and suggest you start by carefully reviewing those provisions. Also you may find that your Bylaws provide that your meetings are governed by Roberts Rules of Order which is the internationally recognized authority on the conduct of meetings of all types of organizations. The Virginia Code does limit comments by members at these meetings during the owners’ forum to items appearing on the agenda, and, again, members may be given a time limit.

Unfortunately, there is no "per unit" or "safe" amount that you would look for in the Association's financials, nor is there any particular formula to use. The amount which should be set aside for long-term maintenance may be drastically different for each different Association, because all Associations have very different maintenance needs. For example, a homeowner association with a community clubhouse and pool will have much higher common area maintenance needs than a homeowner association with no common areas other than a sign at the front of the neighborhood. In the world of condos, there are generally more "common" items that are paid for by the Association than would be found in an HOA, but every condominium regime is structured differently with regard to which portions the owners pay for and which portions the Association pays for.

Notwithstanding the foregoing, you should obtain and carefully inspect the most recent reserve study for any Association you're interested in buying into. Both the Condo and POA Acts require that all Associations perform a reserve study at least once every 5 years, and that they re-visit the results of that study at least once every year. The reserve study is supposed to show a breakdown of all of the long-term common area maintenance needs of the Association, and then give a suggested amount which should be collected from the owners each month so that there will be no large or unexpected special assessments for maintenance in the future. If you find that the Association has no reserve study, that's a warning sign that the Board is not keeping track of reserves and maintenance responsibilities like they should be. If you do obtain a reserve study, then you can compare the findings in that reserve study with the financial records of the Association to see if they're staying "on track" with how much they're supposed to be collecting and saving each year.

Generally, you are not able to get access to financial records or reserve studies for a condo association until you receive what's known as a "resale package." And you generally do not obtain a resale package until after you've signed a contract to purchase a condo unit in that association. From the date you receive the resale package, you only have 3 days in which to review the package and cancel the contract if you see something you don't like. Thus, there is a very narrow and specific window of time during which you can obtain and review the information needed, and to make a decision on what to do. The details of resale packages for condos is described in Virginia Code Section 55-79.97.

Q.  I am the President of a 6-unit condominium and recently one of our owners said we are required to do a Reserve Study. Does VA law require the board to conduct a reserve study or just to have a reserve? If yes, how often? We are a small association with minimal maintenance and common property. We'd rather handle this ourselves but we obviously also want to follow the law.

A.  Thank you for bringing up this topic – it is quite timely as you will see.  Further, even though you are a small condominium association, the Association is probably responsible for replacing almost all components of the building(s) which are of significant value to the owner, so your reserves are as important as any larger association.

Both the Condominium Act (§55-79.39 et seq.) and the Property Owners’ Association Act (§55-514.1 et seq.) require that Associations conduct a reserve study at least every five (5) years to determine the necessity and amount of reserves required to repair, replace and restore the capital components; review the results of that study at least annually to determine if reserves are sufficient; make any adjustments the board of directors deems necessary to maintain reserves, as appropriate; and provide a copy or summary of the reserve study report to prospective purchasers.  Since these provisions went into effect on July 1, 2002, the last possible date that an association can do the study and be in compliance with the law was July 1, 2007.

The study is restricted to components of the Association property which are to be replaced by the Association according to the documents.  This is usually just common elements (such as streets, community buildings and recreational facilities), but it can include portions of limited common elements or units if the documents so specify.

While the law does not specify who must conduct the reserve study.  We strongly recommend that unless your Association truly requires only minimal replacement of common facilities that you have the reserve study done by an independent architect or engineer. 

A reserve study typically consists of three parts:

• Components.  The estimated replacement cost, estimated remaining life, and estimated useful life of each capital component or item, whether or not a part of the common elements, for which the association has the obligation for repair, replacement or restoration and for which the board of directors determines funding is necessary.

• Funding.  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 each fiscal year.
• Procedures.  A general statement describing the procedures used for the estimation and accumulation of cash reserves and the extent to which the association is funding its reserve obligations consistent with the study currently in effect.

If inadequate funds are set aside, members could claim the board is negligent in its fiduciary duty to be prepared to replace Association assets which become obsolete or fail to perform their function; that is, to protect association assets.  With the amount of the detail and knowledge of building materials required, it pays to have a professional prepare reserve studies when you have more than two or three types of items for which you are responsible.

In summary, we strongly urge all associations regardless of size who have not complied with state law to either prepare their own study or hire an independent professional to prepare it for you. In addition to doing the initial reserve study, remember that you are required to have it updated at least every 5 years and to review the study each year to make sure the board is properly funding its reserve requirements.

Also be mindful that the resale disclosure laws require that the study or a summary thereof be furnished to each prospective buyer with each and every resale certificate.  Failure to prepare a reserve study or properly fund it could result in mortgages being denied for home sales and potential liability for Boards of Directors.  If you are a professionally managed community, your manager will be able to direct you to a qualified professional to perform the study.  If you are self managed, you may wish to visit the web site of the Southeastern Virginia Chapter of the Community Association Institute (www.sevacai.org) which has the names of sponsors displayed, a couple of which prepare reserve studies.

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.

RESPONSE: This issue is covered by Section 55-79.75 of the Virginia Condo Act. First, it is important to distinguish between unit owner meetings (which generally occur only once per year), and board/director meetings (which may occur regularly throughout the year). 

Subsection (A) of the aforementioned Code section states that all owners must receive prior written notice (via regular mail or hand delivery) of all unit owner meetings. That notice must state the date, time, and place of the meeting, and must also state the "purposes of such meeting," which essentially means that the unit owners must either receive a formal agenda, or at least be given some indication of what will be discussed, decided, or voted upon at the unit owner meeting.

Subsection (B) of the aforementioned Code section applies to meetings of the executive organ (Board of Directors). These requirements are slightly different than the requirements for owner meetings. For Board meetings, the Board must publish notice of the time, date and place of the upcoming meeting in a place "where it is reasonably calculated to be available to a majority of the unit owners." This does not specifically require that written notice be mailed to the owners, nor does it require that owners be provided with an advanced copy of the meeting agenda. 

Subsection (B), in its discussion of Board meetings, later states that an owner can make a written request to the Association that he/she be provided written notice of all upcoming Board meetings, and the Board must honor that request. The unit owner making that request must submit it in writing at least once per year to the Association. 

Further, the information that is being provided to the Board members in preparation of their Board meeting (commonly referred to as a "Board packet") must be "made available for inspection" to the unit owners "at the same time such documents are furnished to the members of the executive organ." This does not mean that each unit owner is entitled to have an agenda or board packet mailed to him prior to each board meeting, but instead only requires that the Association manager (or whoever handles these affairs) make the board packet available for inspection at the same time the Directors receive this information prior to the meeting. Please note, however, that any documents in the Board packet relating to matters that the Board can discuss confidentially in 'executive session' may be lawfully excluded from the packet available for inspection by all unit owners.

Thus, in summary, the Board is obligated to send prior written notice and agendas to all owners in advance of any unit owner meeting. For Board meetings, the Board is only obligated to make a reasonable good-faith effort to publish notice of the meeting to all unit owners (which may be mailing out notice to everyone, putting notices on a bulletin board or in the elevators, posting on the Association website, etc.), unless a unit owner sends the Board a written request, at least once per year, asking for written notice of all upcoming meetings. The Board is not, however, obligated to mail out copies of an agenda prior to its Board meetings, but must honor the request of any unit owner wanting to inspect the board packet prior to the upcoming board meeting.

Board decisions are measured against a standard known as the “business judgment rule”. The Board must ask themselves this question: Is the decision one that a prudent businessperson, having gathered all the pertinent facts, would reasonably make under the circumstances? If the answer to that question is yes, generally the Board’s decision will withstand legal scrutiny.

Suppose that the Board had taken a poll of the unit owners and observed the use of the playground facilities over time. Suppose, further, that the Board, based on the gathered information, concluded that so few residents use the facilities that the expense of maintaining them was an unwise usage of association funds. If so, the board’s decision to remove the equipment is likely to be upheld if legally challenged.

However, suppose your condominium documents specifically require the consent of two-thirds of the unit owners to spend over $25,000 on recreational improvements. In that case, the Board’s decision may be improper if they increase the size of the pool without that consent.

If the Board wants to change a rule regarding the common area (or the common area itself) it should alert owners as early as possible. Not only will this give owners time to comment intelligently on the issue during the owner’s forum at a board meeting, but it also may help them be more accepting of the change.

However, if the Board decides to raise the annual assessment or make a change to the Association’s rules and regulations, unless there is a requirement to the contrary in the condominium documents, then the board can make the change without the owner’s specific approval. To determine the scope of your board's powers, it's important to study your association documents.  You may want to make a list of the matters which are subject to unit owner vote to keep handy for ready reference. It would be wise to have your list either prepared by or reviewed by your legal counsel.

The affairs of your Association would most likely come to a grinding halt if the Board had to consult with the unit owners for every decision that they made. Since the Board, like a town council, is charged with maintaining and protecting your community, they must have the authority to carry out their day to day duties and responsibilities without putting every issue to a community wide vote. Keep in mind that the board members are bearing the same expenses that you are. If you are not in agreement with the agenda of the board you and the other unit owners can, in turn, exercise your power by electing a new Board of Directors at your next election.

You can learn more about this and other association topics at CA DAY which will be held on Saturday, March 14, 2009 at the Virginia Beach Convention Center. This one day event covers a variety of topics and a chance to meet with both vendors and other homeowners in community associations. More information can be obtained by calling the local chapter at 757-558-8128 or checking the CAI website at www.sevacai.org.