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.

                   Develop a process for handling unit or lot owner complaints – pending approval of draft Ombudsman regulations proposed by the Common Interest Community Board. Keep in mind that changes to your written procedures may be required once the regulations are final later this year, but it is wise to get started. 

                   If the community is not professionally managed and a resident provides bookkeeping, billing and record keeping services, even though that resident need not be licensed, confirm that the association has adequate fidelity bond coverage in place.

                   If the community is a property owners association and not professionally managed, be aware of a change to the process for payment of fees charged for preparation of the association disclosure packet – the charge can be collected at the time the packet is provided to the requesting party.

                   Review restrictive covenants and architectural guidelines concerning display of the U.S. Flag to ensure consistency with the Federal Flag Act. The new statute provides that a unit owners’ or property owners’ association shall not prohibit or otherwise adopt or enforce any policy restricting a unit or lot owner from displaying upon property to which that owner has a separate ownership interest or a right to exclusive possession or use the flag of the United States whenever such display is in compliance with the federal Flag Code. The bill also provides that the unit owners’ or property owners’ association may establish reasonable restrictions as to the size, place, duration, and manner of placement or display of the flag provided the restrictions are necessary to protect a substantial interest of the unit owners’ or property owners’ association. Under the bill in an action brought to enforce a rule pertaining to display of the flag, the unit owners’ or property owners’ association has the burden of proof regarding whether the rule protects a substantial interest of the association.

                   Review association notice procedures and revise as appropriate to take advantage of new authority to allow the use of advanced technology.  It is broad in coverage and contains provisions relating to use of all forms of electronic communications for giving notice, voting, giving consent, and other similar actions, unless the association documents prohibit it.  (See attached copy of the new section of the Condominium Act; POA Act contains identical provision). Virginia Code §59.1-480 states an “electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”

                   Budget for increased court fees for General District Court assessment collection – fees have been increased dramatically.

§ 55-79.71:1. Use of technology.

A. Unless the condominium instruments expressly provide otherwise, (i) any notice required to be sent or received or (ii) any signature, vote, consent, or approval required to be obtained under any condominium instrument or any provision of this chapter may be accomplished using the most advanced technology available at that time if such use is a generally accepted business practice. This section shall govern the use of technology in implementing the provisions of any condominium instrument or any provision of this chapter dealing with notices, signatures, votes, consents, or approvals.

B. Electronic transmission and other equivalent methods. The unit owners' association, unit owners, and other persons entitled to occupy a unit may perform any obligation or exercise any right under any condominium instrument or any provision of this chapter by use of any technological means providing sufficient security, reliability, identification, and verifiability. "Acceptable technological means" shall include without limitation electronic transmission over the Internet or the community or other network, whether by direct connection, intranet, telecopier, or electronic mail.

C. Signature requirements. An electronic signature meeting the requirements of applicable law shall satisfy any requirement for a signature under any condominium instrument or any provision of this chapter.

D. Voting rights. Voting, consent to and approval of any matter under any condominium instrument or any provision of this chapter may be accomplished by electronic transmission or other equivalent technological means provided that a record is created as evidence thereof and maintained as long as such record would be required to be maintained in nonelectronic form.

E. Acknowledgment not required. Subject to other provisions of law, no action required or permitted by any condominium instrument or any provision of this chapter need be acknowledged before a notary public if the identity and signature of such person can otherwise be authenticated to the satisfaction of the executive organ.

F. Nontechnology alternatives. If any person does not have the capability or desire to conduct business using electronic transmission or other equivalent technological means, the unit owners' association shall make reasonable accommodation, at its expense, for such person to conduct business with the unit owners' association without use of such electronic or other means.

G. This section shall not apply to any notice related to an enforcement action by the unit owners' association, an assessment lien, or foreclosure proceedings in enforcement of an assessment lien.

(2010, c. 432.)

        The look and image of a community can be dramatically altered simply by focusing on its highest profile areas.   Two examples are entry areas and exterior color schemes.  In terms of the entry there are signage and landscaping features which need to be considered.  Styles and materials used for entry signage are constantly changing and an update with a new sign, additional plantings and perhaps a couple small brick walls could make a dramatic difference in your entry area.  Perhaps some extra lighting could be added.   A landscape architect can help you with this design. Another important maintenance item that is often neglected by boards is the wooden components like stairs, decks and balconies.  These items need power washing and staining (as well as partial replacement) periodically in order to look their best.

            There are some legal and financial management issues that arise here.  First, to what extent does the Board have authority to decide to go forward with such a project?  What if there are not sufficient funds in reserve for the project and the unit owners need to be assessed? Can the board do this or is a unit owner vote required?  This is usually dictated by the provisions of your declaration or bylaws.  How can you raise the money if there are insufficient reserves set aside for this purpose? There are various ways to raise the funds - bank loan, regular dues increase, and/or a special assessment.  Actually you can use a combination of the above methods depending on the immediacy of the need for funds.  Once you decide on the scope of your project and the approximate cost you should consult with your attorney and accountant about the legal and financial requirements and strategies. 

            This is a good time of year to begin this process.  It'll take some work by a dedicated committee but the community should get a lot of satisfaction from the results - both visual and financial.

No Pet Policy Does Not Violate State or Federal Fair Housing Acts

Hawn v. Shoreline Towers Phase I Condominium Association, Inc., No. 09-11797, U.S. App. Ct., 11^th Cir., Sept. 22, 2009

Covenants Enforcement/Use Restrictions/Federal Law and Legislation: An association board was within its rights to deny a homeowner's request to have a dog, when the homeowner did not provide sufficient documentation of a disability and the association had a no pet policy.

In 2004, Davis Hawn purchased a condominium unit in Shoreline Towers Phase I, located in Pensacola, Fla. When he purchased the unit, there was a sign on the property that read "No Animals Allowed." Hawn was aware of the sign and the community's no pet policy.

In June 2006, he sent another letter to the association in which he claimed that he suffered from physical and mental disabilities that stemmed from a debilitating injury that caused pain and restricted mobility. He also stated he had been robbed, kidnapped and assaulted in the past by his friend's stepson who was living in his unit while he was away on vacation. Although the person was subsequently arrested, Hawn said he had become afraid of living alone. His letter also discussed Booster and for the first time referred to him as a "service animal." He requested that Booster be exempted from Shoreline's no pet policy.

In a letter to Hawn in August 2006, the association requested further information in order to consider his request, including documentation supporting his disability claims and the qualifications of the physicians named in his request. The letter concluded "[w]hile the association sympathizes with your situation, at this time we must deny your request to keep a pet in your condominium unit."

In March 2007, Hawn sued the association, seeking monetary damages and injunctive relief under the state and federal Fair Housing Acts. The district court granted summary judgment to the association on all Hawn's claims, finding that he failed to establish that the association knew of his disability; or that the requested accommodation was necessary; or that the "No Animals Allowed" sign evidenced discriminatory intent by the association. Moreover, the court held that the association's conduct failed to rise to a level that would constitute infliction of emotional distress. Hawn appealed.

In addition to disagreeing with the findings, Hawn argued that the court failed to consider documents presented to the association during an investigation conducted by the Florida Commission on Human Relations ("FCHR"), asserting that this evidence was sufficient to provide notice of his disability and the necessity for a service animal.

The court analyzed Hawn's arguments in the context of the federal Fair Housing Act, recognizing that the Florida Fair Housing Act is substantially identical. Hawn alleged that the association violated two provisions of the Act: Section 3604(f)(3)(B) that prohibits the denial of reasonable accommodation necessary to ensure equal opportunity for disabled persons to use and enjoy their dwellings; and Section 3604(c) that prohibits "any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any … discrimination based on … handicap. …"

Hawn argued that his June 2006 letter to the association was sufficient to create genuine issues of material fact about whether the association knew of his disability and the necessity of his requested accommodation. The appeals court disagreed, noting that a duty to make reasonable accommodation must be attended by a meaningful review of the facts, and did not simply spring from the disabled person's desire for the accommodation.

Hawn's refusal to comply with the association's requests for reasonable documentation prevented it from conducting a meaningful review and, consequently, it could not have known of his disability or his need for a service animal.

The appeals court was similarly unpersuaded by Hawn's argument that the district court erred by failing to consider the documentation made available in the course of the FCHR investigation. In reviewing the court's order, the appeals court determined that the district court did, in fact, consider such evidence. Because there was insufficient evidence to create any genuine issues of material fact as to the association's knowledge of Hawn's disability, the court concluded that the district court correctly granted summary judgment to the association.

Hawn argued that, unlike a sign that reads "No Pets Allowed," the "No Animals Allowed" sign posted by the association evidenced its intent to bar all animals, including service animals for disabled individuals and was discriminatory in nature. The appeals court found such speculation to be unsupported by the record. The sign had been erected approximately 10 years before Hawn bought his unit, and the court found no evidence that the association ever discriminated against any other handicapped person or that handicapped individuals were discouraged from purchasing units in Shoreline because of the sign.

The court affirmed the district court's order for summary judgment.

©2010 Community Associations Institute (CAI). This article is reprinted with permission from the May 2010 issue of Law Reporter, a monthly e-newsletter published by CAI. All rights reserved. Further reproduction and redistribution prohibited.

Working with its 59 chapters, CAI fosters successful, harmonious homeowner and condominium associations by providing education, tools and resources to the volunteer homeowners who govern communities and the professionals who support them.  For more information, visit www.caionline.org or call (888) 224‐4321 (M‐F, 9‐6:30 ET).

QUESTION:

I belong to an incorporated HOA here in VA, and the VP of the Board of Directors made a petty issue about where I park within the community (there are no assigned spaces).  He then followed me to my house and pointed out 2 very tall trees (damaged in multiple storms & shedding limbs) which are near my house but on common property.  He then said he intended to withhold having either of these trees examined when the time comes to call in the tree care company to assess which trees are in danger and have unhealthy trees/limbs tended to throughout the community.  

Would this be a violation of any housing laws or association laws - for him to state his unilateral decision to withhold services for some areas of the community, but not others, based on his personal feelings?  Could the HOA have additional liability issues if one of these trees damages property or injures someone because of the willful (in)action of an individual board member?  I personally feel that this board member needs to be removed immediately, but I don't know how to make the gravity of the situation abundantly clear to the other board members.  Or am I just totally shooting in the dark here?

A board member has a fiduciary obligation to the Association to act in the Association's best interests.  If the Association could be liable for damage caused by the trees, then it does not seem to me that intentionally ignoring the situation out of spite over an unrelated matter would be consistent with this fiduciary obligation. 

Whether or not the Association could be liable as a general matter if the trees are ignored and damage someone or something could depend on what is stated in your governing documents.  For example, some governing documents contain a general limitation or waiver on an Association's liability to owners for negligent action or inaction.  As a general matter, such waivers, if they are found in the governing documents, are valid, at least against claims for property damage.  A waiver of liability such as this probably would be ineffective if personal (bodily) injury occurs.

An officer or board member of an association intentionally ignoring a known danger could impact a couple of things, from a legal perspective.  First, the Association could be accused of intentional misconduct, instead of merely negligence, and this might open the way to a claim for punitive damages.  Additionally, volunteer board members of an incorporated association usually are shielded from individual personal liability for their actions as board members (you cannot sue the board members individually, only the association).  However, this protection is not provided if the if board member "engaged in willful misconduct or a knowing violation of the criminal law."  If the facts are as you describe them, there is certainly a claim that the officer's actions are willful misconduct.

I would write a letter to the board alerting it to the condition of the trees on the common area, and requesting that the association perform maintenance on the trees to remedy any dangerous condition.  I would recommend sending it certified mail and retaining a copy with your receipt for certified mail.  In this way, if the tree causes damage you can establish that the Association was on notice of the condition.

We have received a few inquiries regarding the authority of an Association (typically exercised by the Board) to assign parking spaces located in the common areas for the exclusive use of particular unit or lot owners.  This issue arises occasionally in Southeastern Virginia, where parking is relatively plentiful, but it tends more frequently to be a contentious issue in other areas, such as the Washington DC suburbs of Northern Virginia.

The Supreme Court of Virginia issued a very important opinion in 2006 that illustrates that the authority of a Property Owners' Association, although generally including the power to regulate the use of the common areas, may not include the right to assign parking spaces.

White v. Boundary Association, Inc., 271 Va. 50, 624 S.E.2d 5 (2006), involved an Association in Williamsburg that contained nine lots and 18 common-area parking spaces.  The Board of Directors issued parking regulations that seemed at least even-handed on their face.  Each lot was assigned two parking spaces, and each owner was given the power to have towed any vehicles improperly parked in his or her space.  The plaintiffs immediately filed suit challenging these regulations and claiming that the Board exceeded the Association's authority and violated explicit terms of the Declaration. 

The Association argued that the bylaws permitted it to adopt rules and regulations for the management of the Association as its deemed proper, and the regulations were a proper exercise of the Board's authority to establish rules regarding the common area.

The Supreme Court of Virginia sided with the plaintiffs.  The Court observed that the Declaration contained a provision, which is a fairly typical provision found in many Declarations, which gave every owner "a right and easement of enjoyment in and to the Common Area," subject to three stated limitations, none of which were relevant to authority to pass a parking regulation.  The Court determined that the parking regulations were invalid because they improperly divested the owners of a property right that was granted in the Declaration.  Additionally, the Court observed that the Declaration did not give the Association authority to license portions of the common area.  Presumably, had one of the three limitations to which the owner’s right and easement of enjoyment was subject then "the right of the Association to license portions of the common area," the decision would have been different.

If your Association is considering parking regulations such as these, then it is important to review the provisions of your governing documents to be certain that the regulations would not conflict with some rights given to the owners with regard to use of the common area.  If your governing documents would prevent such a regulation, but there is sufficient support for it in the community, then the solution, as noted by the Court in the White case, is to amend your governing documents so as to permit the regulations.

Acts of Malice

Q: My homeowners association passed a resolution that allows the board to suspend a member's voting rights and attendance at board meetings indefinitely due to acts of malice, such as verbal assault or menacing gestures, toward board members. Whether something is an act of malice is determined by the board members themselves. Can a homeowners association take away a member's voting rights indefinitely and restrict attendance at the meetings?—Alexandria, Va.

A: The first issue is the suspension of voting rights and the second is the prohibition from attending board meetings. I question the legal propriety of a board resolution that suspends a member's voting rights. What do the governing documents say about the suspension of voting rights? Who has the power to suspend voting rights?

Voting is one of the primary member rights in any formal organization. Voting rights in community associations are established by the governing documents, and any suspension or revocation of those rights should be done in accordance with those documents and not by a board-approved resolution. In addition, suspending voting rights does not stop the member's offensive conduct.

On the other hand, prohibiting a homeowner's attendance at board meetings is a reasonable consequence of acts of malice. The board has the right to take appropriate action to ensure that business can be conducted in a proper and business-like environment. You said the member's right to attend board meetings was suspended indefinitely. This implies there is the possibility of reinstating the member's right to attend possibly based on assurance of proper conduct. But is this the criterion of this board?

It would seem extreme to restrict attendance at the meetings indefinitely based on one act of malice. A resolution is similar to a rule, and rules must be reasonable. I would need to examine the wording of this resolution to determine whether it is legal with regard to the suspension of voting rights and whether it is reasonable in its terms regarding the ability of the board to prohibit attendance at board meetings indefinitely.

This resolution may be legally problematic and needs to be reviewed by legal counsel in the context of the governing documents and the issues presented by the individual who is committing acts of malice.

Michael A. Inman is an attorney with Inman & Strickler in Virginia Beach, Va., and a member of CAI's College of Community Association Lawyers (CCAL).

Your Virginia Legislative Action Committee,  (LAC) is hard at work monitoring and taking appropriate action on approximately 30 bills that have been introduced in the legislature this month.  Mike Inman serves on the LAC, as he has for over 15 years, and wishes to direct you to the LAC website for detailed information on what is happening in Richmond.  The web site includes a tracking chart for all the bills.  Please see www.cai-valac.org.  for legislative alerts and the tracking chart, as well as other information.

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 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 meeting...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.

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.

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.