We are often asked by Boards of Directors to assist them in determining the maintenance, repair and replacement responsibilities for certain components in their Association when the provisions in their governing documents are ambiguous about such responsibilities or are absent altogether.

First we need to distinguish the difference between ownership of common elements in a condominium association and ownership of common areas in a homeowners association.  In a condominium association each unit is owned individually and the common elements are owned jointly in common with all of the unit owners.  In a homeowners association each lot is owned individually, but the common areas are owned by the Association (not by the lot owners). To make it more challenging sometimes condominium units appear to be small lots. We realize these are subtle differences, but it is important for purposes of this discussion. Continue Reading Maintenance Responsibilities: Who is supposed to do what?

A couple of months ago we informed you of major changes coming to resale disclosure requirements and the fees that can be charged for preparing those disclosures.  Those changes went into effect on July 1, 2018 and we wanted to remind you that you must now be complying with those changes.

Every homeowners association disclosure for both initial sales by the developer and resales is required to include a form developed by the Common Interest Community (CIC) Board titled “Property Owners’ Association Disclosure Packet Notice.”  This form has always been required for homeowners associations initial sales and resales but the form has been revised to include multiple additional disclosures enacted by the Virginia General Assembly. Continue Reading CHANGES TO RESALE DISCLOSURE REQUIREMENTS AND FEES HAVE NOW BECOME LAW

Like any other business, community associations are often faced with delinquent owners seeking bankruptcy protection. In fact, as of May 2018, over 9,800 bankruptcies have been filed in Virginia alone.  As such, community associations should be aware of the implications of being an unwilling bankruptcy creditor.

 

Types of Bankruptcies

 

The two most common types of bankruptcy that impact community associations are a Chapter 7 and a Chapter 13.

Chapter 7:  Liquidation

 

The Chapter 7 bankruptcy is commonly referred to as the liquidating bankruptcy and is what most people think of when they hear the term “bankruptcy.” The idea behind a Chapter 7 is that the court assigns a third-party (a trustee) to review the debtor’s assets and exemptions and sell any non-exempt assets to pay the debtor’s debts. Unfortunately, Most of the time, that doesn’t actually happen. Most chapter 7 cases are “no-asset” cases, meaning there are no un-exempt assets for the trustees to sell. In a rare “asset” chapter 7 cases, the trustee will notice creditors by sending a letter asking for creditors to file “proofs of claim.” A proof of claim is a standard form that a creditor fills out listing the amount and type of debt. A proof of claim must also have “proof” attached detailing the basis of the debt. The trustee then classifies the types of debt and pays those debts based on their classification or priority until the funds are depleted. The end result is a chapter 7 discharge which wipes away all qualifying unsecured debt incurred prior to the debtor filing bankruptcy.  However, there are debts that survive a chapter 7 discharge including secured debt, priority debt, and non-dischargeable debt. The easy way for community associations to prevent loss of assessments to a chapter 7 discharge is to speak with an attorney as soon as an owner is 30 days delinquent. Continue Reading When Delinquent Owners File a Bankruptcy – What now?

It seems like we have to say this every year, but the Virginia General Assembly was very busy again this session making amendments to the content and fee structures for condominium and homeowner association disclosure requirements.  These changes are significant so we wanted to give association boards and managers time to prepare before these changes go into effect on July 1, 2018.

House Bill 923 focused first on the disclosure form provided by the Common Interest Community (CIC) Board and made significant additions.  It now must contain the following statements to alert buyers to certain aspects of ownership in a community association even though some of these items will not apply in every community:  Continue Reading Big Changes Coming Soon to Resale Disclosure Requirements and Fees

Question: I live in a townhouse style condominium that is comprised primarily of young families and, consequently, we have quite a few dogs in the community. Our recorded Condominium Declaration states: “No more than two (2) pets shall be maintained per UnitThe Board of Directors may promulgate additional rules and regulations regarding pets.” Our Board of Directors has passed a board resolution changing the number of pets allowed per unit from two (2) pets to one (1) pet.  My son is heartbroken that we will have to choose which one of our dogs we have to give away.  Can board members just make up their own rules? Continue Reading Can Board Members Make New Rules and Change Old Ones?

If you own a single family home and your roof needs to be replaced, you either have to take money from savings or borrow the funds to pay for it.  Either way, it’s your sole responsibility to replace your roof.  But what if you own a condominium unit and the roof of your building needs to be replaced or the streets need to be repaved? What if you live in a homeowners association and the pool deck needs to be replaced?  Don’t you expect all of the owners in the community to contribute to the costs and don’t you expect there to be enough money in “savings” to pay for it.  Continue Reading Making the case for replacement reserves

The American Heritage Dictionary defines “fidelity” as “faithfulness to obligations, duties, or observances,” but what does fidelity mean to your association and why do you need fidelity insurance?  Every association collecting assessments has one or more persons handling the financial obligations of the Association (collecting and depositing assessments and paying invoices).  Every board member, management company employee or other individual handling an association’s funds has a fiduciary responsibility to handle those funds in a way that best benefits the association, but what if they don’t?  Continue Reading What is Fidelity Insurance and why does my Association need it?

Since 2012, all associations have been required by Virginia law to have a complaint procedure in place so that owners have a way to submit written complaints to their association board of directors.  The Common Interest Community Ombudsman Regulations provide specific ways in which associations must deal with owner complaints and time frames for responding to owner’s written complaints.  These Regulations also provide a means for owners to submit certain complaints to the CIC Board Ombudsman when an association has either not responded to an owner’s complaint or the association has responded with a written determination that denies the corrective action sought by the owner (known as a “Final Adverse Decision”).  Continue Reading WHEN CAN OWNERS SUBMIT A COMPLAINT TO THE COMMON INTEREST COMMUNITY (CIC) BOARD?

Leasing restrictions can be one of the most controversial and complicated matters in community association governance.  Between statutory requirements, governing documents and VA/FHA regulations, how are Associations supposed to sort it all out, especially when there are often conflicts between them?  Not to mention the fact that statutory and lender regulations seem to change just when you are starting to get use to the current requirements.  The information below is meant to provide you with a general overview to help you determine if you are properly handling rentals in your association or wish to restrict them.  But remember, it’s subject to change without much notice! Continue Reading Leasing Restrictions Dos and Don’ts

If there is one thing we seem to be able to count on from the Virginia General Assembly, its frequent amendments to the statutes regarding association resale certificates and 2017 was no exception.

Under the “News You Can Use” section of this site, Jeanne Lauer explained the new legislation regarding “For Sale” signs in condominium and homeowners associations which became effective July 1, 2017. That posting is a must read for anyone preparing resale certificates for an association because “For Sale” sign regulations in your Declaration (and/or Bylaws for a condominium) must be disclosed in association resale certificates. Unless you are familiar with the new “For Sale” sign statute regarding limitations on an association’s ability to regulate signs, you could easily disclosure incorrect information to prospective purchasers and that’s no way to get off to a good start with new members of the community.

Other changes affecting resale certificates that became effective July 1, 2017 are: (i) if an owner designates a licensed real estate agent as the unit owner’s representative in writing to the association, the association must recognize such representation without the requirement for a formal power of attorney; however, the representative will not have the right to vote on behalf of the owner without a valid proxy; and (2) the Common Interest Community (CIC) Board may now assess a monetary penalty to the association or the association’s common interest community manager (as the case may be) for failure to deliver the resale certificate within 14 days.

Section 55-79.97 of the Virginia Condominium Act and Section 55-509.4 of the Property Owners Association (POA) Act provide a complete list of the information and documentation required to be part of the resale certificate. It’s a prudent business practice to compare your resale certificate to the appropriate statute after July 1 of each year to make sure your association remains in compliance.