For the last several years I have been honored to serve as one of SEVA-CAI’s Delegates to the Virginia Legislative Action Committee (VALAC).  The VALAC does important work in educating legislators about the needs of community associations and in helping to craft or block legislation which affects those community associations.  The process begins each year in the Fall and the most significant work ends in the Spring, with new laws slated for implementation on July 1 of each year.  This year the VALAC started by evaluating hundreds of bills to see what would impact our constituency and then narrowed our focus to 134 bills, the majority of which we viewed as an unreasonable interference with the rights of community associations and which were subsequently withdrawn or defeated.  Significant among the defeated bills were those which would have (1) removed licensing requirements for community association managers (which have been in place for only a few years), (2) permitted the imposition of criminal penalties for violations of the Condominium Act by community associations (among others) and (3) established the right of political candidates to engage in campaign activities on condominium property.

A summary of the new laws which will be taking effect is provided below.

Last month we posted a summary of other new laws in Virginia to be effective on July 1, 2019.

Continue Reading 2019 VIRGINIA GENERAL ASSEMBLY REPORT – (PART 2 OF 2)

WHAT YOU DON’T KNOW CAN HURT YOU!

The Virginia General Assembly has wrapped up another busy year so it’s time to take stock of what new laws and changes to existing laws will affect community associations.  All board members and association managers need to be aware of these new and revised laws in order to avoid the legal pitfalls of doings things “the way we always have” instead of the way the new laws require it to be done.  All of these new or revised laws have been passed by both the Virginia House and Senate, have been signed by the Governor, and will go into effect on July 1, 2019.  We will break the changes down into several categories and send you the “need to know” information in several installments over the next couple of months.  In this issue we will discuss resale disclosure changes and child care businesses in HOAs. Continue Reading 2019 Virginia General Assembly Update

COME JOIN US AT CA DAY ON MARCH 9

We hope the new year is going well for you all.  We are looking forward to the Southeastern Virginia Chapter of CAI’s annual Community Associations Day which will be held on March 9, 2019 from 7:30 to 4:30 at the Virginia Beach Convention Center.  Our CA Team will be there in full force. Mike Inman will be speaking on a new and unique topic – dealing with municipalities on such things as condemnation of property, rezoning of neighboring property, storm water management and enforcement of ordinances. Jeanne Lauer will be hosting a discussion on “Influencing Legislation that Impacts Your Community and the Importance of VALAC” (the Virginia Legislative Action Committee).  Greg Montero will be hosting a round table discuss on “Almost Free Legal Advice.”  Also, as usual, we will have our booth to give us a chance to greet you.  We hope to see you there. Information on the event can be found at www.cadayvirginia.com.

 

WHY DOES MY CONDOMINIUM NEED FHA CERTIFICATION

Federal Housing Administration (FHA) loans currently account for a large percentage of the available financing options for condominium units in today’s market.  Other than VA loans (which are only available to active or retired military), FHA loans offer one of the lowest down payments and interest rates available which makes them attractive to a lot of new buyers and current owners who wish to refinance. Continue Reading Why does my condominium need FHA certification

Sometimes we have the unpleasant responsibility of telling a board that the proxy they have sent out (or worse, used) for a membership meeting was invalid due to lack of compliance with their bylaws and/or Virginia Statutes, or that it simply doesn’t constitute a proxy.   It seems that many people 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 of myths about proxies that we need to dispel. Continue Reading Making sure every proxy (and vote) counts

Many Association governing documents require an annual audit.  In order for an audit to be meaningful in the Community Association context it must be performed by an independent certified public accountant. The only way to fulfill the requirements is to hire a CPA who is not a member of the Board or even an owner in the community.  While your documents may specifically require an audit, you need to be aware that a CPA can do one of three levels of financial examinations to determine if the accounting work is being done properly: a compilation, a review or an audit depending on the requirements set forth in the governing documents. In a compilation, the accountant simply puts the association’s numbers in a proper financial format. The accounts are not examined for accuracy. A review determines if the financial statements require any material modifications. It consists of inquiries into the association’s bookkeeping practices.  The audit is the most detailed level of review and, if done properly, it will offer reasonable assurance that the records are free of misstatements. The auditor also looks for irregularities or illegal acts. It is significantly more expensive than the other two reviews.

 

The American Institute of Certified Public Accounts has standards for doing audits on community associations. By adhering to these standards, an auditor can express an opinion on the association’s financial health. Continue Reading Do we have to have an annual audit?

We have published on this topic in the past, but due to frequent misunderstanding of the process we want to provide more information on this topic. Most community association boards of directors realize the importance of, and requirement for, holding open meetings. There are times however when closed sessions of the board are needed. Fortunately in Virginia the statutes for both homeowners associations and condominium associations are very specific as to when closed meetings can be held. They are generally referred to as executive sessions. The purpose of executive sessions is to allow the board to discuss certain sensitive topics among themselves with no members present.  The following are the topics which qualify for a meeting to be closed pursuant to statute:

Continue Reading WHEN CAN A BOARD GO INTO EXECUTIVE SESSION?

In the midst of this electoral season, perhaps it is especially timely to discuss sign regulation in communities, particularly as it relates to political signs. You may be getting questions or comments about sign regulation in your communities, so we thought it would be a good idea to let you know what goes, and what does not, in community associations with regard to political signs. There are those that will assume that there is no way that community associations can regulate political signs because it violates their right of free speech under the First Amendment to the Constitution. For reasons we will explain, this is not entirely correct in the community association context.

Of course it is common to have sign regulation in community associations, particularly with respect to “For Sale” signs. Is there a distinction to be made between “For Sale” signs and political signs? Political signs seem to have more to do with free speech than for sale signs. In fact, when analyzing government regulation of speech, courts often distinguish between “commercial speech” and other types of speech, and find that commercial speech is not entitled to the same level of protection as other types of speech. But does that matter in a community association? Continue Reading Political Signs and Community Associations in Virginia

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?