Financial and Records Management

According to a news release from the Department of Housing and Urban Development (HUD) several days ago, there are over 150,000 condominium projects in the United States, but “only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.” In an effort to make Federal Housing Administration (FHA) loans accessible to more prospective purchasers of condominium units and because HUD estimates that 84% of FHA-insured condominium unit buyers are first time homeowners, HUD has announced some pretty significant changes to FHA regulations.  These major changes will become effective on October 15, 2019 and include:
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ASSOCIATION DISCLOSURE NOTICES EFFECTIVE JULY 1, 2019

 

A couple of months ago we told you about changes to the Property Owners Association (POA) Act and the Condominium Act regarding the Disclosure Notices.  We want to remind Association managers and board members that every association should now be using these revised Disclosure Notices.

Effective July 1, 2019 the Property Owners Disclosure Packet Notice prepared by the Virginia Common Interest Community (CIC) Board that is required to be included in every HOA Association Disclosure Packet for the initial sale by the developer and all subsequent resales pursuant to §55-509.5 of the Virginia Residential Disclosure Act was amended.  The Condominium Unit Owners’ Association Resale Certificate Notice that is required to be included in every condominium resale certificate pursuant to §55-79.97 was also amended.  Both Disclosure Notices now inform purchasers, under the section entitled “Assessments,” that mandatory fees collected by condominium associations may include the cost of “construction or maintenance of stormwater management facilities.”  
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As association attorneys we are in need of the governing documents in order to answer questions posed by the board or the manager.  Frequently we have those documents in that association’s file if we regularly represent that association.  We do need to keep up to date on any changes in the rules and regulations or architectural guidelines which may be made without our input or review.  Of course, we do believe it is a good investment for associations to allow us to review proposed rule or guideline changes before implementing to insure enforceability.  


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We have found that managers and board members who have not had any experience with the process of obtaining FHA project approval have unrealistic expectations about the processing time.In this edition we let you know the “ins and outs” of the application for such approval. We handle both initial applications and recertifications and there is a significant difference.


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QUESTION: 

I understand that at this time all associations are required to have a complaint procedure in place in order for their members to be able to let the CIC Board know of issues they have with their association. I also know that the Annual Report form requires an Association to state whether or not it has a complaint procedure. What is the consequence if an association fails to comply after getting the DPOR’s letter about non-compliance when they have checked “no” on the Annual Report?


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Q:      We are a self managed association and members often ask for copies of records such as financial data and minutes of meetings. Often they ask for minutes before they are approved. One request is for our contract with the landscaper. We don’t feel that all these requests are appropriate. What do we have to provide to our owners?


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Question:

I have a contract on my Virginia condo to close next week.  After the contract was signed, a special assessment was voted on and passed. The first due date for the assessment is after the closing.

The contract says "Unless otherwise agreed to in writing, Seller will pay any special assessments and will comply with all orders or notices of violations of any county or local authority, condominium unit owners’ association, homeowners’ or property owners’ association or actions in any court on account thereof, against or affecting the Property on the Settlement Date."

The title agency is saying that because the special assessment was passed before the closing I must pay the whole assessment.  Is this the correct interpretation of the above language from the contract?   I will pay it if I have to, but as it is not even due until after the settlement date; I would like to confirm.


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