Financial and Records Management

Boards often ask us how to best fund a project that becomes necessary due to unexpected events. This could be a significant leak or structural issue with the swimming pool or a roofing inspection report which states that replacement is needed well before the time planned in the reserve study. For purposes of this article assume that the board has determined that the need for “the fix” is too urgent to wait for fund raising through a significant increase in the regular assessment.
Continue Reading FUNDING SURPRISE PROJECTS – LOAN OR SPECIAL ASSESSMENT?

Last year we informed you that effective October 1, 2019 the Virginia General Assembly reorganized Chapter 55 of the Code of Virginia. Chapter 55 includes the Condominium Act, the Property Owners Association (POA) Act and the Real Estate Cooperative Act. This reorganization did not amend the content of these Code Sections but did change the Code Section numbers. Prior to October, 2019 the Condominium Act was comprised of Sections 55-75.45 through 55.79.85. The Condominium Act is now comprised of Sections 55.1-1907 through 55.1-1969. Prior to October, 2019 the POA Act was comprised of Sections 55-508 through 55.516.2. The POA Act is now comprised of Sections 55.1-1801 through Sections 55.1-1836. Fortunately, a conversion table is available which makes it easy to correct form documents containing Code section citations. That chart can be found at https://www.vsb.org/docs/sections/realproperty/appendixb.pdf.
Continue Reading NEW STATE CODE SECTION NUMBERS FOR COMMUNITY ASSOCIATIONS – FORMS NEED UPDATING

Recently we posted the first of two parts about the changes in qualifications for FHA loans for condominiums. In this part we provide information on the rest of the changes.

 

REDUCTION IN OWNER OCCUPANCY REQUIREMENTS FOR ELIGIBLE PROJECTS

 

FHA’s primary motive for requiring that at least fifty percent (50%) of the units in a project be owner occupied or secondary residences is because it is statistically more likely that condominiums with a high percentage of rentals will have higher foreclosure and assessment delinquency rates than condominiums that are primarily owner occupied. It appears that FHA has settled on a compromise in order to avoid penalizing projects with higher rentals but lower delinquency rates.  FHA currently requires that no more than fifteen percent (15%) of the units can be sixty (60) days or more in arrears in the payment of assessments.  Effective October 15, if only ten percent (10%) or fewer owners are sixty (60) days or more in arrears, FHA will accept owner occupancy rates of only thirty five percent (35%).  This could be a significant boost for Hampton Roads.  We have seen many projects with strong financials rejected for FHA certification simply because of owner occupancy requirements.  Because of the high concentration of the military in our area, many condominium projects can have a higher percentage of rentals but still maintain low delinquency rates.

FHA has also expanded on what qualifies as an owner occupied or secondary residence which we believe will also help increase the rate of owner occupancy in some projects and take the guess work out of defining which units qualify as owner occupied and which do not.  These expanded definitions include {emphasis added}:

  • “any Unit that is occupied by the owner as his or her place of abode for any portion of the calendar year and that is not rented for a majority of the calendar year;
  • any Unit listed for sale, and not listed for rent, that was previously occupied by the owner as his or her place of abode for any portion of the calendar year and that is not rented for a majority of the calendar year; or
  • any Unit sold to an owner who intends to occupy the Unit as his or her place of abode for any portion of the calendar year and has no intent to rent the Unit for a majority of the calendar year.”

 
Continue Reading FHA LOANS – MAJOR CHANGES REGARDING CONDOMINIUM QUALIFICATIONS – PART II EFFECTIVE OCTOBER 15, 2019

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:
Continue Reading FHA LOANS – MAJOR CHANGES COMING IN OCTOBER REGARDING CONDOMINIUM QUALIFICATIONS

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.”  
Continue Reading Updated Association Disclosure Notices and Repeal of Title 55, Code of Virginia

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.  Continue Reading DOCUMENT MAINTENANCE – DO YOU HAVE ALL OF YOUR ASSOCIATION’S GOVERNING DOCUMENTS?

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.Continue Reading How long does it take for a condominium to get FHA project approval?

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?Continue Reading Mandate from the Legislature-Complaint Procedure

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?Continue Reading Requests for Association records – What are the rules of the road?