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?

There seems to be some confusion about this new addition to the resale provisions in the Condominium Act and the Property Owners Association Act. As of July 1, 2017 there is a new Virginia law, passage of which was promoted by the Virginia Association of Realtors, which will impact unit owners and lot owners in nearly all community associations as to “For Sale” signs. (No other types of signs, like “For Rent” signs, are covered by these new laws.).

Continue Reading NEW VIRGINIA LAW REGARDING REAL ESTATE FOR SALE SIGNS

 

Revock v. Cowpet Bay West Condominium Association

Third Circuit Court of Appeals, 2017

A very instructive case was decided last month in a Federal Appeals Court which will demonstrate almost everything not to do with respect to compliance with the Fair Housing Act relative to emotional support animals. This case dealt with a suit brought by two emotionally disabled unit owners in a condominium community that had a no pet rule. The association had no policy regarding service animals or emotional support animals. The residents seeking approval of their dogs provided appropriate paperwork supporting their need for the dogs.  Certain residents were upset by the violation of the no pet rule expressing their views on strongly worded and insulting blog postings and called for these violators to be fined.

Continue Reading Fair Housing Act – Emotional Support Animals

A few months ago we informed you that both houses of Congress voted unanimously to pass the Housing Opportunity Through Modernization Act (HOTMA) which, in part, required FHA to lower the required percentage of owner occupied units in condominiums from 50% to 35% unless FHA could prove that a higher percentage of owner occupancy was justified. 

Continue Reading NEW FHA OWNER OCCUPANCY REQUIREMENTS COULD BENEFIT SOME CONDOMINIUM COMMUNITIES

By: Jeanne S. Lauer, Esq.

 

The Virginia General Assembly and the Governor have agreed on several changes to the Condominium Act and the Property Owners Association Act (POAA). As a member of the CAI Virginia Legislative Action Committee I want to let you know about these changes of which you should be aware:

 

Continue Reading NEW LAWS FOR COMMUNITY ASSOCIATIONS EFFECTIVE JULY 1, 2015

 

[This article is an excerpt from an article written by Mike Hunter for the

Charlotte Observer. We believe it contains some very helpful information and suggestions]

“Most swimming pools have a list of rules posted somewhere on the premises. We’ve all seen them. The rules contain common sense prohibitions against dangerous pool activities, such as having glass in the pool area and diving into the shallow end.

And almost every set of pool rules contains a statement similar to this: ‘No one under the age of 18 may use the pool unless accompanied by a parent or guardian.’ It makes sense, right?

According to a 2012 federal court opinion from California (Iniestra v. Cliff Warren Investments), a pool rule requiring adult supervision of children violated the Fair Housing Act (FHA) because it discriminated against families with children.

In explaining its opinion, the federal court found the rule requiring adult supervision to not make perfect sense if its goal was to ensure the safety of all swimmers. The court noted that the Iniestra children, who were competent swimmers, were not allowed in the pool facility without a parent, but yet adults who never swam a day in their life could use the pool facility without supervision. Also illogical was that a certified lifeguard who was under 18 could not use the pool without the presence of a parent or guardian.

Continue Reading The Fair Housing Act and Your Community Pool

Due to some shepherding of this bill by CAI’s Virginia Legislative Action Committee, as of July 1 you can get help from the Circuit Court if you have made a good faith attempt (3 times) to get a critical amendment passed without success. The statute details exactly what must be done to achieve the amendment.  We hate to say it but you really need to read this statute as it lays out exactly how and when it works.  Here it is:

Continue Reading If you can’t get a critical amendment passed there is relief in court

Often associations review their rules when they want to make some change or addition, but it is best to review all the rules at least every 5 years because a few things do change periodically in the make-up and needs of every community.  So here are some guidelines for your review that might prove useful to you:

Continue Reading Revising your Rules and Regs? Keep it Simple!

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