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which we viewed as an unreasonable interference with the rights of community associations and which were subsequently withdrawn or defeated.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.
BUDGETS AND RESERVES
This is perhaps the most significant of all the legislative changes this year. The purpose of these new budget and reserve requirements are to insure full financial disclosure to all owners and to prevent under funding of replacement reserve accounts.
SB1538 and HB2030 added requirements regarding budgets and reserves to § 55-79.83:1 of the Condominium Act, § 55-471.1 of the Cooperative Act and Section 55-514.1 of the Property Owners Association (POA) Act. Effective July 1, 2019, all three Acts will require that association budgets include: (i) a statement of the amount of reserves recommended in the reserve study that all three Acts currently require associations to perform every five (5) years and (ii) a statement of the amount of cash currently on hand for replacement reserves. The two statements will inform owners as to whether or not the replacement reserves are fully funded in accordance with the reserve schedule. Board of Directors will also be required to provide owners with the annual budget or a summary of the annual budget prior to the beginning of each fiscal year.
DOCUMENTS TO BE PROVIDED BY DECLARANT
SB1756 and HB 2019 added a requirement to § 55-79.74 of the Condominium Act and § 55-509.2 of the POA Act that developers of condominium and HOA projects provide to the owner controlled Board of Directors, upon transition from declarant control, an inventory and description of stormwater facilities located on the common elements/common areas for which the association is responsible to maintain, together with the requirements for maintenance of the facilities.
PROXIES IN CONDOMINIUM ASSOCIATIONS
HB2647 removed the requirement in § 55-79.77 of the Condominium Act that currently requires proxies to be executed “by a person having authority, at the time of the execution thereof, to execute deeds on behalf of that person.” This section was amended to simply require that “proxies be signed by or on behalf of the unit owner.” This change creates a lower standard for who can sign a proxy on behalf of an owner; however, the association Bylaws could (and, in our opinion, should) establish standards for persons who can sign on behalf of an owner. A new provision was also added to this section providing that if any one co-owner of a unit objects to a proxy filed by another co-owner at or prior to the meeting, the proxy will be deemed revoked. These changes do not affect HOAs or cooperatives which give no guidance on the execution of or content of proxies .
ASSOCIATION NOTICES BY ELECTRONIC MAIL
HB2694 provides that Associations may deliver association membership meeting notices by electronic mail provided that: (i) the member has elected to receive such notice by electronic mail and (ii) if the electronic mail notice is returned as undeliverable, the notice is then sent to the owner by United States mail.
ASSOCIATION ANNUAL REPORT FEES
COMMON INTEREST COMMUNITY MANAGER LICENSES FEES
SB2081 eliminated the flat fee for Association Annual Reports and Common Interest Community Manager License renewal fees to the Virginia Common Interest Community (CIC) Board and set a standard by which the CIC Board is to establish such fees based on a percentage of the total amount of funds received by the CIC Board on a biannual basis (rather than on a flat fee basis).