2013 Virginia Legislative Update
By Jerry M. Wright.
It is that time of year again — time to acquaint yourself with more legislation that may affect your community association! By the time the 2013 Virginia General Assembly wrapped up its Regular Session in late February, one hundred Delegates and forty Senators had dispensed with over 2,500 pieces of legislation. Of those, 1,526 Bills passed, 1,370 failed and 324 were carried over to the 2014 Session.
This year, there were over thirty pieces of legislation that directly or indirectly affected community associations. These included bills dealing with late fees, disclosure requirements (solar panel restrictions and secondary mortgage market approvals), late fees, home businesses, declarant control, mortgage foreclosures, meeting notices, automated external defibrillators (“AED’s”), and stormwater facilities. These newly-enacted laws become effective on July 1, 2013 (with one exception related to developer-controlled condominiums, which became effective on March 20, 2013).There were several bills relating to community associations that failed, including a bill that would have required agendas to be included in meeting notices (or else any action at the meeting would be deemed null and void).
In this article, however, we focus only upon the relevant bills that were passed by the General Assembly and signed into law by the Governor.
Disclosure Packets/Resale Certificates – The Virginia Property Owners’ Association Act (“POA Act”) and the Virginia Condominium Act (“Condo Act”) will require two additional items of information to be included in disclosure packets and resale certificates. Namely, disclosure packets and resale certificates will now require (i) a statement setting forth any restriction, limitation, or prohibition on the right of a Lot/Unit owner to install or use solar energy collection devices on the Lot/Unit owner’s property (House Bill 2305) and (ii) a statement indicating any known project approvals currently in effect issued by secondary mortgage market agencies (House Bill 1807).
Late Fees – For those associations whose recorded instruments do not address late fees (or the ability of the Board to adopt late fees), the POA Act and the Condo Act were amended to provide express authority to impose late fees, but subject to certain statutory limitations. For example, unless a POA’s declaration or a condominium’s declaration or bylaws (or rules duly adopted pursuant to those recorded instruments) provide otherwise, the board of directors can impose a late fee for an assessment (or any installment thereof) that is not paid within 60 days of the due date. Also, the new law states that unless a POA’s declaration or a condominium’s declaration or bylaws provide otherwise, this late fee can be no more than the amount that localities can charge for unpaid taxes, which is currently five percent (5%). (House Bill 1595)
Home Businesses – Under this new statutory provision, property owners’ associations (“POAs”) will not have authority to prohibit home-based businesses, except to the extent their declarations provide otherwise. They will, however, still be able to (i) restrict the time, place and manner of the business operation, and (ii) restrict the size, place, duration and manner of the placement or display of any signs related to the business. The business use of an owner’s property must also comply with local ordinances. (House Bill 2200). Note that this new law does not apply to condominium associations.
Declarant Control Period – Effective March 20, 2013, declarants in condominiums have the opportunity to extend the declarant control period for that condominium to up to 15 years from the date the first unit was sold in any portion of the condominium or from the date units to which three-fourths of the undivided interests in the common elements were conveyed, whichever occurs first. The extension is subject to several conditions, including the calling of a special meeting of the association, approval by at least 2/3 of the non-declarant owners at the special meeting, and the election at the special meeting of a “warranty review committee” (comprised of at least three persons not affiliated with declarant). Also, the notice of the special meeting must include a disclosure on a form created by the Virginia Common Interest Community Board, which can be found by clicking here.
Once formed, the warranty review committee will have authority to investigate, assert and settle structural warranty defect claims against declarant; levy additional assessments to fund committee’s operation in the event association funds are not enough; and notify the locality of committee formation within 30 days of formation.
Also, the association is required to provide sufficient funds reasonably necessary to fulfill the committee’s obligations and to engage an architect, engineer, counsel or any other experts; investigate whether a breach of warranty exists; and assert and settle claims against the declarant. Unaffected by this new legislation is the requirement that an association must, more than six months before filing suit, provide the declarant with written notice of the defects and an opportunity to cure them. However, the deadline for filing suit was revised to account for the formation of a warranty review committee – specifically, a lawsuit for breach of warranty against structural defects must be filed against a developer within (i) five years from the date the warranty period began, or (ii) one year after the committee’s formation, whichever occurs last. These 2013 statutory amendments also require that, within 45 days of creation of a warranty review committee, the declarant must deliver to the chair of the committee the following: (i) a copy of the latest available approved plans and specifications for all improvements in the project; (ii) all association insurance policies currently in force; (ii) any written unexpired contractor, subcontractor, manufacturer or supplier warranties applicable to the condominium, and (iv) a list of manufacturers of paints, roofing materials and similar materials. (House Bill 2275 – This Bill contained an “emergency” clause allowing it to become effective upon its passage, which occurred on March 20, 2013).
Notice of Mortgage Foreclosures – In the event of a deed of trust sale of a lot or unit in a common interest community (i.e., POAs, Condos and Co-ops), the mortgage company’s foreclosure trustee must provide the common interest community with notice of the sale within 60 days after the sale. The notice must include: the property address, the owners under the deed of trust, the name and contact information of the notice provider, and the name and address of the new owner. (House Bill 1861).
Notice of Meetings – During which Directors are Elected The POA Act and the Condo Act were both amended to provide that if there is a cancellation of an annual meeting where directors are (or were to be) elected, notice of the subsequently called meeting must state that the meeting purpose is for the election of directors. (House Bill 1711). Automated External Defibrillators (AED’s) The existing statutory liability protections related to AEDs was amended to provide that any person who maintains AED’s on property owned or controlled by such person is immune from civil liability for any personal injury that results from any act or omission in the use in an emergency of an AED located on such property, unless the injury results from gross negligence or willful or wanton misconduct of the person who maintains the AED or his agent or employee. (House Bill 1988).
Stormwater Facilities (Local vs. State Regulation) – The primary effect of this legislation is on future communities. It was a result of an effort to allow development of stormwater facilities to meet only minimum State requirements. The legislation, in its initial form, prohibited localities from requiring more stringent standards of BMP facilities during development. In the end, the language of the legislation that was enacted allows localities to regulate stormwater facilities based upon several factors, including long-term costs and liability considerations. (House Bill 2190).
We hope this information prepares you in dealing with this year’s batch of new laws affecting Virginia community associations. Of course, if you have any questions about these new laws and how they impact your association, please do not hesitate to contact us.