Client Alert: Virginia 2023 Legislative Update for Common Interest Communities
Date: June 13, 2023
The following bills amend the Property Owners’ Association Act (Va. Code Ann. 55.1-1801, et seq., as amended (1950)), the Virginia Condominium Act (Va. Code Ann. 55.1-1900, et seq., as amended (1950)), and other statutes that may affect common interest communities. Please feel free to contact us if you have questions regarding any of the following legislative changes.
Common Interest Community Board
HB 1627 and SB 1042 – The legislation amends §§ 54.1-2354.3 and 54.1-2354.4 of the Code of Virginia regarding the process governing the decisions of the Common Interest Community Ombudsman over violations of common interest community associations. It allows the Office of the Common Interest Community Ombudsman (the “Ombudsman”), upon receiving any notice of a final adverse decision issued by a common interest community association, the authority to either (i) refer such final adverse decision to the CIC Board for further review or (ii) make a determination of whether such final adverse decision conflicts with relevant laws or Board regulations. The legislation requires the Ombudsman to promptly notify the association’s governing board and its common interest community manager of such determination, and now the Ombudsman’s decisions are binding on the parties and not subject to appeal, whereas the Ombudsman’s decisions were previously advisory in nature.
If the Office receives a subsequent notice of a final adverse decision for the same violation by the same association within one year of the previous determination, the Office must refer the matter to the Board for review of the violation and potential sanctions, including possible fines up to $1,000 and legal action. With the automatic referral to the CIC Board for the same violation within a year’s time, associations should be more incentivized to ensure corrective action is taken if the Ombudsman determines a violation exists.
Fair Housing – Assistance Animals
HB 1725 - amends §§ 36-96.3:1 and 59.1-200 of the Code of Virginia regarding the request for an assistance animal. Many community associations are posed with requests from disabled residents to make reasonable accommodations and allow an assistance animal, either a trained service animal or an emotional support animal, to reside in the building. In order to properly evaluate such a request, an association may request documentation from a licensed medical provider who is in a therapeutic relationship with the resident to confirm the disability and substantiate the need for an assistance animal.
This legislation now makes it illegal for the licensed medical provider to provide fraudulent supporting documentation of the existence of a disability and need for the assistance animal. The legislation is designed to provide a disincentive for medical providers to falsely claim their patients are disabled and entitled to an assistance animal. Although community associations will not be able to file lawsuits to enforce the new law since enforcement is left to the Virginia Attorney General’s Office, the law is expected to serve as a deterrent of fraudulent activity.
Stormwater Management
SB 1091 – § 15.2-2114.01 of the Virginia Code was originally adopted in order to establish a local stormwater management fund to grant funds to private property owners and common interest communities to use for stormwater management and erosion control projects. Initially, the funds were to be used only for construction, improvement or repair of a stormwater management facility; erosion and sediment control; or flood mitigation. Now, this Bill adds a section to the Code that expands the allowable uses of the grants for joint flooding mitigation projects of condominium owners. This legislation certainly has a positive impact on condominiums by allowing local funds to be used to mitigate unit-to-unit flood mitigation.
Association Management Agreements
HB 1519 – This legislation adds § 55.1-1837 to the Virginia Property Owners’ Association Act and § 55.1-1940.1 to the Virginia Condominium Act, allowing associations or common interest community managers to terminate management contracts at any time without cause upon less than 60 days’ written notice if the contract contains an automatic renewal provision. This legislation is significant as it gives associations some options and leeway when considering management contracts. Associations should keep this legislation in mind when negotiating management contracts that have the automatic renewal provision. However, nonetheless, we encourage board of directors to consult with legal counsel when reviewing management contracts and exercising this termination authority.
Resale Certificates
HB 2235 and SB 1222 – This legislation affects resale disclosure packages for Virginia common interest communities. Specifically, a chapter will be added to Title 55.1 (Chapter 23.1) and the current provisions pertaining to resale disclosure packets contained in the Virginia Property Owners’ Association Act (§ 55.1-1808 through § 55.1-1814) and the Virginia Condominium Act (§§ 55.1-1990 through 55.1-1995) will be repealed effective July 1, 2023.
Most of the resale requirements which were previously contained in the Virginia Property Owners’ Association Act and Virginia Condominium Act will remain intact, but will simply be located under another title of the Virginia Code. The main changes are as follows:
- “Resale Certificate” will now be the name of the disclosures required upon sale as applicable across the board. Previously the Virginia Property Owners’ Association Act referred to the “disclosure packet,” while the Virginia Condominium Act referred to the “resale certificate.” The requirements pertaining to resale certificates shall be found in Va. Code § 55.1-2307 et seq. with the form and contents being described in Va. Code § 55.1-2310.
- The fee for the resale certificate must now be paid when the request is made, and not at settlement or within 60 days of closing.
- The Common Interest Community Board has developed a form which must accompany resale certificates. The form is now available here. The form summarizes characteristics of common interest communities generally that may affect a prospective purchaser’s decision to purchase a lot or unit located in a common interest community. The form requires the resale certificate preparer to input information about the Association and contents of the resale certificate.
In terms of changes to the contents of the resale certificate, some notable changes are as follows:
- The preparer of the Resale Certificate must include in the Resale Certificate their name, address, and phone number and any managing agent of the association
- In addition to the most recent balance sheet, the most recent income and expense statement if any must be provided
- A statement of whether the board has received written notice from a governmental agency of any violation of environmental, health, or building codes with respect to the unit being sold, the limited elements assigned thereto, or any other portion of the common interest community that has not been cured
- In addition to the most recent 6 months of Board meeting minutes, the most recent draft or approved meeting of the membership minutes
- A statement of any limitations, prohibitions, or restrictions in the governing documents on:
- the number or age or persons who may occupy a unit as a dwelling
- the size, placement or duration of display of political, for sale, or any other signs on the property
- parking and vehicles
- the operation of a home-based business that otherwise complies with applicable local ordinances
- an owner’s ability to rent the unit
We encourage Associations to contact us to review the revised resale certificate and form for accuracy and completeness to ensure compliance with the new laws.
Settlement Agents’ Ability to Release Judgment Liens
HB 2184 - This legislation is important to be aware of by all Association lienholders. The new statute will be contained in § 55.1-3101 of the Virginia Code and will allow settlement agents to release judgment liens so long as they comply with the terms contained therein. Most notably, if the settlement agent makes a written request for a payoff from the lien creditor and its counsel of record as reflected in the judgment, judgment abstract or any extension filed in land records, and the lien creditor has not responded within 15 days or is unable to be located by the settlement agent, the settlement agent may now deliver or attempt to deliver via commercial delivery, USPS or certified mail a notice of intent to release with a copy of the release to record. If the judgment creditor does not respond within 30 days of such notice of intent to release, the settlement agent may execute, acknowledge and file with the clerk of court of the jurisdiction in which the property is located a certificate of release (which includes an affidavit, a copy of the notice of intent to release, and the owner’s affidavit). Aforesaid certificate shall operate as a release of a judgment lien.
The provision does offer some relief, as § 55.1-3104 states that a certificate of release filed and recorded wrongfully or erroneously by a settlement agent shall not relieve a party from obligation or liability for the debt secured by the judgment lien. It also provides that a settlement agent who negligently executes and files or records an erroneous certificate or release shall be liable to the lien creditor for actual damages sustained.
Please contact a Whiteford community association attorney for more specific advice based on your community’s individual needs and concerns.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.