Little can be more frustrating to an association than when a non-compliant homeowner files for bankruptcy. The bankruptcy laws are complex, and navigating them can be a challenge even for the most sophisticated managers. One of the broadest protections for homeowners that file bankruptcy is the “automatic stay.” This provision of the bankruptcy code immediately halts all efforts to enforce any claim against the debtor that may affect the homeowner’s property, including collection of overdue assessments and non-compliance fees. What’s more, it hampers associations’ ability even to enforce the governing documents related to upkeep of the property due to the prohibition of acts to “exercise control over property of the [bankruptcy] estate,” which may include the home and property on which it sits.

Luckily, the Bankruptcy Code creates a method for associations to work through the rules to be able to enforce the covenants. An association can seek relief from the automatic stay by filing a motion with the Court, explaining the violation, how it is damaging the community, and why the Court should allow the association to seek judicial remedies to enforce the restrictions. The Bankruptcy Courts generally look favorably on these motions as they are not seeking to collect money owed from the homeowner but rather are simply trying to compel the owner to keep the property in compliance with the governing documents. In fact, many times, homeowners, the association, and the Trustee (the individual tasked with managing the bankruptcy estate) can work together to agree to the relief from the automatic stay without ever having to enter a Courtroom.

Fortunately, the Bankruptcy Courts handle hundreds of similar motions every year, so they have created a streamlined process. If the association, homeowner, and Trustee come to an agreement, they can submit an order that the Court will generally review and sign promptly. Otherwise, the association can file a motion with the Court and set a hearing within as little time as a few weeks to have the matter heard. This can be very beneficial to an association with a homeowner that has violations that are long overdue for correction.

Gordon & Rees has experienced bankruptcy attorneys that can help associations seek relief from the automatic stay. Their bankruptcy attorneys can also help file proofs of claim and attempt to ensure that the association receives everything they are entitled to through the course of the bankruptcy.

Many people are generally familiar with the concept that housing providers, real estate agents, and property management companies are subject to state and federal fair housing laws. However, it is important to know that community associations are also subject to those laws. State fair housing laws vary from state to state. These laws typically set forth a statutory procedure for the resolution of complaints of violations of those laws.

This post will focus mainly on the Virginia Fair Housing Law (“VFHL”) (Virginia Code Section 36-96.1, et seq.) and the Virginia process for complaint resolution.

What VFHL Covers

Virginia has a stated policy to provide fair housing throughout the Commonwealth. Va. Code § 36-96.1. The VFHL prohibits covered persons or entities from engaging in unlawful discriminatory housing practices. Va. Code § 36-96.3. Continue Reading Virginia Fair Housing Law and Community Associations: Procedural Background and Best Practices in Handling Complaints

For more than a year, community associations have been struggling with managing the use of their pools amidst the COVID-19 pandemic. With ever-changing regulations, vacillating infection rates, and differing opinions on boards and within communities, the decision may be overwhelming. However, with some simple education and adherence to guidelines, community associations can feel confident in reopening their pools while at the same time limiting liability. Last year, we provided information to assist community associations, and this year, with updated orders from the Governor, we hope to provide the most current information for community associations to make fully informed decisions.

On April 21, 2021, Governor Northam issued his Fifth Amended Executive Order Seventy-Two. The language in the Order mirrored that of last year’s order regarding pools:

Outdoor and indoor swimming pools may be open, provided occupancy is limited to no more than 75% of the lowest occupancy load on the certificate of occupancy and all swimmers maintain at least ten feet of physical distance from others who are not family members.

Continue Reading 2021 Update: Opening HOA Pools in the Pandemic: Community Association Considerations in Opening Pools in Virginia Amongst the COVID-19 Pandemic

In the world of enforcing covenants, deeds, and restrictions, injunctions are one of the most powerful tools association managers have in their arsenal. An injunction is an order from a Court either requiring a homeowner to comply with particular rules or restrictions or ordering the homeowner to cease violating the restrictions. Associations can request injunctive relief whether or not the association wishes to seek monetary damages against the homeowner.

Courts are often willing to award injunctions for several reasons. First, in most cases where injunctions are appropriate, the association has taken many steps prior to filing suit to enforce the covenants, including communications with the homeowner, calling the owner to a due process hearing of the board, assessing non-compliance charges, and oftentimes demands for compliance from the association’s attorney. The association can then plead with the Court, arguing that there is little else the association can do to enforce the restrictions. Judges are frequently sympathetic to these arguments, especially considering the fact that the restrictions are legally deemed to be a contract with the homeowner, and if the homeowner refuses to abide by the contract, then the only avenue for redress is with the Courts. Additionally, most violations affect the neighboring properties and often decrease home values and/or make it difficult for neighbors to sell their property. Continue Reading The Almighty Injunction

By recent decision, the Virginia Supreme Court weighed in on an insurance subrogation dispute arising out of a fire at a Virginia condominium. The case is illustrative as to situations that sometimes face community associations when there are casualty losses.

Subrogation: A Basic Explanation

Subrogation is a legal doctrine where a party who pays a loss on another’s behalf is permitted to “step into the shoes” of the payee (person receiving the funds) and enforce their rights as to a legal claim. An elementary principle of subrogation is that an insurer may not subrogate against its own insured. In other words, an insurer cannot sue its own insured for negligence under a subrogation theory. This is intuitive because if an insurer could sue an insured to recover such losses then there would not be much of a concept of insurance coverage (as any time the insurer paid a loss to an insured, there would be a strong incentive for the insurer to sue its own insured to recover the loss). Subrogation may be waived by contract. Continue Reading Subrogation: Stepping into the Shoes of Another to Enforce Claims: the Virginia Supreme Court Hands Down an Opinion on Subrogation in the Context of a Condominium Fire

For those who live in a community with a homeowners association (also referred to in Virginia as a “property owners’ association” or a condominium association) (an “Association”), you are no doubt familiar with assessments that go toward landscaping, parks, and pools, and declarations and bylaws that govern architectural changes to the exterior of the homes. How strictly these are enforced may go to the nature of the people serving on the board of the Association, or it may be due to the rights included in a development’s founding documents: Declaration, Articles of Incorporation, and Bylaws. What can be enforced by law and in what manner starts with an examination of these documents. Continue Reading Collections Overview: A Summary of Collecting Delinquent Community Association Assessments

“When will the community association pools open?” No question has been on the forefront of community association board members and frazzled parents more. On March 12, 2020, Governor Northam issued an executive order, declaring a state of emergency due to the coronavirus. Five days later, the Governor limited capacity to fitness facilities, and on March 23, completely closed all recreational and entertainment businesses, which included public pools. Then, on June 30, Governor Northam issued his executive order regarding Phase 3 of reopening Virginia, which included the following provision:

Outdoor and indoor swimming pools may be open, provided occupancy is limited to no more than 75% of the lowest occupancy load on the certificate of occupancy and all swimmers maintain at least ten feet of physical distance from others who are not family members.

Community association residents rejoiced, but board members began handwringing at the prospect of potential liability. This article is intended to provide clarity to the issue and give community associations the knowledge and tools they need to decide if and how to open community pools safely. Continue Reading Opening HOA Pools in the Pandemic: Community Association Considerations in Opening Pools in Virginia Amongst the COVID-19 Pandemic

The Virginia General Assembly passed hundreds of bills during the 2020 legislative session. For those who lead, live in, or associate with community associations, many of these changes could impact the day to day operations of how individuals and these associations interact. Below is a summary of some of the General Assembly’s more significant recent bills that effect community associations.

House Bill 176 – Contract Disclosure Statement with regards to the Property Owners’ Association Act and Virginia Condominium Act

With House Bill 176, the Virginia General Assembly updated Virginia Code Section 55.1-1808. Section 55.1-1808 is a provision that requires the seller of a lot to disclose that the lot is located within a development that is subject to the Property Owners’ Association Act and provide to the purchaser of the lot an association disclosure packet. Under certain terms, the purchaser has the right to cancel the contract to purchase the lot upon receipt of this disclosure packet. The new law updates the language of the statute to include the term “ratified real estate contract.” Generally, the purchaser previously had the right to cancel the contract within three days of receiving the association disclosure packet. Now, the purchaser also has the right to cancel the contract of purchase for a period of up to seven days if specified in a ratified real estate contract. Continue Reading Summary of New Virginia Legislation Impacting Community Associations in 2020

Given the worldwide coronavirus pandemic, many states have issued stay-at-home orders, and taken action to limit public gatherings. Given this sudden and extraordinary legal change, many community associations are facing difficulty in scheduling their meetings (annual and special meetings of members). Specifically, many community associations are facing the logistical challenge of conducting these meetings, via remote or electronic means, to accomplish community association business, minimize legal and health risks, and comply with the various stay-at-home orders.

2018 Legislative Changes to Remote Meeting Requirements

Before transitioning all meetings to remote or electronic means, community associations need to be careful and discuss the issue with their counsel to develop a workable plan. Back in 2018, we previously posted about a recent legislative amendment enacted by Virginia’s General Assembly permitting remote meetings under certain circumstances. The law has been codified as Virginia Code Section 13.1-844.2.

Under that statute law, nonstock corporations (which many community associations are) may conduct annual and special meetings of members via electronic means, provided that the governing documents (articles of incorporation and bylaws) do not require the meetings to take place at a particular location. Continue Reading COVID-19 and Remote Community Association Meetings: A Closer Look at the Legal Requirements, and an Update on Virginia General Assembly’s Emergency Action

Most people are generally familiar with the concept that hotels, restaurants, and other places of public accommodation are subject to the Americans with Disabilities Act (“ADA”). However, as we have mentioned before on this blog, community associations can fall under the scope of the ADA as well.

The ADA is a sweeping set of federal statutes that applies to places of public accommodation, amongst other entities. The ADA framework seeks to prohibit discrimination against disabled persons. As a general matter, a community association may be a place of public accommodation for purposes of the ADA if it is open to the general public, if its common areas are available for rent by members of the public, or if there are portions of the common area open to the public, such as restaurants or a golf course. The legal inquiry as to whether an association is a “covered entity” is rather fact intensive. Ultimately, the analysis turns on how open the Association is to members of the general public, not just its own owners. The more a community association is open to the public, the higher the chance that the community association will fall under the scope of the ADA. Continue Reading ADA and Community Associations: Best Practices in Handling Requests