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Removing a Mechanic's Lien (In the Condominium Context) May Be Easier than You Think

 

As any condominium association that has had to deal with one knows, the mechanic’s lien is a powerful hammer to force payment to a contractor. Once it is filed in the land records, a lien often makes it impossible for condominium unit owners to sell or refinance, costs the condominium association time and money (in legal fees) to defend, and generally embroils the condominium association in much unwanted litigation.

The good news is that removing a mechanic’s lien can be easier than you might think. Filing a lien, especially on a large condominium association, is not an easy task. The contractor has to conduct a title search and bring down for each condominium unit. And the Virginia mechanic’s lien statute is full of traps for the unwary. Because the Virginia courts view mechanic’s liens as "purely a creature of statute" and "in derogation of the common law," the mechanic’s lien statute is strictly construed. That is, it must be followed meticulously, or the lien will be invalid. Thus, painstaking analysis is required to ensure that the lien complies with Title 43 of the Virginia Code.

As a result, mechanic’s lien claims can be very defensible. Aside from the critical timing issues, which affect all mechanic’s liens (they must be filed within 90 days, and may only include work done within 150 days, of completion of the work), there are certain property identity and allocation issues that are specific to condominiums.

Here are some important points to remember:

     

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Remember Who the Client Is When Meeting with an Attorney

 

When consulting with an attorney on behalf of a legal entity, such as a homeowners association or condominium unit owners association, or a developer that is a limited liability company or corporation, it is easy to lose track of who is being represented by the attorney. The attorney’s engagement letter should clearly state who the client is and, even better, will also state related parties whom the attorney will not be representing. Representation of an entity does not typically include representation of managers, individual officers, members, or shareholders of such entity unless such relationship is expressly or implicitly established.

If you are an officer, member, manager, director, or shareholder of a Declarant or Association, remember that, in your consultations with the attorney for such entity, you are acting as an agent of such entity, which is the client. Remembering that you personally are not the client will help you to avoid divulging confidences that are personal to you and that you may not want the others in the organization to know. In order to represent her Association or Declarant client diligently, the entity’s attorney may not be able to ethically keep your confidences from the client.

Is A Member Legally Allowed To Review Voting Records Relating To Elections For An HOA Board Of Directors?

Recently, we had a reader ask whether a member of a homeowners association is legally permitted to review and inspect voting records relating to elections for the board of directors of the member's HOA.

The short answer is that it depends on the nature of the records requested as well as other factors. Virginia Code Section 55-510 spells out when an owner can review certain records for a property owners' association. If an owner (i) is in good standing with the association, and (ii) makes a records inspection request "for a proper purpose related to his membership in the association," then he is entitled to review association "books and records" that do not fall under any statutory exemptions. Section 55-510's discussion of "books and records" needs to be read in conjunction with other provisions of the Virginia Code (and chiefly, the Virginia Nonstock Corporation Act) that elaborate on what exactly constitutes "books and records" (as not every document in an association's possession constitutes a "book and record" as the term is defined in the Virginia Code). As a result, this analysis can sometimes be rather technical, and associations should consult with their legal counsel to ensure that they don't provide for the inspection of any records that they're not legally required to provide.

Under this analysis, assuming that the owner is in good standing with the association, and makes the request "for a proper purpose related to his membership in the association" (and does not, for example, submit the request for the purpose of attempting to pursue litigation against the association), then it would be appropriate for an association to provide the owner with a copy of the vote tally sheet that the association used to count all of the votes. Arguably, ballots and proxies do not constitute "books and records" as defined under Virginia law, and therefore should not be produced by the association. Moreover, if an association's governing documents require or permit voting by secret ballot, producing ballots with names on them or directed proxies would essentially defeat the goals behind such.

Keep in mind that if the association has adopted a records inspection and copying policy, it could charge the owner a monetary fee for expenses related to searching for the records and copying them.

How Far Does an HOA President's Power Extend? Discussion Forum Follow-Up

An HOAleader.com reader writes, "Our HOA board recently agreed [to] fire the landscape vendor because of poor service. At a regular meeting of the board this was discussed and agreed that [we] needed a new landscape service. The minutes read as follows 'Landscape was given notice and will be done middle of July. Board is getting new quotes and will decide on a new vendor as soon as possible.'

"The contract was signed before submitting information to the board. No bids were presented to the board for a vote. The president feels that as CEO he had full authority to transact this business before reporting to the board. Do you believe that the president's actions were okay? Our policies and procedures call for three vendor bids and vote by board for special projects. I assumed that this held true for pool vendors and landscape vendors. It was done in this manner by previous boards according to minutes. I am also a current board member and would like to just make sure that the board stays on track."

Can a president sign this contract without the board's approval? And did the president have a conflict of interest here?

Click here to read the entire article.

Small HOA, Big Problem: Too Much Inclusion?

The good thing about some small associations is that they allow all owners to get involved in decision making. The bad thing? They allow all owners to get involved in decision making. In this week's tip, we weigh the pros and cons of small–HOA boards over–sharing with owners.

The practice of opening decisions to a discussion among all owners is very common at small condo or homeowner associations. "You see it a lot in associations made of three–family buildings," explains Samuel "Sandy" Moskowitz, a partner at Davis, Malm & D'Agostine PC in Boston who represents 30–40 community associations at any given time. "Often everything works fine when everyone is reasonable and has pretty much the same financial status. But if someone loses a job or sells to someone who's unreasonable, then it gets very frustrating. The guy on the top floor says the roof is leaking and water is coming into his unit; but the guy on first floor says he doesn't have money for a new roof and his unit's dry. You wind up really hamstringing the association."

Click here to read the entire article.

Small-HOA Challenges: The Pros and Cons of Getting Everybody's Input

One common problem at small associations is that it takes seemingly forever to make decisions because many small-association boards solicit input from all owners on major decisions—even if their governing documents don't require them to. Here we discuss the benefits and drawbacks of that practice.

It's Wrong to Give Everyone a Voice?
The practice of opening decisions to a discussion among all owners is very common at small associations. "You see it a lot in associations made of three-family buildings," explains Samuel "Sandy" Moskowitz, a partner at a Boston firm who represents 30-40 community associations at any given time. "Often everything works fine when everyone is reasonable and has pretty much the same financial status. But if someone loses a job or sells to someone who's unreasonable, then it gets very frustrating. The guy on the top floor says the roof is leaking and water is coming into his unit; but the guy on first floor says he doesn't have money for a new roof and his unit's dry. You wind up really hamstringing the association."

Click here to read the entire article.

Can't Fill That Open HOA Board Seat? Try These Suggestions

In this week's tip, we give you two suggestions for coping when you can't get anybody to run for an open board seat.

All of our experts have seen this issue arise to varying degrees. "We've had this problem," says Elizabeth White, a shareholder and head of the community associations practice at the law firm of LeClairRyan in Williamsburg, Va. "Often we have this at transition, where owners aren't happy with the developer and they think that by holding out and not running for the board, they're going to put pressure on the developer. I've also had it because of apathy and you don't have a big enough pool of volunteers."

What's the big problem when it comes to open board seats? That may affect your ability to operate the association. "The board needs a quorum to do business," says Raymond Daniel Burke, who represents an average of 20 community associations. "And if there's a vacancy of an officer who's necessary for things like signatures on checks, it becomes very consequential that you have that vacancy."

Click here to read the entire article.

What Happens When Nobody Runs for the HOA Board?

An HOAleader.com reader wants to know what happens when nobody runs for any open board seats. Here our experts give the lowdown.

Check Your Remedies
All of our experts have seen this issue arise to varying degrees. "We've had this problem," says Elizabeth White, a shareholder and head of the community associations practice at the law firm of LeClairRyan in Williamsburg, Va. "Often we have this at transition, where owners aren't happy with the developer and they think that by holding out and not running for the board, they're going to put pressure on the developer. I've also had it because of apathy and you don't have a big enough pool of volunteers."

Click here to read the entire article.

2012 Virginia Leadership Retreat

LeClairRyan hosts Treena Gibson, General Manager of R & A Management & Referral, LLC, at the Virginia Leadership Retreat

Has Your Homeowner's Association Adopted an Owner Complaint Policy Yet?

If your homeowners association has not yet adopted an owner complaint policy, it should move quickly. Recently, Virginia's Common Interest Community Board promulgated regulations to implement a recent law (Virginia Code Section 55-530(E)) requiring all homeowners associations in Virginia to adopt a policy for receiving and reviewing owner complaints.

Under the regulations, all homeowners associations must adopt a policy by the end of this September. Associations will be required to certify, in their annual report to the Virginia Department of Professional and Occupational Regulation, that a policy has been adopted and is in effect. Moreover, associations are required to include the complaint policy in their disclosure packets. As the regulations contain some fairly detailed requirements as to what terms and conditions must be included in the policy, associations should ask their legal counsel for assistance in drafting a policy.