Before sending your email to us, please note and understand the following:

This website provides general information about LeClairRyan, its practice areas and professional staff. It is not intended to provide you with legal advice with respect to a matter that you may have.

Until such time as LeClairRyan has resolved all potential conflicts of interest in accepting your representation and has agreed to be engaged as your legal counsel, you are not represented by LeClairRyan or any of its attorneys and have not become a client of the Firm.

Sending this email or otherwise contacting LeClairRyan does not create an attorney-client relationship. By sending information to us, you are not creating an attorney-client relationship, and no disclosure by you before this firm agrees to represent you will prohibit this firm from representing any person or entity adverse to you.

Only if, and after, LeClairRyan has confirmed to you that it is willing and able to represent you should you, send the Firm any information or documents that you consider private or confidential. Such information will not be treated as private, confidential or otherwise protected from disclosure until LeClairRyan has confirmed that it is able and willing to represent you.

If you choose to ignore this warning and submit any information that you believe or otherwise assert to be confidential or privileged, then by clicking on the “Accept” button, you agree that your submission will not preclude LeClairRyan from representing a client in a matter adverse to you where that information could be used against you.
Accept Cancel
OK

Persistence Can Lead to Dollars: Preserving the Community Association's Lien for Delinquent Assessments - Part One

One of the most common questions we receive from Community Association clients is how do we preserve our lien for and recover delinquent assessments? 

The frustrating reality is that some owners in Community Associations fail to pay their assessments in a timely manner.  These delinquencies can create serious financial issues within the community.  There are a few ways for Community Associations to pursue delinquent assessments.  In part one of this series on collection remedies, we will discuss one method of collection, or rather, preservation, of a Community Association’s lien: the memorandum of lien.

What is a memorandum of lien?

A memorandum of lien is a document that is recorded in the land records of the Circuit Court Clerk’s Office in the city or county where the real property is located.  The memorandum of lien essentially states that the Community Association has a lien encumbering the property for delinquent assessments.  The operative statutes require the Community Association to include certain information on the memorandum of lien, including, but not limited to, the name of the development, a description of the lot, the delinquent amounts and their due dates, and the names of the owners.  Moreover, the Community Association must provide written notice (sent via certified mail at least ten days prior to the filing of the memorandum of lien) to the delinquent owner that a memorandum of lien will be filed if the amounts remain delinquent.

While this process seems simple enough, it is important to note that a memorandum of lien is entirely a creation of Virginia statute.  Accordingly, the applicable statutes must be strictly complied with in order to make the memorandum of lien valid.  Failure to strictly comply with the statues may invalidate the memorandum of lien.

How far back can a memorandum of lien go?

A memorandum of lien for a property owners’ association may capture all delinquent assessments that have become due and owing during the last 12 months. 

A memorandum of lien for a condominium unit owner’s association may capture all delinquent assessments that have become due and owing during the last 90 days. 

What does the memorandum of lien accomplish?

The memorandum of lien does not automatically mean the debt is paid.  The memorandum of lien acts a cloud on the title of the real property of the delinquent owner.  Sometimes owners will pay the amounts voluntarily after the memorandum of lien is recorded.  Should the owner try to sell or refinance a mortgage secured by the property, the title company or lender may well require that the lien be satisfied.  This situation usually manifests itself with the lien amount being paid out of a real estate closing.  A Community Association may also initiate a non-judicial foreclosure or sue to enforce a recorded memorandum of lien (and may do so within 36 months of the recording of the memorandum of lien).  We will discuss these more complex avenues in a future post.

It is important to note that it is not guaranteed that the memorandum of lien will be satisfied in the event of a real estate transaction or foreclosure.  Some buyers may purchase the encumbered property subject to (and with the memorandum of lien remaining intact) the Community Association’s lien.  Foreclosures are a bit different.  Foreclosures on deeds of trust will wipe away any junior liens (usually a Community Association’s memoranda of lien).  Any proceeds remaining from the foreclosure (after the costs and debt secured by the deed of trust is satisfied) will be paid according to statute.  Practically speaking, if there is no (or very little) equity in the property, then the sums secured by the memorandum of lien will not usually be paid.

Recording a memorandum of lien for delinquent assessments is a rather inexpensive and efficient step to attempt to preserve a Community Association’s lien for delinquent assessments.  It does not require the filing of a lawsuit or going to court.  However, the process for recording a memorandum of lien can be complicated, time sensitive, and requires the assistance of an experienced Community Associations attorney.  In the interests of preserving its financial solvency, it is important for the Community Association to be persistent and adopt a routine practice, consistent with its governing documents, to record and preserve such memoranda of lien.

Part 2 of this series will discuss the foreclosure process for a memorandum of lien.

Association Charges : Be Aware of Legal Restrictions on Assessments and Charges

As of July 1, 2015, the Virginia Condominium Act provides that no condominium association may impose an assessment or charge against a unit owner unless such charge or assessment (a) is expressly authorized by the Condominium Act (see particularly Va. Code Sec. 55-79.83) and/or by the condominium instruments for the community, (b) represents a fee for service provided, or (c) is a fee for a resale certificate, as provided for in the Condominium Act. Va. Code Section 55-79.42:1.

The Common Interest Community Board has the authority to assess a monetary penalty and/or issue a cease and desist order against an association or common interest community manager who violates this Code section pursuant to its powers under Title 54.1 (“Common Interest Communities”), Sections 54.1-2349, -2351, and -2352. (The Property Owners’ Association Act already included a similar provision regarding assessments and charges in Section 55-509.3, which was amended in 2015 to add the CICB’s enforcement powers.)

Continue Reading...

Disclosure Packets and Resale Certificates: Statutory Updates

Since our last postings on the subject of disclosure packets, the General Assembly has adopted several minor Code changes to clarify existing provisions:

Delivery by Overnight Carrier 
The Code section providing for cancellation of the purchase agreement within a certain time period after receipt of the resale certificate / disclosure packet previously failed to mention when the purchaser could cancel if the resale certificate / disclosure packet were delivered by overnight delivery service. For both property owners’ associations (“POAs”) and condominium associations, whether self-managed or professionally managed, if the resale certificate / disclosure packet is delivered by commercial overnight delivery service, the purchaser may cancel the contract within three days after receiving it.

The seller or the seller’s authorized agent may choose whether a resale certificate / disclosure packet will be delivered in hard copy or electronically. Such request and instructions must be stated in writing.

Continue Reading...

Webinar: Collecting Condo Development and HOA Fees

Will SleethJoin me, Thursday, Jan. 22 (11:00 am - 12:30 pm ET), for this practical collections guide reviewing key issues and processes involved in pursuing outstanding debts in common interest communities. The real estate market troubles have left many condominium and HOAs in turmoil. With fewer members to carry the financial load, every penny counts.  Explore the debtor protections that exist in specific situations, and make certain the collection efforts are lawful and effective.

Topics include: A walk-through of the essential steps of collection procedures; Making certain governing documents support the claim; Finding new ways of legally pursuing the debt owed to the community; and practical tips for staying in compliance with FDCPA.

Who Should Attend: Attorneys, Common-interest community presidents and vice-presidents, Accountants, and Real estate professionals.

Registration fee: $199. CLE credit available. 
Additional details and registration can be found at: www.nbi-sems.com

LeClairRyan Attorneys Attend the Virginia Leadership Retreat (VLR): 2014

This weekend, four members of LeClairRyan's Community Association Industry Team are attending the Virginia Leadership Retreat (VLR) at the Homestead in Hot Springs, VA. The team has attended the annual conference each year since its inception six years ago, often having one or more of its attorneys speaking at the event. Pictured below at the Homestead (from left to right) are Brian Muse, Liz White, Will Sleeth, and Lori Schweller.

Lori Schweller and Will Sleeth to Speak at Upcoming CA Day in Richmond

LeClairRyan attorneys Lori Schweller and Will Sleeth will be speaking once again at this year's Community Association Day trade event sponsored by the Central Virginia Chapter of CAI, which will take place this Tuesday the 18th. The two will be giving a presentation titled "Common Area, Common Problems -- Parking, Drinking, and Other Liability Issues".

For more information about this year's CA Day, including information about how to register, please click here.

 

Drones and HOAs: How Homeowners Associations and Condominium Associations Can Be Prepared to Deal with the New Technology

  Amazon.com’s recent announcement – that in the future it may utilize unmanned drones to deliver packages to individual residences – has created a host of novel legal issues that all homeowners associations should consider and plan for. Although commentators believe that the commercial use of delivery drones may be a few years off, associations should begin planning now for whether they should regulate the use of drones within the association; how they should regulate the use of drones; and how they can minimize potential liability arising from the use of drones.

While the public has so far only been provided with bits and pieces of information about the make-up and capabilities of unmanned delivery drones, some general information is available: a drone will carry a package and will fly from a warehouse to an owner’s house, with the goal of attempting to deliver the package in a very short amount of time right after it has been ordered. The drone is designed to land, helicopter style, on an owner’s lawn and drop off the package. The drone will then use its helicopter-style propellers to vertically ascend from the owner’s lawn and return to the warehouse.

Continue Reading...

Elizabeth White Quoted by Virginia Lawyers Weekly Regarding Virginia House Bill 791

Elizabeth L. White, the leader of LeClairRyan’s national Community Association Industry Team, was recently contacted by Virginia Lawyers Weekly and asked to weigh in on pending legislation in the form of Virginia House Bill 791, which would, if passed by the Virginia General Assembly, amend both the Virginia Condominium Act and the Virginia Property Owners Association Act.

The full text of the bill can be found here and here. Although proponents of the bill indicate they are seeking clarification regarding the authority of associations in Virginia to adopt and enforce rules -- clarity which they feel is needed in light of some recent court cases in Virginia -- the proposed legislation, as written, would require associations to go through a two step process before associations could file any suit in a court of law to enforce their declaration and/or rules and regulations. While undertaking alternative dispute resolution is preferable to litigation in most cases, the subject bill as currently written does not make exception for cases which pose an imminent threat to personal health and safety and/or pose an imminent threat of injury to other property.

Continue Reading...

LeClairRyan's Community Association Team Handles Acquisition of Golf Course for Large-Scale HOA

Editor's Note: LeClairRyan's Community Association Team handles sophisticated legal matters for a wide array of large-scale master-planned communities throughout Virginia and the nation. The following press release highlights the Team's recent work in assisting a large master-planned homeowner's association in Newport News and York County, Virginia purchase the golf course and country club that is located within the community.

KILN CREEK HOMEOWNERS’ ASSOCIATION TO PURCHASE GOLF COURSE, COUNTRY CLUB & 290 ACRES OF PROTECTED GREEN SPACE

 

Newport News, Virginia—December 23, 2013

The Villages of Kiln Creek Owners Association (KCOA) board of directors today completed its purchase of the Kiln Creek Golf Course & Resort from Dick Ashe. The $3.5 million purchase price includes 290 acres of protected green space with an 18-hole golf course, a former nine-hole golf course, a clubhouse, a 15-room hotel, two restaurants, a swimming pool, tennis courts, a fitness center and office space.

 

Continue Reading...

Parking Rights and Common Area / Common Element: Can the Association (or Declarant) Do That?!

You serve on your condominium or property owners’ association’s board of directors and have been receiving complaints about unauthorized cars and space shortages in the community’s parking lot. The Board would like to designate specific parking spaces for use by designated units so that each unit has a certain number of parking spaces available to it at all times. May it do so? The answer depends on (a) how parking spaces are classified in your declaration of covenants, conditions, and restrictions, and (b) the association’s authority to control common area / common element pursuant to the Virginia Condominium Act or Property Owners’ Association Act and the specific terms of the association’s governing documents.

Continue Reading...