Thank you to all those who participated in our March 31st webinar on POA Disclosure Packets. To follow up, the following are answers to those questions you submitted that were left unanswered at the end of the program. Thank you for your insightful questions!
Q. Is HB 702, the new law regarding time of payment for disclosure packets (effective July 1, 2010), applicable to professionally managed associations as well as self-managed associations?
A. The new law will apply only to self-managed associations. For the time being, professionally-managed associations should continue to ensure that fees for disclosure packets are collected at settlement.
Q. Must a copy of an insurance document or certificate for the Association be included in the disclosure packet, or only a notation of the coverage amount?
A. The disclosure packet must include a "statement setting forth what insurance coverage is provided for all lot owners by the association, including the fidelity bond maintained by the association, and what additional insurance would normally be secured by each individual lot owner." A document from the insurance company is not required.
Q. Where in the POA Act are set forth the penalties for not delivering the disclosure packet?
A. Information regarding the purchaser’s right to cancel the purchase contract is set forth in Va. Code § 55-509.4.B and C. The provisions regarding the association’s waiver of claims for delinquent assessments or violations of the declaration, bylaws, rules and regulations, or architectural guidelines; as well as liability for actual damages sustained by a seller, up to $1,000 in a professionally-managed association, or $500 in a self-managed association, are set forth in Va. Code § 55-509.6.L.
Q. If disclosure packet fees are not paid and the association manager finds out only after closing, the lien will be on the new owner’s lot and not a personal obligation of the sellers, correct?
A. Yes, assuming the lot closes within 90 days of delivery of the disclosure packet, the responsibility for payment is a personal obligation of the purchaser, and a lien will be on the lot itself. The disclosure packet fees should be paid at settlement, if the lot closes. But, the POA Act provides that "(i)f settlement does not occur within 90 days of the delivery of the disclosure packet, or the funds are not collected at settlement and disbursed to the association or the common interest community manager, all fees, including those costs that would have otherwise been the responsibility of the purchaser or the settlement agent, shall be assessed against the lot owner and shall be the personal obligation of the lot owner and shall be an assessment against the lot …" Since "lot owner" is not defined, we must interpret the phrase according to its plain meaning, which would be whoever owns the lot at the relevant time. If closing takes place, the lot owner will be the purchaser, as discussed above. If closing does not occur, then the lot owner would be the seller. If closing does not occur within 90 days of the delivery of the disclosure packet, the lot owner would still be the seller, who, in such case, would be responsible for paying the disclosure packet fees to the association or association manager even if closing has not occurred.
Q. In the webinar, we stated that disclosure packet fees are not payable in advance. Is that assumed since they are paid at closing, or does the Code specifically state that they are not payable in advance?
Q. Is there a CICB cover sheet for a Condo Resale Certificate?
A. No. The Resale Certificate for a Condominium should contain all of the information set out in Va. Code § 55-79.97. The condominium instruments for a condominium may include a resale certificate template as an exhibit to the bylaws or the template may be approved by a duly adopted resolution of the Board of Directors.