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.
Common Elements of a condominium can be amorphous creatures. In this post, we’ll discuss common elements and limited common elements as they pertain to parking rights.
A condominium is a legal property regime authorized by statute – in Virginia, by the Virginia Condominium Act (Va. Code §§ 59-79.39 ff.). A condominium is legally created by the recordation of a declaration with certain exhibits required by statute. The plat (or plats) recorded with the declaration should depict those areas of the condominium land designated as Common Element (defined in the Condominium Act as any portion of the condominium that is not "Units"). Along with his unit, each unit owner in the condominium receives an interest in the Common Elements proportional to his "percentage interest," which should be set out in the declaration.
Certain portions of the Common Elements may be designated on the plat and plans and/or in the declaration as Limited Common Elements, which means they are reserved for the exclusive use of one or more – but not all – of the units. Such Limited Common Elements must be so designated on the condominium plats/plans along with the identifying number(s) of the unit(s) to which they are assigned (if assigned) unless such designation is unnecessary (e.g. shutters, window boxes, etc.)
Property Owners’ Association Context
Non-condominium developments governed by the Virginia Property Owners’ Association Act (the "POA") (Va. Code §§ 55-508 ff.) may have "common area" (which, in many regards, is the functional equivalent of "common element" in the condominium context), which is owned and governed by the development’s property owners’ association pursuant to a declaration and other governing documents.
How Parking Areas Are Designated in the Governing Documents
Parking areas may be Common Area/Element available for use by all owners on a first-come, first-served basis; or, parking spaces may be individually designated as Limited Common Area/Element appurtenant to particular lots/units. One parking lot may contain both categories of parking spaces. To complicate matters further, the declaration may give the Association the power to designate certain Common Area/Element (that are not Limited Common Area/Element) spaces for use by certain units – and to change such designations. (Ideally, in a condominium under development, the public offering statement of a condominium will describe in detail how parking areas will be treated.) For example, the declaration for a condominium might provide that individual parking spaces will be designated and granted as Limited Common Elements by the deeds conveying the units and that the condominium plat will be amended once all parking spaces are assigned to identify which spaces are Limited Common Elements for which units.
Remember that a declaration is a contract among the unit or lot owners and the owners association. It will set out the terms for current and future assignment and use of Common Area/Element, consistent with the Condominium Act or POA. Where the declaration is silent, unclear, or ambiguous, the provisions of the Condominium Act or POA will often govern.
In the case of a condominium, if a Common Element is not initially designated as a Limited Common Element on the plat and plans, it cannot be converted into a Limited Common Element unless the plat and plans contain a "description or delineation of all common elements not within the boundaries of any convertible lands which may subsequently be assigned as limited common elements, together with a statement that (i) they may be so assigned and a description of the method whereby any such assignments shall be made in accordance with the provisions of § 55-79.57, or (ii) once assigned, the conditions under which they may be unassigned and converted to common elements in accordance with § 55-79.57." Va. Code Sec. 55-79.54. In short, you should be able to read the condominium instruments to learn which portions of the Common Element are, or might become, Limited Common Elements.
Sometimes, a condominium declaration will refer to certain areas of the Common Elements as "Reserved Common Elements," defined as areas that the owners association has power to designate for the use of a certain class of owners – for example, a parking lot in which the association may designate parking spaces for certain unit owners’ use. Classifying these spaces as "reserved" instead of Limited Common Elements allows the Association to reassign spaces as needed without amending the declaration or plat and plans. This scheme is useful in a mixed-use condominium in which, for example, residential unit owners have designated limited common element parking spaces but commercial unit owners may not – instead having the right to use spaces in a certain lot on a first come-first served basis.
Virginia Cases Dealing with Parking Spaces
Two Virginia cases spotlight how language drafted to explain these rights can be ambiguous and can trip up owners associations that are attempting to exercise the authority they may or may not have. Both cases involve townhome developments (governed by a property owners’ association) with common area parking lots. In both cases, the Virginia Supreme Court upheld the trial court’s ruling for the homeowners who argued that their rights under the declaration had been violated by the association – that the association breached the contract between the association and the homeowner plaintiffs.
The Sully Station Case
In Sully Station II Community Association, Inc. v. Dye et al., 259 Va. 282 (2000), the owners association for a townhouse community appealed a decision of the Fairfax Count Circuit Court in favor of the plaintiff unit owners. The unit owners, all of whom owned units with attached garages, complained that the association violated the terms of the declaration when it adopted a policy that assigned two common area parking spaces to each townhome without a garage. Previously, all 94 common area spaces were first- come, first-served. After the association’s action, 78 parking spaces were reserved for the "non-garaged" townhomes, leaving only 16 unassigned spaces for use on a first-come, first-served basis by all townhome owners and guests.
The question for the court was whether the association’s action gave a license to the non-garaged townhome owners or constituted a rule or regulation governing use of the common area. (A license is a privilege to use land without any ownership interest or estate in the land.) That distinction between a rule of the association and a license from the association mattered here because the declaration provided that the association had the right to license portions of the common area to members "on a uniform, non-preferential basis," but its right to establish rules and regulations to govern common area was not specifically required to be uniform and non-preferential.
The association argued that its new policy was a rule, not the grant of licenses, citing specific provisions in the governing documents that authorized the association to promulgate rules to regulate parking areas, including assigning parking spaces.
The Court, however, ruled that the right the Association gave to each non-garaged owner must be a license because, the Court explained, without the grant from the Association of the exclusive right to use the parking spaces, the non-garaged owner would not have had the legal right to exclude the garaged owners from the assigned spaces. That is, the right given was an exclusive property right so it must be a license. Since the parking policy involved a license given non-uniformly, on a preferential basis, such grant was outside of the association’s power. With two justices dissenting, the Court upheld the Circuit Court’s ruling for the homeowners.
The Boundary Case
The Virginia Supreme Court revisited the license versus rule dichotomy in White v. Boundary Association, Inc., 271 Va. 50 (2006). The Whites owned a townhome within a 9-unit townhome development. The development’s declaration granted to every owner "a right and easement of enjoyment to the Common Area" subject only to three provisions, including the right of the association to charge fees for recreational facilities, to suspend voting rights for unpaid assessments, and to make dedications to public authorities. The Board of Directors adopted parking regulations that dedicated two parking spaces to each unit. Since the common area contained eighteen parking spaces, all spaces were thereby dedicated. A few months later, the Board adopted another set of regulations that gave unit owners the right to have cars towed from their assigned spaces if parked without their permission.
The Whites sought a declaratory judgment that the regulations were void and unenforceable because they violated the declaration, but the Circuit Court determined that the rules were properly adopted. The Whites appealed, arguing that the adopted rules exceeded the association’s authority under the Property Owners’ Association Act, which permits adoption of rules and regulations except when those rules and regulations conflict with rights reserved to the owners by their declaration. Hearkening back to its decision in Sully Station, the Supreme Court once again concluded that the parking policy at issue conferred a license on unit owners in violation of the declaration’s express reservation to all unit owners of the right to use the common area. An association’s power to promulgate rules and regulations pursuant to authority granted under its bylaws is subject to a declaration’s reservation of rights to the association members; therefore, the parking regulations were invalid since they had the effect of "divest(ing) the unit owners of a property right granted in the Declaration that ‘runs with and binds the land.’"
The Manchester Oaks Case
Last year, the Supreme Court considered again some of these questions in Manchester Oaks Homeowners Assoc., Inc. v. Batt et al., 284 Va. 409 (2012). This time, the Court had to consider not only whether the property owners’ association violated its declaration when it assigned parking spaces on an unequal basis, but also whether the association validly amended its declaration to give itself the power to do so and whether the lower court, which ruled for the homeowners, correctly awarded legal fees and costs to the homeowners. We will discuss only the first question in this post.
This case, too, involved a townhome development subject to the POA in which some of the townhomes had garages and some did not, and in which there was a common area parking lot. The association adopted a policy restricting the use of certain parking spaces but then abandoned the policy once the plaintiffs filed suit in court. Then, the association adopted an amendment to its declaration to create the category of "Reserved Common Area" over which the association’s board of directors had the power to grant non-uniform licenses. The plaintiffs argued that the unequal treatment that would result from the association’s exercising its rights to license spaces to non-garaged lots violated the declaration and that the board members of the association breached their fiduciary duties.
The Circuit Court found a number of problems with the purported amendment to the declaration so found it invalid. Therefore, it held that the reservation of parking spaces for some but not all members was discriminatory since all lot owners have an equal right to use the common areas.
On appeal, the association argued that, unlike the declaration at issue in Sully Station, discussed above, nothing in the language of the declaration for Manchester Oaks required it to assign parking spaces equally among units.
The Supreme Court disagreed with the association’s argument, explaining that the language in the declaration giving the association authority to grant lot owners the right to use one, two, or no spaces did not give it the right to treat different owners differently. In lieu of such express language in the declaration, the association must assign common area parking spaces equally to all unit owners, if at all, because "equality is inherent in the definition of common area." The Court upheld the judgment for the owners.
Lessons we can learn from these cases:
- Just because a policy seems fair to your board or association doesn’t necessarily mean that it is fair or legal. Refer to your governing documents, and, when in doubt, seek legal advice.
- Governing documents should be drafted to define clearly the common areas/elements and limited common areas/elements in your development, as well as what common elements may be converted into limited common elements and whether and how common areas/elements may be designated for the use of certain unit owners.
- Rules and regulations cannot be adopted pursuant to powers granted to the board in the bylaws if the rule or regulation would have the effect of divesting owners of rights in the common area/elements granted or reserved to them in the declaration.
- Unless the documents provide specific authorization, an association has no right to convert common elements to limited common elements or to assign rights to use common areas/elements unequally among lot/unit owners.