In a previous post, we discussed the advantages and disadvantages of a memorandum of lien foreclosure.

In this post, we will focus on the process of enforcing an Association’s judgment lien.

When an Association sues a delinquent owner, the Association seeks a monetary damages award (plus attorney’s fees and costs usually) from a court.  If the Association wins, the court awards the Association a monetary judgment.

What’s a Judgment? 

A judgment is merely a piece of paper that states that the delinquent owner owes the Association the delinquent amounts.  A judgment is not a court order to pay.  With the exception of child support or tax debts, delinquent debtors are generally not court-ordered to pay debts. Continue Reading Stepping Up The Pressure: Using a Judgment Creditor’s Suit to Enforce an Association’s Lien

In our previous post, we considered one method a Community Association may use to preserve and collect its lien for unpaid assessments: the memorandum of lien.

In this post, we will focus on the process of foreclosing on a Community Association’s memorandum of lien.  As we discussed last time, once the memorandum of lien is recorded, it acts as an encumbrance on the property’s title.  Once recorded, the memorandum of lien will be valid for a period of 36 months.

So what may a Community Association do with a memorandum of lien to collect delinquent assessments?  As we discussed in the previous post, simply recording the memorandum of lien does not necessarily mean that the Community Association will be paid.  However, the General Assembly has provided the Community Association with a powerful statutory tool to enforce its memorandum of lien: the nonjudicial foreclosure.

Continue Reading Persistence Can Lead to Dollars Part II: Foreclosing on a Memorandum of Lien

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. Continue Reading Persistence Can Lead to Dollars: Preserving the Community Association’s Lien for Delinquent Assessments – Part One

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

How should a homeowners association or a condominium association deal with an owner who fails to pay his dues or assessments? There are three main remedies that associations have under Virginia law: (1) file a lawsuit against the owner, (2) file a memorandum of lien against the owner’s lot or unit, and (3) suspend an owner’s privilege to use certain portions of the common area or common element (we’ll address this third remedy in a future post).

Filing a Lawsuit

Associations have a right to file a lawsuit against delinquent owners, seeking a judgment for the delinquent amount. Many associations’ governing documents will also provide that the association is entitled to recover its court costs and attorneys’ fees too. In practice, some courts are occasionally reluctant to award associations the full amount of attorneys’ fees incurred in attempting to collect delinquent assessments, so the association may only be able to recover a certain dollar figure, or a certain percentage of the delinquent amount. While each court (and judge within that court) is different, it’s been our experience that in most situations, associations are usually able to recover most of the attorneys fees incurred in attempting to collect delinquent assessments.

Continue Reading Collections Options Regarding Owners Who Fail To Pay Their Assessments

Bills recently passed in the Virginia General Assembly extend the list of items for inclusion in property owners’ association disclosure packets and condominium association resale certificates, and also broaden non-association disclosure requirements.  Effective July 1, 2013, disclosure packets may or must (depending on the item) include the following new items:

 Restrictions on Solar Panels (HB 2305): Disclosure statements for lots within property owners’ associations and resale certificates for condominiums must include a statement setting forth any restriction, limitation, or prohibition on the right of a unit owner or lot owner to install or use solar energy collection devices on the owner’s property or unit. Va. Code §§ 55-79.97(C)(17), 55-509.5(A)(12).

Further, Va. Code  § 55-519(B)(9) provides that the disclosure form required under the Virginia Residential Property Disclosure Act (a Virginia law that spells out, among other things, certain disclosures that most sellers of property must provide, regardless of whether the property is within a community association) must include language to notify purchasers that by delivering the residential property disclosure statement, the owner makes no representations with respect to any right to install or use solar energy collection devices on the property.

Of course, it is always incumbent on the purchaser to read the declaration, bylaws, and rules and regulations for a community association to determine whether the association has established any restrictions concerning the size, place, and manner of placement of solar energy collection devices; or, for an association with a restrictive covenant adopted prior to July 1, 2008, any restriction or prohibition on the installation or use of a solar collection device. 

Continue Reading Disclosure Packets and Resale Certificates Revisited: Recent Statutory Amendments

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:

Continue Reading Removing a Mechanic’s Lien (In the Condominium Context) May Be Easier Than You Think

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.

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.

If your homeowners association has not yet adopted a records copying policy, it should move quickly. On July 1, 2012, a new law in Virginia goes into effect that requires boards of directors of associations to have adopted a cost schedule if the association wants to charge owners for the costs of copies and labor related to producing books and records for inspection, pursuant to records requests by owners. Under the current law, associations are not required to have adopted a formal cost schedule in order to impose such charges.

Section 55-510(D) states that the cost schedule must: (i) specify the charges for materials and labor, (ii) apply equally to all members in good standing, and (iii) be provided to such requesting member at the time the request is made. Because some owners make very broad records inspection records, and because some owners make frequent requests, every association should have a cost schedule in place in order to pass the costs (which can sometimes be substantial) along to the owners. If your association has not yet adopted such a policy, it should contact its attorney shortly so that it can put one it place as soon as possible.