The annual Virginia Leadership Retreat will take place this year from July 27 – July 29, 2012 at the Homestead in Hot Springs, Virginia. This annual event has become the premier state-wide gathering for the community association industry in Virginia. Once again, LeClairRyan’s community association team will be well represented there. Like most years, we’ll be blogging live from the event. Also, this year we’ll be tweeting live! If you’re not currently following Will Sleeth (the Editor of the Virginia Community Association Law Blog) on Twitter, you can follow him @Will_Sleeth. For more information about the Leadership Retreat, click here.
The Fee Simple law journal (the journal of the Virginia State Bar’s Real Property Section) recently published an article by LeClairRyan‘s Will Sleeth related to developer transition issues. The article, titled "The Transition from Developer-Control of a Property Owners’ Association and the 2002 Attorney General’s Opinion," examined whether Virginia law imposes a time-limit on when a developer must transition control of the board of directors of a property owners’ association to the owners, if there is not a specific provision requiring such in the association’s governing documents. The article examines the current state of the law, with a special focus on a controversial opinion issued by the Virginia Attorney General in 2002. To read a copy of the article, click here.
While many board members have likely been tempted at some point to utter under their breaths that a fellow director can at times be a "dog," reports of actual dogs being appointed as directors of community associations are few and far between.
So it raised a few eyebrows when the Washington Post reported the other week that a shaggy white dog named "Ms. Beatha Lee" was recently elected the president of the Hillbrook-Tall Oaks Civic Association in Annandale, Virginia. The Post reports that certain members, frustrated at the difficulty of having to continually recruit members to serve on the board, decided to offer the dog as a candidate.
While it does not appear that the Association is a property owners’ association or condominium association, as defined under Virginia law, certain smaller community associations may experience similar frustrations in attempting to recruit and retain board members.
Here’s our free legal advice for the day: don’t even think about trying to nominate a dog (or any pet for that matter) for a board position. There is a large list of reasons why it would be improper, not the least of which is that most association documents require directors to be members of the association, something animals can not be by virtue of the fact that they can’t own property. Furthermore, the law imposes upon directors duties of care and loyalty to the corporation. While dog lovers will universally agree that dogs are some of the most "loyal" creatures there are, the legal concept of "loyalty" is quite different from faithfully retrieving a frisbee or curling up on the couch.
In a post several months ago, we noted the General Assembly’s adoption of amendments to the Property Owners’ Association Act and the Condominium Act that address associations’ ability to regulate the display of the United States flag. As we reported then, the amended Virginia Code sections (Va. Code § 55-513.1 [POAs] and § 55-79.75:2 [Condos]) follow the language of the federal Freedom to Display the American Flag Act of 2005, signed into law on July 24, 2006. It provides that no association (POA or condominium) shall prohibit an owner from displaying the U.S. flag on his own property (lot or unit) as long as the display conforms to federal law, rule or custom. You can find the official rules governing flag display in Title 4, Chapter 1 at the U.S. House of Representatives’ website at http://uscode.house.gov/uscode-cgi/fastweb.exe?search.
Are your association’s governing documents free of typos? Many are not. The danger that typos pose to association documents was brought home with force recently when LAW.com published an article about a $16 million lawsuit related to a typo in the public offering statement for a condominium in New York City.
According to the article, the attorney who drafted the offering statement inserted a provision that said that the buyers of condominiums would receive their deposits back if the first closing in the condominium didn’t occur by September 1, 2008. The attorney intended to draft the statement so that it provided a deadline of September 1, 2009. When the first closing did not occur until February 2009, several buyers filed suit demanding a return of their deposits. Litigation is currently pending before the federal Second Circuit Court of Appeals.
Though a public offering statement is directed towards the initial purchasers of a condominium unit, typos in associations’ articles of incorporation, declaration of restrictive covenants, and bylaws can wreck havoc on a community for years to come. If your association knows that it has a typo or typos in your governing documents, it should consult with its legal counsel to determine whether the typo can be fixed through a corrective amendment.
And if you haven’t read through your association’s governing documents lately to check for typos, we’d strongly recommend that you do so. It’s always smarter to take a proactive approach than to allow a small typo to lead to major legal problems.
The other week the Wall Street Journal published an interesting and somewhat amusing article about the latest trend in upscale neighborhoods: renting a goat as a means to trim a yard and eliminate weeds.
Apparently renting a goat constitutes an environmentally-friendly "carbon-emission-free" way to trim grass. The Journal reports that: "Prices can range from $200 a day for a dozen goats to upward of $1,000 for larger herds of 100 or more."
If this trend catches on, it will pose some unique issues for associations throughout Virginia. Many associations will likely look skeptically upon goat trailers carting goats smack into the middle of their neighborhood as they’re let loose to chew-up the grass throughout a lot. Many associations’ covenants contain restrictions on maintaining or raising cattle, livestock, and non-domesticated animals on lots, but those covenants may not explicitly prohibit those animals from coming on to a lot for short periods of time. Therefore, if an association encounters this situation, it may want to consider amending its covenants to prohibit non-domesticated animals from coming on to lots.
So if you serve on the board of an association and wake up tomorrow morning to the sight of a flock of goats roaming around a yard, it might be smart to try to have the association address the situation through the covenants rather than having neighbors become angry with each other and try to "chew each other out".
The General Assembly recently adopted amendments to the Property Owners’ Association Act and the Condominium Act that address associations’ ability to regulate the display of the United States flag. The amended Virginia Code sections follow the language of the U.S. Code (The Freedom to Display the American Flag Act of 2005), which is the federal law regarding the U.S. flag in Title 4, Chapter 1. POA and condominium boards and managers, and declarants and their attorneys who are preparing covenants and rules for POAs and condominiums, need to be aware of the new law. The amendments to Va. Code Sec. 55-79.75:2 of the Condominium Act and Va. Code Sec. 55-513.1 of the POA Act are essentially the same, so I will discuss them together.
The new law provides that no association (POA or Condominium) shall prohibit an owner from displaying the U.S. flag on his own property (lot or unit) as long as the display conforms to federal law, rule or custom. You can find the official rules governing flag display in Title 4, Chapter 1 at the U.S. House of Representatives’ website ( http://uscode.house.gov/search/criteria.shtml). (There are also several helpful non-governmental sites run by non-profit organizations that you can find by performing an internet search of "flag protocol.") However, an association may continue to "establish reasonable restrictions as to the size, place, duration, and manner of placement or display of the flag on such property provided such restrictions are necessary to protect a substantial interest of the (unit owners’) association."
In addition, be aware that, in any legal action brought by an association for violation of a community flag restriction, the association bears the burden of proving in court that its restrictions as to size, place, duration, and manner of placement are necessary to protect a substantial interest of the association. Therefore, these criteria should be carefully considered when drafted, and existing regulations should be evaluated to ensure they protect your association’s substantial interests. If not, you may want to consider amending or revoking them.
Associations may continue to restrict the display of flags in the common elements/areas of the community, but any limited common element (i.e. any area over which an owner has "exclusive possession or use"), such as, for example, typically a unit’s balcony or porch, should be treated the same as the lot or unit with respect to flag display.
Remember that POAs must disclose any community restrictions regarding flag display in the disclosure packet. If an association fails to do so and then brings an action against a homeowner for flag display in violation of the association’s rules and/or covenants, the homeowner can assert as a defense that the required disclosure was not contained within the disclosure packet.
Did you happen to miss last month’s Fair Housing Act webinar put on by LeClairRyan’s Liz White and Brian Muse? No problem — the webinar is available for viewing at your convenience. Just click here to be linked to the blog’s "Webinars" section to find links to this webinar as well as all of the team’s other webinars.
If you serve on the board of directors of a property owners’ association or a condominium association, or are a property manager, you need to ensure that you are looking at the correct law – the Property Owners’ Association Act, or the Condominium Act, respectively. Although both acts contain many similar provisions that bear on issues common to both types of associations, on some key issues the provisions of the acts differ, and pose a potential stumbling block to the unwary.
The potential for confusion is especially pronounced among directors in a certain type of association who frequently discuss community association issues with friends who serve as directors of a different type of association (e.g., a director of a property owners’ association discussing issues with a director of a condominium association), as well as property managers who may manage several associations, a few of which may be property owners’ associations, and a few of which may be condominium associations.
For example, § 55.510(F) of the Property Owners’ Association Act provides that a property owners’ association’s “bylaws shall specify an officer or his agent who shall, at least 14 days in advance of any annual or regularly scheduled meeting [of the members]… send to each member notice of the time, place, and purposes of such meeting.”
§ 55.79-75(A) of the Condominium Act, on the other hand, provides that a condominium association’s “bylaws shall specify an officer or his agent who shall, at least 21 days in advance of any annual or regularly scheduled meeting [of the members]… send to each unit owner notice of the time, place, and purposes of such meeting.”
The two acts differ in their provisions relating to a variety of other issues as well, such as proxies (§ 55-79.77 of the Condominium Act contains detailed provisions concerning proxies that are not found in the Property Owners’ Association Act).
The lesson is that board members and property managers need to pay close attention to the provisions of the specific applicable act, and can not just assume that the provisions of one act apply to the other form of association. When in doubt, always make the safe choice of spending a few minutes to review the provisions of the applicable act. And if you’re ever confused by or unsure of the applicability of a certain provision, don’t hesitate to contact your legal counsel for clarification.
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.