Liability - Insurance & Risk Management Issues

Even the most careful community association is bound to have the occasional dispute with an owner, a municipality, or vendor. Typically, documents are created, records are made, and emails and letters are exchanged. What records, if any, should a community association retain?

In some circumstances, parties are under a legal obligation to preserve relevant documents and evidence for purposes of potential litigation. Importantly, this duty can apply regardless of whether a lawsuit has been filed. The failure to comply with that duty is known as “spoliation”.

When dealing with spoliation, courts are empowered to impose a variety of punitive sanctions. These sanctions are varied and may range from an award of attorney’s fees to an adverse inference instruction, which is an instruction to the jury that they must infer that the litigant’s failure to preserve the evidence means that the evidence was unfavorable to the litigant. Needless to say, such an instruction to a jury could lead to a substantially increased damages award.
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The internet has undoubtedly changed the way people work, shop, travel, and consume.  The internet, specifically Airbnb, is also changing how people view and arrange for housing.  According to AirBnb’s website, over two million people book on AirBnB each and every night.  AirBnB has listings in over 81,000 cities in over 191 countries. Short-term rentals of houses, apartments, and condominium units are becoming ubiquitous and a profitable way to use one’s real estate.

For community associations, short-term rentals are a hot topic in today’s legal and association governance landscape.  Courts and localities are attempting to deal with the unique challenges presented by short-term rentals.  Some jurisdictions are seeking to limit or otherwise tax short-term rentals.  Community associations are also faced with regulating short-term rentals, responding to potential objections by certain owners, as well as planning to minimize the potential risks posed by short-term rentals.
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In a previous post, we discussed Dexter the (almost) flying emotional support peacock.  In this post, we turn our attention to Maybelline the emotional support pig in the great state of Florida.  Maybelline is at the center of a dispute between her owner and her owner’s HOA.  The owner claims that she suffers from certain conditions with which Maybelline helps, as an emotional support animal.  The HOA has notified the owner that Maybelline is “livestock,” the presence of which the HOA’s governing documents prohibit.

So who is right?  Under certain circumstances, Maybelline may be allowed to stay.  This post will focus on the legal background surrounding community associations and emotional support animals.
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Though not legally required, most condominium instruments provide that the association must carry hazard and liability insurance in order to protect the membership from disaster and the financial strain of litigation. The instruments may also specify the amount of the deductibles that the association’s various types of coverage will have; if not, the deductibles may be set by the board of directors.

The most common condominium insurance question I hear is what, exactly, should the association’s master casualty policy cover? There are three approaches to master casualty coverage.  The most comprehensive type covers all condominium improvements – common elements, units, and all fixtures and finishes within the units, even if upgraded by the owners.  The second type of coverage insures all condominium improvements – both common elements and the units, but the units are insured only to a certain level and will not cover upgrades made by the owner.  The third approach to master hazard coverage is to insure only the common elements. 
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Insurance is one of those necessities of life that we avoid thinking about until a problem occurs. At that point, we realize that the details of our policies do matter and that we probably should have spent more time reviewing them before it was too late.

Fortunately, many insurance providers are knowledgeable about the types of coverage that condominium associations may purchase and can advise your association as to the pros and cons of those options.
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Many may recall the recent story about the airline traveler seeking to bring an emotional support peacock (Dexter) on board an airplane.  While the story received much national publicity, the reality appears to be that assistance animals and emotional support animals are becoming more commonplace in everyday life.  Stories such as Dexter’s present some interesting legal questions for non-profits, governments, and businesses alike.

Assistance animals and emotional support animals are sometimes (incorrectly) used interchangeably.  They involve different sources of law and require different analyses.  This next series of posts will seek to provide some clarity on the legal issues relating to both categories.  In part one of this series, we will focus on the legal issues surrounding the Americans with Disabilities Act (“ADA”) and assistance animals for purposes of community associations.  Our next post will address emotional support animals and the federal and state fair housing acts.
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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".

  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.


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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.


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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:


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