Month: June 2019

2019 Legislative Changes Affecting Community Associations

By:  Deborah M. Casey, CCAL® and Gaela Normile[1]

Happy Summer!  It is hard to believe that 2019 is half over.  July 1 means new laws become effective in Virginia.

During the 2019 session of the Virginia General Assembly, CAI’s Virginia Legislative Action Committee (VALAC) monitored over 75 bills that directly or indirectly impacted community associations.  Of those 75 bills, VALAC pursued 20, and, fortunately, there are only a few that passed.  The bills with the most direct impact on community associations are listed below.

  1. Home-Based Businesses (HB1853/SB1537).

This bill adds a provision to Va. Code Section 55-513.2 that considers home-based child care services to be a residential use in localities that classify home-based child care services as an accessory or ancillary use under the locality’s zoning ordinance. However, property owners’ associations (POAs) may expressly either (i) prohibit or restrict such use in the declaration or (ii) restrict in the bylaws or rules the time, place and manner of operation of such use, and the size, place, duration, and manner of placement or display of any signs on the lot related to such use.  This provision does not apply to condominiums or cooperatives.

Amends: Va. Code § 55-513.2.

  1. Reserves for Capital Components (HB2030/SB1538)

Perhaps one of the most significant legislative changes of 2019 pertains to reserves for capital components. Unless the recorded documents provide otherwise, the Board is required to make available to owners either the association’s annual budget or a summary of the annual budget prior to the beginning of each fiscal year.

In addition, if the reserve study requires budgeting for reserves, the annual budget made available to the owners must also include a statement that indicates the amount of reserves recommended in the reserve study as well as the amount of current cash available for replacement of the reserves.

The purpose of the legislative change is two-fold: (1) to insure all owners are provided full financial disclosure and (2) to prevent underfunding of replacement reserve accounts. This bill also requires the CICB to prepare guidelines for the development of reserve studies.

Amends Va. Code: §§ 55-79.83:1, 55-471.1, 55-514.1.

  1. Delivery of Condominium Resale Certificates & POA Disclosure Packets (HB2385/SB1580)

Beginning July 1, 2019, a real estate contract may be canceled if the purchaser receives a resale certificate or disclosure packet that does not contain information required by the Condominium Act or the Property Owners’ Association Act. Importantly, the legislative change does not extend the amount of time the purchaser has to cancel the contract.

Amends Va. Code: §§ 55-79.97, 55-509.4.

  1. Transition from Declarant to Owner Control, Stormwater Facilities (SB1756)

Upon transition from declarant control, the declarant/developer is required to deliver to the president of the association or his designated agent an inventory and description of stormwater facilities located on the common elements/areas for which the association has, or may have, maintenance, repair, or replacement responsibility. In addition, the declarant/developer must also provide the requirements for the maintenance of such facilities.

Amends Va. Code:  §§ 55-79.74, 55-509.2

  1. Notice of Property Owners Association Meetings by Email (HB2694)

Members of POAs may elect to receive association meeting notices by electronic mail provided that the member has elected to receive such notice in such manner.  If the electronic mail notice is returned to the sender as undeliverable, then the notice must subsequently be sent to the member by United States mail.

Amends Va. Code: § 55-510.

  1. Meetings of Condominium Associations, Proxies Voting (HB2647)

Any proxy is void if not signed by or on behalf of the unit owner.  In addition, if the unit owner is more than one person, the proxy may be revoked if any such unit owner objects to the proxy at or prior to the meeting.

Although the amended provision creates a lower standard for who can sign a proxy on behalf of an owner, the association bylaws can establish higher standards for persons who can sign on behalf of an owner.  This new provision affects condominiums only.

Amends Va. Code: § 55-79.77.

  1. Association Annual Report Fees and Common Interest Community Manager License Fees (HB 2081)

Fees for association annual reports and CIC manager license applications and renewals will no longer be set by a fixed fee, but rather, fees will be set by the CIC Board based on a percentage of the total amount of funds received by the CIC Board on a biannual basis.   The CICB in turn voted to eliminate annual assessment payments as a requirement for manager licensure and association registration.

Amends Va. Code: §§ 54.1-2349, 55-79.93:1, 55-504.1, 55-509.6, 55-509.7, 55-516.1, 55-529.

On the Horizon:  (SB1080)  Title 55 will be rewritten, effective October 1, 2019, in a new Title 55.1.  The acts regarding common interest communities (condominium, property owners, cooperatives, time-shares) will be reorganized in Title 55.1 to be more logical, remove obsolete and duplicate provisions and improve the structure and clarity of the statutes.  While there will be some wording changes, there is not supposed to be any substantive changes to the provisions.  The Common Interest Community Management Information Fund (Va. Code Section 55-528, et seq.) is expected to be moved to Title 54.1.

[1] Gaela Normile is a third-year law student at Penn State University.

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We’ve Been Sued! We Need to Sue! What to Expect When Your Association Goes to General District Court

Community associations are not immune from being sued or having to file suit.  Community associations frequently are in court for issues such as the collection of unpaid assessments from residents, disputes with contractors, and covenant and rule enforcement.

Many of these disputes are handled in the general district court of the relevant locality.  In Virginia, general district courts exclusively handle civil cases involving amounts in dispute $4,500 or less.  Cases with amounts in controversy of greater than $4,500 and not in excess of $25,000 may be brought in either the general district court or the circuit court in the relevant locality.  Cases with amounts in dispute in excess of $25,000 must be filed in the circuit court in the relevant locality.  General district courts also have jurisdiction to decide cases pursuant to the Condominium Act and Property Owners’ Association Act to grant injunctive relief to collect violation charges and correct violations.

Civil matters in general district court are typically started by the filing of a “warrant in debt” or a “motion for judgment.”  The warrant in debt or motion for judgment must be then “served” on the other party.  The law requires that the other side be notified in the way provided by the law that they have been sued.

At what is known as the “first return date,” the plaintiff or counsel appear in court.  If the defendant does not contest the lawsuit, then the court may enter default judgment in the plaintiff’s favor.  If the defendant contests the allegations, the court will set a trial date typically several months later and order the Plaintiff to file a Bill of Particulars and the Defendant to file a Grounds of Defense by certain dates.

A “Bill of Particulars” is a document where a Plaintiff explains why it contends it is owed the amount sought.  A “Grounds of Defense” is a document where a Defendant explains why he, she or it does not owe the amount sought.  It is important that parties timely file a Bill of Particulars or Grounds of Defense, as failure to do so could result in an adverse ruling without an opportunity to present your case.

After the filing of these documents, the case will then proceed to trial.  Each side will have an opportunity to present opening argument, to offer witnesses and exhibits in support of their position, to cross-examine witnesses presented by the other side, and to give a closing argument.  Then, the judge will render a decision based on the evidence before him or her.   The rules of evidence apply in general district court.

If a party is unhappy with the judge’s decision and the amount in controversy is greater than $20.00, there is an automatic right of appeal to the circuit court in the relevant locality by filing a notice of appeal and posting an appeal bond within ten days of the general district court’s decision.  The trial in circuit court will be “de novo”, a new trial.

General District Court provides a relatively swift timeline for adjudicating cases.  It is a court “not of record” and there is no discovery (interrogatories, requests for production, requests for admission, depositions), thus streamlining the time and cost of proceeding.


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New Virginia Law Regarding Personnel Records

The Virginia General Assembly passed a new law regarding employers’ personnel records. Effective July 1, 2019, Virginia employers must provide a current or former employee (or his/her attorney), upon request, documents reflecting:

  • Dates of employment with the employer;
  • Wages or salary history during the employment;
  • Job description and job title during the employment; or
  • Any injuries sustained during the course of the employment with the employer

The employer must honor the request even if there is no subpoena. The employer has 30 days from the receipt of a written request to provide the information. If the employer is unable to meet the 30-day deadline, the employer must notify the requester of the reason for the delay and then will have an additional 30 days, but no more, to comply with the records request. The law allows the employer to charge a “reasonable” amount for the costs of making copies and processing the request.

If the employer willfully fails to comply with a request, either by failing to respond or by charging an unreasonable amount for the records, a court may award the employee damages for all expenses the employee or former employee incurs to obtain the records, including attorneys’ fees.

The law provides an exception allowing an employer to withhold records from an employee if his or her treating physician or clinical psychologist has made a part of the records a written opinion that the employee’s review of the records would be likely to endanger anyone’s life or physical safety, or if the records reference someone whom the requested records would be likely to cause substantial harm. In either circumstance, the employer would still have to produce the records to the employee’s attorney, but not directly to the employee.

This new law is a departure from the former Virginia rule that an employer need not disclose personnel files absent a subpoena. Going forward, employers who receive a request from an employee or former employee should produce the records showing the dates of employment, wage/salary history, job description and title, and any work-related injuries. Other aspects of the personnel file (e.g., performance reviews, disciplinary records, etc.) still would not need to be produced absent a subpoena.

If you have questions about this new law, the labor and employment law attorneys at Vandeventer Black LLP can assist you.

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To Indemnify, Hold Harmless and Defend; Frequently Used and Frequently Misunderstood Contract Terms – Let’s Review

Contract terms addressing indemnity and requirements to hold another harmless or responsible for the defense of another are contract terms that appear in virtually all construction contracts.  Despite their almost universal incorporation, they are frequently misunderstood!

Everyday business decisions are made, and contracts incorporating these terms are signed, yet these terms are often misunderstood, not fully appreciated, and found confusing by many.

In general terms, an agreement to indemnify another party means that you agree to compensate that party for its damages as outlined in the contract. Where a contract requires a contractor (indemnitor) to indemnify an owner or general contractor (indemnitee) for damages it incurs due to the contractor’s (indemnitor) wrongful conduct, the indemnitor is responsible for paying the indemnitee’s associated damages, such as from a third-party judgment emanating from the wrongful conduct. Essentially, you are agreeing to pay another for damages that another has incurred resulting from your work.

An agreement to hold a party harmless generally entails a release of the indemnitee from specific liabilities outlined in your contract and likewise an assumption of those responsibilities by the indemnitor. Thus, when you agree to hold another party harmless, it means you agree that that party will not be liable for certain losses or damages defined in the contract.

And where a party (promisor) has agreed to defend another party (promisee), when that other party (promisee) is forced to defend against a third-party lawsuit stemming from the promisor’s work, the promisor is responsible for the promisee’s legal costs.

While we have all heard the saying don’t sign anything you don’t understand, it is easy to overlook this simple lesson in practice. But it is critical that parties have a clear and informed understanding about what they are obligating themselves to in relation to the benefits of entering a contract in the first place. If in doubt, parties should seek counsel to clarify exposures and limitations.

To make an informed business decision, it is also important for parties to consult their insurers to be sure of what they are and are not insured against regarding these terms. Otherwise, the indemnitor and/or promisor may be solely responsible for all associated costs. You need to make sure that your policies of insurance do not preclude entering into indemnity agreements and that your insurance covers the indemnitee if you do agree to such terms.

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