The Virginia General Assembly enacted legislation that resulted in significant changes to both the Virginia Property Owners Association Act and the Virginia Condominium Act. These changes went into effect on July 1, 2008. It is now more important than ever that your professional management company is up to date on these changes and is prepared to act accordingly.
The new legislation created a regulatory body called the Common Interest Community Board (CIC Board) comprised of eleven members appointed by the Governor. These members include three common interest community managers, one attorney, one Accountant (CPA), one representative of the time share industry, two real estate developers, a Virginia citizen who is a member of a common interest community association board and two Virginia citizens who are residents of common interest community associations.
The CIC Board has the authority to assess individuals up to $1000 for any violation of newly added Chapter 23.3, Title 54.1 of the Virginia Code, as well as order a cease and desist order to a Board of Directors of a Community Association if it determines the board is in violation of the new laws. You may click above where it says “Chapter 23.3 Title 54.1 of the Virginia Code” for the full legislation or read just the highlights:
“Association” refers to the Community, its owners, Board of Directors and anyone who lives on the property. “Manager” refers to GHA as your management agent, provided you have a legal signed contract with our company. If you are managed by another management agent that is not GHA, then “Manager” refers to that agent in the following.
Complaints Process:Each community association must establish reasonable procedures for the resolution of complaints from members of the association. Complaints must be in writing, and must be maintained for no less than one year after the association acts upon the complaint. The association will provide complaint forms to persons who wish to register complaints. Forms must include the name, address and telephone number of the association or its community manager, as well as the mailing address, phone and e-mail of the Office of the Common Interest Community Ombudsman. The procedures shall include a written description of the complainant’s right to notice of adverse decisions.
Management Company Licensing, Manager Certifications:Any person providing management services, including but not limited to business, legal, financial transactions, executing resolutions on behalf of the association, enforcing governing documents, collecting or disbursing money, preparing budgets and financial statements, arranging or conducting meetings or negotiating contracts on behalf of an association must hold a valid license on or after January 1, 2009, prior to engaging in such services. Legislation includes a transition period during which Managers may obtain a one-time provisional license valid through June 11, 2011 to allow the Common Interest Community manager time to comply with all the licensing requirements. Common Interest Community Managers must secure a blanket fidelity bond or employee dishonesty insurance policy covering both the manager and its clients, and must have its records independently audited annually.
Insurance:Common Interest Community Associations are required to obtain and maintain either a blanket fidelity bond or employee dishonesty insurance policy insuring the association from losses resulting from theft or dishonesty committed by officers, directors, anyone employed by the unit owner’s association, or employees of the Common Interest Community Manager. Coverage must be the lesser of $1 million or the amount of reserve balances of the Unit Owner’s Association plus 25% of the aggregate annual assessment of the Unit Owner’s Association. Either the Management Agent or the Governing Board of the Common Interest Community Association may obtain this insurance on behalf of the association.
Ombudsman:Legislation establishes the Office of the Common Interst Community Ombudsman, falling under the Virginia Department of Professional Ocupation and Regulation. The Ombudsman must be an attorney in good standing with the Virginia State Bar and will receive complaints, assist associations in properly using prodecures available, offer dispute resolution services to help resolve conflicts among associations and their members, respond in a timely manner, monitor changes in federal and state laws, and act on direction of the CIC Board.
Annual Report Fees Paid by Condominium Associations:The annual report fee is increased by an annual assessment which is the lesser of $1000 or .02 percent of the association’s assessment income. This income will help to partially fund the CIC Board as well as the CIC Management Information Fund. This also created a Recovery Fund to be used at the discretion of the CIC Board to protect the interest of the associations. Each CIC Manager filing for a license as well as each association filing its first annual report shall be assessed $25 which is assigned to the Recovery Fund.
Resale Certificates and Association Disclosure Packets: Associations are now required to include copies of any approved minutes of the board of directors and all meetings for the six months preceeding the request for the resale package. An Association may charge fees as authorized by this legislation for inspection of the property and the preparation of the disclosure package. Fees are as follows:
– Inspection of the Unit or Lot: Not to exceed $100
– Preparation and delivery of resale package in paper, limit 2 copies: Not to exceed $150
– Preparation and delivery of resale package in electronic format: Not to exceed $125
– Expedite Fee: Not to exceed $50
– Additional Hard Copy of Resale Certificate: Not to exceed $25
– Courier Delivery: Not to exceed exact amount paid for delivery
– Post Closing Fee to establish new owner in the records of the association: Not to exceed $50
Resale fees shall be collected at settlement and will be payable out of the proceeds. Neither the Association nor the Manager may require payment at the time of request. If settlement does not occur within 90 days of the delivery of the resale package, or funds are not collected at settlement and disbursed to the Association or Manager, all fees including those that would have been the purchaser’s responsibility shall be assessed to the seller. Settlement agents may request financial updates which may be delivered electronically or in hard copy, and these must be provided within three business days of the request. The provider must also send written escrow instructions on the funds to be paid from settlement proceeds to the association or Management Agent. No fees shall be charged in response for the escrow instructions. Settlement agent must provide complete contact information for the seller when sending funds.