2012 VIRGINIA COMMON INTEREST COMMUNITY LEGISLATION This course is approved by the National Board of Certification for Community Association Managers (NBC-CAM) to fulfill continuing education requirements for the CMCA® certification.

SESSION OVERVIEW LONG SESSION CONVENED – JANUARY 11 ADJOURNED – MARCH 10 RECONVENED (BUDGET) – MARCH 10 RECONVENED (VETO) SESSION – APRIL 18

SESSION OVERVIEW 2876 BILLS INTRODUCED – 1917 HOUSE – 959 SENATE 326 BILLS CONTINUED TO BILLS PASSED 934 BILLS FAILED 7 BILLS VETOED BY GOVERNOR

SESSION OVERVIEW 33 BILLS FOLLOWED – 18 BILLS ON POINT 19 FAILED BILLS 2 BILLS VETOED 3 BILLS CARRIED OVER TO 2013 SESSION 3 BILLS REFERRED TO HOUSING COMMISSION Once Signed by the Governor – BILLS BECOME EFFECTIVE JULY 1, 2012

SESSION OVERVIEW BILLS CARRIED OVER TO 2013 SELF-HELP (HB 979) FREEDOM OF SPEECH – POLITICAL SIGNS (HB 1008) LIEN PRIORITY (PROPERTY OWNERS’ ASSOCIATION ACT - HB1256)

VIRGINIA HOUSING COMMISSION THREE BILLS REFERRED TO VIRGINIA HOUSING COMMISSION FOR STUDY: RULE ENFORCEMENT (HB1213) POSTING OF DOCUMENTS ON ASSOCIATION WEBSITES (HB668) PROPERTY OWNERS’ ASSOCIATION SELF- HELP (HB979) PLUS INFORMATION REQUESTED BY LENDERS (HB377)

SESSION OVERVIEW PASSED LEGISLATION ASSESSMENT COLLECTION COMMON INTEREST COMMUNITY OMBUDSMAN COMMON INTEREST COMMUNITY BOARD DECLARANT RIGHTS & OBLIGATIONS RESALE DISCLOSURE EXEMPTION BOOKS AND RECORDS – ADOPTED 2011

SESSION OVERVIEW FAILED LEGISLATION FORECLOSURE AND LIEN PRIORITY ASSOCIATION WEBSITES BOARD MEMBER DUTY OF CARE RULE ENFORCEMENT MODEL DECLARATIONS SOLAR PANELS BOOKS AND RECORDS INFORMATION REQUESTED BY LENDERS

ASSESSMENT COLLECTION RECOVERY OF ATTORNEYS’ FEES AND COSTS Provides that in actions against certain unit owners for nonpayment of assessments, the prevailing party shall be awarded reasonable attorney fees, costs, and interest, even if the proceeding is settled prior to judgment. Also provides that certain delinquent unit owners shall be personally responsible for reasonable attorney fees and costs (whether any judicial proceedings are filed).

ASSESSMENT COLLECTION RECOVERY OF ATTORNEYS’ FEES AND COSTS Applies only to owners who have failed to pay assessments: On more than one unit or lot; or If an owner has had legal action taken against him for nonpayment of any prior assessment and the Association prevailed in that action. Applies to condominium and property owners’ associations.

ASSESSMENT COLLECTION RECOVERY OF COSTS FROM PREVIOUS GARNISHMENTS Allows costs incurred by a judgment creditor in connection with a prior garnishment to be collected in a subsequent garnishment attempt that is based on the same judgment.

COMMON INTEREST COMMUNITY OMBUDSMAN ROLE & AUTHORITY Clarifies the authority of the Common Interest Community Ombudsman to assist individual members of common interest communities regarding rights and processes available under applicable laws and regulations. Mirrors draft regulations.

COMMON INTEREST COMMUNITY BOARD MODEL DECLARATIONS Requires Common Interest Community Board to: Develop and publish best practices for declarations; and Develop a model declaration consistent with the best practices and the requirements of the Condominium Act, Real Estate Cooperative Act, and Property Owners' Association Act. VETOED BY GOVERNOR

COMMON INTEREST COMMUNITY BOARD MODEL DECLARATIONS - VETO EXPLANATION Pursuant to Article V, Section 6, of the Constitution of Virginia, I veto House Bill 423, which would require the Common Interest Community Board to develop and publish best practices and model declarations. Virginia law already defines and outlines the minimum components required for declarations, those legal documents establishing the contract between members and their condominium, real estate cooperative, or property owners' association. Declarations are specific to each community, and associations should rely on attorneys and other real estate professionals in creating those governing documents, rather than relying on a model declaration from a state government board. While perhaps well intentioned, this bill increases the Common Interest Community Board's workload without any discernible benefit.

DECLARANT RIGHTS & OBLIGATIONS RIGHT TO EXPAND, CONTRACT OR CONVERT CONDOMINIUM Increases from 7 years to 10 years from the date of recordation of the declaration the time limit in which the declarant of a condominium must exercise rights to expand, contract, or convert a condominium.

DECLARANT RIGHTS & OBLIGATIONS LIMITATION ON CERTAIN CONTRACTS Limits any management contract, employment contract, or contract with a declarant-controlled entity to a five-year term. Any management contract, employment contract, or contract with a declarant-controlled entity entered into on or after July 1, 2012, may be terminated without penalty by the association or its board of directors upon not less than 90 days' written notice to the other party given not later than 60 days after the expiration of the period of declarant control contemplated by the governing documents.

DECLARANT RIGHTS & OBLIGATIONS LIMITATION ON CERTAIN CONTRACTS Requires all other contracts, leases or agreements entered into by or on behalf of the association, its board of directors, or the lot owners as a group if such contract, lease, or agreement to bona fide and commercially reasonable to the association at the time entered into under the circumstances. Applies only to community associations subject to Property Owners’ Association Act.*

DECLARANT RIGHTS & OBLIGATIONS LIMITATION OF CERTAIN CONTRACTS Requires certain information to be provided by the Declarant upon transfer of control of Board: Number of lots subject to the declaration; Number of lots that may be subject to the declaration upon completion of development; and Number of members of the board of directors and number of such directors appointed by the declarant together with names and contact information of members of the board of directors.

SOLAR PANELS Removes the express provision that allows covenants restricting the installation of solar power devices to continue to be enforceable if they became effective prior to July 1, Applicability of Code provision remains unresolved. VETOED BY GOVERNOR

SOLAR PANELS VETO EXPLANATION Pursuant to Article V, Section 6, of the Constitution of Virginia, I veto Senate Bill 627, which would invalidate certain community association restrictive covenants on solar power devices. The current statute bars community associations from prohibiting or restricting solar power devices, effective July 1, This bill alters the effective date by including language preventing the bar from being applied to restrictive covenants in effect prior to that date. By removing that language, Senate Bill 627 appears to contradict the general legislative rule that statutory enactments are applied prospectively. In addition to the problem of retroactive application, the legislation potentially violates both the United States Constitution (Article I, Section 10) and the Virginia Constitution (Article I, Section 11) by “impairing the obligation of contracts.” Existing law provides sufficient opportunity for community association owners to allow solar power devices if a majority so desires, by amending any applicable restrictive covenants.

RESALE DISCLOSURE EXEMPTION FORECLOSURE OF DECLARANT-OWNED UNITS Exempts disposition of a unit by a sale at an auction, where the resale certificate was made available as part of an auction package for prospective purchasers prior to the auction sale from provisions of §§ through , subsections A and C of § , and § of the Condominium Act.

ACCESS TO BOOKS AND RECORDS ADOPTION OF COST SCHEDULE Provides that charges for access to association books and records may be imposed only in accordance with a cost schedule adopted by the board. The cost schedule must: –Specify the charges for materials and labor; –Apply equally to all members in good standing; and –Be provided at the time the request is made. Adopted in 2011, not effective until July 1, 2012.

COMMON INTEREST COMMUNITY BOARD REGULATORY ACTION Management Firm Regulations − Regulations Effective April 1, 2010 − Provisional Licensure Extended to July 1, 2012 Manager Certification Regulations − Board Adopted Regulations - Spring 2010 − Approved by the Governor – Effective March 1, 2012 Ombudsman Regulations − Board Adopted Regulations - Late 2009 − Approved by the Governor – Effective July 1, 2012

2012 VIRGINIA LEGISLATIVE CHECKLIST Establish a procedure for identifying owners delinquent in the payment of assessments (1) owning more than one unit; or (2) against whom legal action has previously been taken - in order to request reasonable attorney fees from that owner as part of settlement negotiations. Develop, adopt and publish a cost schedule for providing access to association books and records.

2012 VIRGINIA LEGISLATIVE CHECKLIST For property owners’ associations in transition from developer control: Request any documentation required to be provided by developer, in particular all contracts. Review employment and management contracts entered into by the developer within sixty days after transition to determine whether to exercise the right to terminate those contracts. Review all other contracts entered into by developer with Association legal counsel to determine whether those contracts are commercially reasonable.

2012 VIRGINIA LEGISLATIVE CHECKLIST In addition to statutory changes, Virginia common interest community associations must also be informed about regulatory action taken by the Common Interest Community Board. Final regulations for Common Interest Community Managers were effective March 1, Final regulations for the Common Interest Community Ombudsman have been approved by the Governor and become effective July 1, All associations must to develop a written internal complaint procedure before September 28, 2012.

THANK YOU! M ERCER T RIGIANI 112 S. Alfred Street Alexandria, Virginia