2023 Virginia Legislative Changes Affecting Community Associations

The Virginia General Assembly had a busy 2023 session that involved consideration of proposals for new laws that would impact community associations, some of which were passed by both houses and ultimately signed into law by Governor Youngkin. Highlights of the laws, which take effect on July 1, 2023 are discussed below.

Termination of Management Agreement

These new laws provide that if a condominium or property owners’ association has an agreement with a management company that has an automatic renewal provision, then either the manager or the association can terminate the agreement at any time with or without cause upon at least 60 days’ written notice. This legislation will present challenges and opportunities for management companies and associations alike.  If you have questions, please contact association counsel.

• Adds Va. Code §§ 55.1-1837 and 55.1-1940.1.

Common Interest Community Ombudsman – Final Adverse Decisions

This new law clarifies the Common Interest Community Board (CICB) Ombudsman and CICB review process when a final adverse decision from an association is challenged. It provides that the Common Interest Community Ombudsman has the option of (1) referring final adverse decisions to the Common Interest Community Board or (2) making his or her own determination as to whether the decision conflicts with law. If there is a conflict, the Ombudsman is required to notify the governing board of the Association and, if applicable, the association manager of the problem. If there is a subsequent notice of final adverse decision filed for the same violation, then the Ombudsman refers that matter to the CICB. Similarly, it also provides that if an association commits the same violation two or more times in a year, then the Director of DPOR shall refer the repeat violation to the CICB which can impose appropriate remedies pursuant to its authority.

• Amends Va. Code §§ 54.1-2354.3 and 54.1-2354.4.

Liability for the Site of Trails or Waterways

This new law provides that an owner of property provided by easement for recreational use in a qualifying local park shall not be liable for injury to person or property arising from the condition of property, in the absence of gross negligence or willful misconduct. This change protects associations who allow localities to use their property for parks via easement.

• Amends Va. Code §§ 15.2-1806 and 15.2-1809.1

Creation of Resale Disclosure Act

One of the most significant legislative changes relates to the removal of the various resale provisions in the Virginia Property Owners’ Association Act, Condominium Act, and Cooperative Act and consolidation of those provisions into a new single act referred to as the Virginia Resale Disclosure Act, which will be located at Chapter 23.1 in Title 55.1. The new Resale Disclosure Act groups resale provisions together for property owners’ associations, condominium associations, and cooperatives, and collectively refers to them as “resale certificates.”

The Resale Disclosure Act contains a list of thirty different items that need to be included or disclosed in a resale certificate—much of which is the same information and documentation previously required, however, the new act will also require additional information and documentation to be provided. Some of the additional information and documentation to be contained or disclosed in resale certificates includes:

• The name, address, and phone numbers of the preparer of the resale certificate and any managing agent of the association;
• A copy of the association’s governing documents, including the declaration, bylaws, organizing articles, and any other foundational documents of the association and all amendments to such documents, and rules and regulations;
• A copy of the current operating budget of the association (the option for a summary instead is no longer permitted);
• Copies of any approved or draft minutes of the most recent association meeting (inclusion of draft association meeting minutes is new);
• A statement setting forth any restriction, limitation, or prohibition on the size, placement, or duration of display of political, for sale, or any other signs on the property (the disclosure for political signs used to only apply to property owners’ associations but now applies to condominium associations and cooperatives as well);
• A statement identifying any parking or vehicle restriction, limitation, or prohibition in the governing documents or rules and regulations;
• A statement setting forth any restriction, limitation, or prohibition on the operation of a home-based business that otherwise complies with all applicable local ordinances; and
• A statement setting forth any restriction, limitation, or prohibition on an owner’s ability to rent the unit or lot.

In addition to the various new items that must be included in resale certificates, the Resale Disclosure Act also contains the following notable provisions:

• A purchaser will not be liable for any unpaid assessment or fee greater than the amount set forth in the resale certificate, updated resale certificate, or financial update;
• The association as to the purchaser will be bound by the information provided in the resale certificate, including any updates thereto, as to the amounts of current assessments, including any approved special or additional assessment, and any violation of the governing documents or rules and regulations, unless the purchaser had actual knowledge that the contents of the resale certificate were in error; and
• The preparer of the resale certificate or any updates thereto shall be liable to the seller in an amount equal to the actual damages sustained by the seller in an amount not to exceed $1,000.

Further, the Resale Disclosure Act reverts to the way it used to be and provides that the seller pay the fees for the resale certificate at the time a request for the same has been made or any updates thereto. The Common Interest Community Board will continue to establish the maximum fees an association may charge for resale certificates. Nonetheless, the new act requires that all associations publish and make available a schedule of the applicable fees (i) for preparation and delivery of the resale certificate any updates thereto; (ii) for the inspection of a unit or lot; and (iii) related to any post-closing costs.

This legislation also tagged the Common Interest Community Board with creating a standardized resale certificate form, which must be used for all resales as of July 1, 2023.  The form will make it much easier to comply. The form can be accessed on the DPOR website (PDF).

In addition to using the CICB-approved form, associations should also take steps to:

• adopt and publish a fee schedule;
• create form to accept written requests for resale certificates;
• ensure there is a way to accept payments; and
• ensure full and accurate completion of resale certificates.

While it is important every year to review and revise each association’s resale certificate to ensure compliance with new legislation, this year it is especially true. See the Virginia LIS website for the full text of the Resale Disclosure Act and its various sections.

• Adds Chapter 23.1 to Title 55.1 of the Code of Virginia and affects numerous other statutes in Titles 54.1 and 55.1 of the Code of Virginia.

Local Stormwater Management Fund for Projects of Condominium Owners

Provides that a local Stormwater Management Fund may provide grants to joint flooding mitigation projects of condominium owners.

• Amends Va. Code § 15.2-2114.01.

Assistance Animals in Dwellings

This law provides that if a person uses fraudulent supporting documentation of a disability or disability-related need for an assistance animal, then that person could be held liable under the Virginia Consumer Protection Act.

• Amends Va. Code § 36-96.3:1 and 59.1-200.

Release of Specific Property from Judgment Liens by a Settlement Agent

This new law establishes a process whereby a settlement agent may have a judgment lien released when the lien creditor does not respond to a written request to pay off the amount owed.

• Adds Chapter 31 to Title 55.1 of the Code of Virginia.

As shown above, there are several significant changes in the law that will affect associations and other stakeholders when they become effective on July 1. Associations, managers, and business partners should pay close attention to these new laws and reach out to legal counsel for assistance.