A Legislative Fix for Virginia Community Associations After Palisades Park

The Virginia General Assembly recently passed legislation that addresses concerns for the community association industry from the ruling in a recent Court of Appeals decision in Burkholder v. Palisades Park Owners Ass’n, 76 Va. App. 577 (2023). This legislative change ensures community associations can collect fees from residents for the association’s contractual or legal obligations in the exercise of their duties and responsibilities. 

In February 2023, the Court of Appeals of Virginia ruled on whether property owners’ associations could require lot owners to pay a fee for lot inspections and whether this requirement complied with Virginia Code § 55.1-1805. In that case, Palisades Park Owners Association, Inc. had imposed annual assessments, which included a fee for individual lot inspections to ensure compliance with the Association’s regulations. The lot owners argued that the inspection charges violated Virginia Code § 55.1-1805, because the statute only allowed for assessments if expressly authorized in the association’s declaration. The owners argued that the association’s declaration was unclear in this regard. The association responded stating the use of the assessment was to pay for inspections to ensure compliance with its declaration, articles of incorporation, bylaws, and architectural review board guidelines, and the fee was charged against all lot owners. 

In its ruling, the Court of Appeals held that the assessment violated Virginia Code § 55.1-1805. The court found that the declaration does not expressly authorize assessments or charges against the lot owners unless they related to the common area. In addition, the court held that Virginia Code § 55.1-1805’s effect is not limited to charges against individual lots and lot owners. It held that the association’s declaration did not expressly authorize assessments for lot-compliance inspections.

The ruling raised concerns in the community association industry about how associations could carry out their duties without being able to finance them if charges were not expressly allowed under the association’s declaration.

The Virginia General Assembly addressed the issue in the Property Owners Association Act, Virginia Code § 55.1-1805, and in the Condominium Act, Virginia Code § 55.1-1904. As revised, the Virginia Code now allows property owners’ associations and condominium associations to impose assessments, charges, and fees for the association’s contractual or legal obligations in the exercise of the association’s duties and responsibilities.

Virginia Code § 55.1-1805 removed language forbidding associations from “making assessments” or imposing charges against “a lot or lot owner.” It also removed the clause “nothing in this chapter shall be construed to authorize an association or common interest-community manager to charge an inspection fee for an unimproved or improved lot except as provided in § 55.1-2316.” This clause was replaced by “Nothing in this chapter shall be construed to prevent an association from levying or using assessments, charges, or fees to pay the association's contractual or other legal obligations in the exercise of the association's duties and responsibilities.” The language in Virginia Code § 55.1-1904 was also amended, addressing this issue for condominium associations in a similar fashion.

Have questions regarding how the new legislation may affect you? Contact a member of the Woods Rogers Community Associations team.

The author thanks summer associate Sara Burns for her co-authorship, research, and insightful contributions to this article. Sara is pursuing her JD at William & Mary Law School.