Property Development and Owners' Associations

PLDR represents developers, owners, real estate agents, property managers, community associations, such as property owners’ associations and condominium owners’ associations, to provide practical solutions to common problems. Our experience across many practice areas enables us to consult with clients on issues that regularly arise with community associations. Our attorneys handle a wide range of matters that affect property and condominium owners’ associations, the most typical of which are listed below:

A declaration is an instrument recorded among the land records that gives birth to an association. The declaration provides the governing structure for a real estate development, including what property it covers and what part of the land constitutes common areas. The declaration also provides restrictions on the use of the property and terms for assessments to pay for maintaining the common areas.
An association may be incorporated, although not required by law. Articles of incorporation and By-Laws govern how an association operates and conducts its affairs. These documents can set forth the rights of owners and the duties of officers, directors, and employees.
Nearly every public construction project is subject to a legal requirement that the prime contractor provide performance and payment bonds. PLDR’s attorneys are familiar with asserting and defending bond claims under the Federal Miller Act and Virginia’s “Little Miller” Act.
Provided that the declarations authorize the association to enact rules and regulations, reasonable rules and regulations can be placed on the owners, such as when and how common areas (pools, tennis courts, etc.) can be used.
According to the CICB’s website (http://www.dpor.virginia.gov/Boards/CIC-Board/), the Common Interest Community Board regulates common interest community managers, as well as certain employees of licensed management firms. The Board's authority also includes condominium and time-share project registrations, and extends to transactions occurring within Virginia, even if the property involved is located outside the Commonwealth. Property owner, condominium, and cooperative associations are required to file annual reports with the Board.
Generally, a developer controls a subdivision or condominium during development. The declarations typically give the developer certain rights (e.g., set the amount of assessments) and duties (e.g., maintain roads and common areas). A well-crafted declaration will delineate these duties and state when the developer passes control of the subdivision or condominium to the association. It is quite common for a dispute to arise between a developer and the association on this issue.
An association must ensure that it complies with its own governing documents, such as Articles of Incorporation or By-Laws. For instance, an association must adhere to rules governing meetings when passing any resolution. Failure to follow the association’s own rules, such as sending a timely notice of a meeting and by proper means, could jeopardize the validity of the resolution.
Associations are required to keep detailed records of receipts and expenditures affecting the operation and administration of the association. Virginia law allows an owner to have access to an association’s records, with several exceptions. For example, an association must disclose to an owner the expenditures affecting the operation. On the other hand, records relating to pending or probable litigation by or against the association need not be disclosed to an owner.
A disclosure statement or packet is a document prepared by the association to a potential purchaser of a unit, condominium, lot or house, notifying of the existence of the association, the amount and frequency of assessments, among several others. These disclosures must be made to comply with Virginia law. An often overlooked tool for associations is to go beyond the required disclosures and insert limitations in the disclosure statement about the use of the statement and that potential purchasers should conduct their own investigation.
An association can enforce and collect assessments in multiple ways. A memorandum of lien can be recorded and it serves as a lien against the delinquent property owners. In addition, an association can file a judgment against the delinquent owner to recover damages. Once either the judgment or lien is obtained, the association must then seek to enforce the judgment or lien.
The Declarations may contain covenants (or promises) that the owner will perform certain obligations. Typical covenants include the payment of assessments, performance of maintenance on a structure, or compliance with certain architectural requirements of a structure. Covenants may be enforced by another owner or the Association.
Virginia law allows an association to record a memorandum of lien for unpaid assessments in the land records where the property is located. For property owners’ associations, a memorandum of lien must be recorded before the expiration of 12 months from the time the first such assessment became due. For a condominium association, a memorandum of lien must be recorded within 90 days from the time such assessment became due, requiring more frequent and diligent oversight compared to a property owners’ association. A close examination of the Declarations will reveal when the assessments are due.
After the memorandum of lien is recorded and, thus perfected, the association can proceed with a non-judicial foreclosure. This collection device is a powerful tool that enables the association to sell the property at auction to satisfy the debt. The foreclosure proceeding must be initiated within 36 months from the date when the memorandum of lien was recorded. Commencement of foreclosure proceedings often results in voluntary payment by the property owner.
Owners or associations may want to enforce rights available to them under either Virginia law or the declarations. For example, an association may want to force a homeowner to comply with restrictions in the declarations, such as paving a driveway to create uniformity and enhance aesthetics in the subdivision.
An association with employees may face employment disputes, such as discrimination, harassment, retaliation, wrongful discharge, noncompetition, wage and hour, breach of contract, employee benefits, and other matters. As a way to avoid these disputes, an association should invest in the preparation and revision of employee handbooks, employment contracts, severance agreements, noncompete agreements, and other forms of planning.
Director and officer liability can stem from a breach of a fiduciary duty (e.g. placing personal interest above association), breach of the duty of care (failure to use good business judgment), and others.

PLDR has ample experience representing developers, associations, lenders, and homeowners in developments subject to declarations and run by owners’ associations. Regular representation of all players in the field gives our firm a unique advantage, helping us achieve forward thinking and creative ideas. Whether an issue arises in litigation or in the drafting of a contract, this representation allows us to gain a perspective from all parties and understand what motivates another party. A clear understanding of objectives leads to more amicable and cost-effective results.

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