What does it mean to be on the Board of Directors of your HOA? Fiduciary Duties (Part 1 of a series)

October 30, 2014 on 1:28 pm | In Business Planning, Common Interest Community, HOA, Merger & Acquisition, Real Estate Strategies, Susan B. Tarley | No Comments

Board members are told that they have fiduciary duties to the community association, but what does that really mean?  Fiduciary duties arise because the members of the association entrust a board member to act in the best interest of the association when handling the association’s business.

There are three components that are important to understand fiduciary duty.  First, the Virginia Code, at § 13.1-870, imposes on directors a requirement that a director exercise her duties in good faith and in the best interest of the association.  This requirement is the so-called “business judgment” rule. Second, Virginia case law imposes duty of care that requires a board member to act as a reasonable person would under similar circumstances.  Third, Virginia case law imposes a duty of loyalty that requires a board member to put the association before any personal interest.  These last two duties are referred to as “common law” duties. Continue reading “What does it mean to be on the Board of Directors of your HOA? Fiduciary Duties (Part 1 of a series)”

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HOAs and a Reserve Study…it’s the law! (Part 1 of a 3 part series on Reserves)

October 30, 2014 on 1:28 pm | In Common Interest Community, HOA, Susan B. Tarley | No Comments

Yes, Virginia, property owners’ associations and condominium associations are required to have a reserve study.  At least once every five years an association must obtain a study to determine the necessity and amount of reserves (i.e. financial savings) required to repair, replace and restore capital components.  Capital components are those items, regardless of whether they are part of the common area or common elements, for which a) the association has an obligation to repair, replace or restore, and for which b) the board or executive organ determines that funding is necessary.

Continue reading “HOAs and a Reserve Study…it’s the law! (Part 1 of a 3 part series on Reserves)”

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Pool Season: Is Your Association Ready to Take the Plunge?

October 30, 2014 on 1:28 pm | In Common Interest Community, HOA, HOA litigation, Unit Owners Association | Comments Off on Pool Season: Is Your Association Ready to Take the Plunge?

Many Community Associations prepare to open their neighborhood pool by adding chemicals and performing maintenance to ensure the health and safety of the Owners. But just as HOAs take care in measuring chlorine and skimming leaves, Boards of Directors are well-advised to take care in preparing the Association’s Pool Rules. This blog post reviews the possible “rules” that HOAs may implement for pool safety.

HOAs, Swimming Pool and the ADA

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Arbitration in debt collection: FTC says it’s a broken system

October 30, 2014 on 1:28 pm | In Common Interest Community, State & Federal Litigation, Susan B. Tarley | No Comments

As a follow-up to our post on the costs and benefits of the arbitration process, the Federal Trade Commission (“FTC”) recently issued a report indicating that the litigation and arbitration practices for resolving consumer debt need major reform.

Debt collection cases are on the rise.  We have seen a tremendous increase in the number of cases we are filing on delinquent homeowner association dues. In James City County/Williamsburg, the local courts have seen a 27% increase in civil filings from 2006 to 2008.  Other courts in Virginia and other states are experiencing similar increases in civil filings.

The FTC has made specific recommendations that the Federal government and the states consider new laws to protect consumers including a recommendation that a temporary ban be placed on the use of binding arbitration until such time that the arbitration forums have initiated changes to address deficiencies in arbitration. The FTC has suggested that state legislatures adopt measures to make it more likely that consumers will defend themselves in litigation, decreasing the prevalence of default judgments; require debt collectors to include more information about the alleged debt in their complaints; take steps to make it less likely that collectors will sue on debt on which the statute of limitations has run; and change laws to prevent the freezing of a specified amount in a bank account including funds exempt from garnishment.

We do not believe that these changes, if they occur, will effect our current practice areas and clients. However, we have also seen instances in which perceived procedural unfairness can lead to overreaching legislation. For example, it is fair to say that when the Fair Debt Collection Practices Act was passed, legislators did not intend for it to reach into the wide-ranging areas it now does, including the collection of homeowner dues. See, e.g., Barry v. Board of Managers of Elmwood Park Condominium II, NT Slip Op 27506, http://caselaw.findlaw.com/ny-civil-court/1211140.html (December 12, 2007, NY Civil Court City of New York, Richmond County) (Judge Philip S. Straniere writing that “Somehow I think that Adams, Jefferson and Madison must be turning over in their graves at the thought that the federal government is regulating such a local activity as the collection of condominium association dues between the homeowner and the association”).

Arbitration tends to release pressure on state courts by handling cases that otherwise would be brought in court. However, if the process continues to be perceived as unfair, restrictions on the use of arbitration could be forthcoming.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

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Benefits of Community Associations Part 1: Are HOAs really as bad as some portray?

October 30, 2014 on 1:28 pm | In Common Interest Community, HOA, HOA litigation, Jason Howell, Real Estate Litigation, Real Estate Strategies, Susan B. Tarley, Unit Owners Association | No Comments

 

Community Associations have been the subject of a lot of bad press lately. An Associated Press article is typical of news reports that lambast associations. The article tells about a 55-and-older condo complex in Florida. According to the article, units in the Inlet House condo complex used to be worth $79,000, but sold for as little as $3,000 after rats started chewing through toilet seats and sewage started leaking from the ceiling. The article goes on to vilify the condo association for levying a $6,000 special assessment on residents and then foreclosing on owners who don’t pay their dues.

In its eagerness to blame the condo association for the woes of these senior citizens, the article and many blogs pointing out the “abuses of HOAs” miss an important point: the association may be the only group really looking out for the interests of the owners. Let’s look at what the article does not allege: it does not allege that the Association was responsible for the rat infestation or the sewage leak and it does not allege that the Association could have prevented the housing meltdown that contributed to the decline in property values.

Continue reading “Benefits of Community Associations Part 1: Are HOAs really as bad as some portray?”

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Benefits of HOAs Part 3: The Importance of Assessments to your Community

October 30, 2014 on 1:28 pm | In Common Interest Community, HOA, HOA litigation, Jason Howell, John Tarley, Real Estate Litigation, Susan B. Tarley, Unit Owners Association | No Comments

To many homeowners, the assessments they pay to their homeowners or condominium association are just one more bill each month. Too often, owners don’t realize the benefits they get in exchange for these assessments. Some owners even go so far as to stop paying their assessments. A careful review of your association’s budget would show that the benefits for owners that come from their assessment payments far surpass the cost of the assessment. But when an owner chooses not to pay, everyone in the community bears the consequences.

Continue reading “Benefits of HOAs Part 3: The Importance of Assessments to your Community”

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How important are state statutes and case decisions in governing your HOA?

October 30, 2014 on 1:28 pm | In Common Interest Community, HOA, HOA litigation, Susan B. Tarley, Unit Owners Association | No Comments

We discussed Governing Documents for homeowners associations and Governing Documents for condominium associations. These governing documents for your community association must be read in conjunction with certain state and federal laws. In this article, we will discuss those relevant laws that must be considered by your HOA.

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Can I cut down my neighbor’s tree when its branches overhang my property?

October 30, 2014 on 1:28 pm | In Common Interest Community, John Tarley, Real Estate Strategies, State & Federal Litigation | 4 Comments

In our ever crowding residential areas, more of us experience the situation in which the limbs of a neighbor’s tree overhang our property line. Most of the time, these limbs do not pose us any concern, but questions do arise as to whether we have the right to prune our neighbor’s trees. In the past,the Virginia rule has been that you could trim the branches of your neighbor’s tree up to your property line. However, the Virginia Supreme Court expanded that long-standing rule when it decided that an owner whose property was damaged by the root system of a neighbor’s tree may be entitled to more relief than simply cutting back the roots and overhanging branches to the property line.

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Immigration and Employers – Remember your I-9 Forms

October 30, 2014 on 1:27 pm | In Business Planning, Common Interest Community, John Tarley, Merger & Acquisition | No Comments

There are many issues for entrepreneurs starting and operating their small businesses. In that light, immigration is not just a national issue involving major companies. Small businesses must be aware of government requirements, too.

Since 1986, the Immigration and Nationality Act has required employers to to verify that its employees are able to accept employment in the United States. Consequently, the I-9 form was developed. Every employee must complete an I-9 form at the time of hire. Employers are required to ensure the form is completed within three days of hire. Furthermore, even if the company engages contractors, the company could be liable if it knows the contractor employs unauthorized workers. Obviously, criminal penalties await those who fraudulently fill out the I-9 form, but civil penalties also can be levied against companies who fail to keep proper records, even if the employee is legally authorized to work in the United States.

As always, ask your attorney to make sure that your company’s legal issues are covered so that you can focus your energy on growing your business.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

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Part 1 on Virginia’s Unauthorized Practice of Law Rules and HOAs – Where do we find guidance?

October 30, 2014 on 1:27 pm | In Business Law, Common Interest Community, HOA, HOA litigation, John Tarley, Susan B. Tarley, Unit Owners Association | No Comments

Mention the unauthorized practice of law when discussing homeowner and condominium associations and typically the room gets very quiet. Associations, board members and managers strive to keep their budgets low, but compliance with new laws and regulations, keeping up with the collection of assessments, and the upswing in litigation involving homeowner and condominium associations makes it very difficult. When matters become a “legal issue,” board members and managers are best advised to seek legal counsel to ensure that the association is being adequately protected and represented, and that the board members and the managers are not engaging in activities that the Commonwealth might find to be the unauthorized practice of law.

We previously blogged on questions of the unauthorized practice of law when an unlicensed attorney serves on the association’s Board of Directors. In our next two blogs, we will review other issues involving questions of the unauthorized practice of law. In this blog, we discuss where we look for guidance, and in a subsequent blog, we will review Virginia decisions and opinions on the unauthorized practice of law.

Continue reading “Part 1 on Virginia’s Unauthorized Practice of Law Rules and HOAs – Where do we find guidance?”

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