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HOAs and the Power to Adopt Rules and Regulations: Is it more limited than we think?

Community Associations that have adopted rules and regulations that permit the association to avail itself of the enforcement capabilities found in Va. Code Ann. § 55-79.80:2 or § 55-513(B) should have counsel review the governing documents or condominium instruments, as applicable, in light of an unpublished Virginia Supreme Court order in Shadowood Condominium Association et al., v. Fairfax County Redevelopment and Housing Authority. In Shadowood, the Court determined that community associations do not have the authority to impose charges or suspend owner’s rights unless the authority is specifically granted in the condominium instruments or governing documents. This blog post analyzes that Court order.

Factual Background

The Fairfax County Redevelopment and Housing Authority (“FCHRA”) owns units in Shadowood Condominium that are leased to low-income families as public housing. The Association assessed charges against FCHRA for failing to submit paperwork required by the Association, and for violations of Association rules and regulations.

In 2010, FCHRA filed suit against the Association claiming that the Association had improperly assessed more than $20,000 in fines against FCHRA, and had attempted to suspend its rights and privileges to use facilities and common elements because FCHRA had failed to pay the assessed charges. FCHRA argued that the master deed and bylaws only permitted the Association to levy assessments for maintenance of the property, and that the Association was prohibited from levying assessments for violations of the policies or rules and regulations of the Association.

The Fairfax County Circuit Court concluded that the Association lacked the authority under its master deed and bylaws to assess FCHRA pursuant to Va. Code Ann. § 55-79.80:2 for violations of certain policies adopted by the Association. The Association filed an appeal with the Virginia Supreme Court.

The Virginia Supreme Court’s review

Focusing on the language contained in the condominium instruments that prohibited the association from imposing assessments for any other reason other than maintenance, replacement and repair of the common elements, the Court ruled against the Association, essentially finding the Association’s actions to be ultra vires. Included in the Court’s order was a footnote giving us a strong indication that the condominium instruments must (i) expressly provide the condominium association with the ability to impose charges and suspend unit owner rights for violations of the condominium instruments, or (ii) expressly empower the condominium association to adopt a rule that permits it to impose charges and suspend unit owner rights for violations of the condominium instruments, for the Association to invoke the enforcement capabilities found in Va. Code Ann. § 55-79.80:2.

What should your Association do?

Association Counsel would be advised to review the governing documents or condominium instruments to determine:

  1. Does the declaration for the community expressly empower the association to impose charges and suspend owner rights for violations of the governing documents or condominium instruments?
  2. Do the rules for the community expressly empower the association to adopt a rule that permits it to impose charges and suspend owner rights for violations?
  3. Is there any prohibition on levying assessments in the governing documents or the condominium instruments?

Conclusion

As an unpublished order, the Virginia Supreme Court’s decision in Shadowood Condominium Association et al., v. Fairfax County Redevelopment and Housing Authority does not have precedential effect but an association should nonetheless follow the Court’s analysis and reasoning.  Unless the condominium instruments or governing documents specifically permit the common interest community to impose the charges and/or suspension of rights for violations of the documents and authorize the charges to be assessed by the association, it is likely that a court may find against the association where the owner contests such actions.

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Susan Tarley

Susan chairs the firm's common interest community (HOAs and Condos) practice area. She was admitted into the College of Community Association Attorneys (“CCAL”). Susan is one of fewer than 150 attorneys nationwide to be admitted to CCAL, for distinguishing herself through contributions to the evolution or practice of community association law.

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Filed under: Common Interest Community, HOA, HOA litigation, Unit Owners Association by Susan Tarley

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