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Virginia Attorney General opinion on HOAs

In Virginia homeowner associations, the governing documents permit a developer to continue control of the HOA’s Board of Directors for a specific period of time, or until a specific number of lots are sold. The length of that period depends upon the governing documents of each association.

HOA

This issue has generated litigation in Williamsburg, and now, thanks to Peter Vieth from Virginia Lawyer’s Weekly, we have learned of a formal opinion from the Virginia Attorney General. In an opinion dated January 11, 2013, the AG answered two questions posed by Virginia Senator Bryce E. Reeves. This blog post takes a look at that opinion.

Is the Property Owners Association Act Unconstitutional?

First, Senator Reeves asked whether the Virginia Property Owners Association Act (“POAA”) was unconstitutional if it permitted a developer to “maintain control of a homeowners’ association for a specific period of time, or until a specific number of lots or units are sold to private persons.” The AG dispensed with this question very succinctly, because, as we have written previously, although the Virginia Condominium Act contains automatic time limits, “time limits [for developer control] do not currently exist in the Virginia POAA.” Similarly, the AG wrote that the POAA “does not expressly provide or otherwise allow for a developer to maintain control of a homeowners’ association for a specific period of time, or until a specific number of lots or units are sold.” Consequently, the AG had no statutory provision to review for constitutionality.

The AG noted that the relationship between an HOA and the homeowners is contractual. So long as the contract does not violate any applicable provision of law, “a provision establishing a declarant control period is likely valid.”

Finally, the AG wrote that any recourse against an association governed by the POAA is a “private cause of action.” Such lawsuits could arise from a failure to comply with the declaration.

Can an attorney represent the developer and the association?

Second, Senator Reeves asked whether an attorney faces an impermissible conflict of interest when representing both the developer and the association during the period of declarant control. This situation arises quite frequently, because generally, the developer’s attorney drafts the governing documents, and then becomes the attorney for the association. Once the association transfers control of the Board of Directors, the association generally engages a new attorney to provide representation.

However, as the AG wrote, complaints arising against attorney are “properly addressed by [the Virginia State Bar].” Therefore, the AG could not opine on that issue.

Conclusion

In the end, the Attorney General’s opinion did not create any new interpretations or guidance for homeowners associations governed by the POAA. However, the issue of  the timing the transfer of control of an association’s Board of Directors continues to cause some consternation. Because every set of governing documents is different, contact your experienced common interest community attorney for advice and counsel.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

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John Tarley

John is the firm's managing partner and chairs the firm's small business, zoning, and litigation practice areas.

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Filed under: Common Interest Community, HOA, HOA litigation, John Tarley, Real Estate Litigation, Real Estate Strategies, Unit Owners Association by John Tarley

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