A Virginia Circuit Court case highlights the expense and time commitment required when a homeowner sues a common interest community (referred to as “HOA” in this article). Furthermore, this case illustrates that HOAs can rarely predict or control when they may be dragged into a lawsuit.

In this case, Hornstein v. Federal Hill Homeowners Association, a homeowner had her house for sale with a pending sales contract. Pursuant to Va. Code Ann. § 55-509.5, the HOA provided a disclosure packet that revealed that the homeowner’s fence was not located on her property. In fact, the homeowner’s own survey confirmed that fact. The pending sales contract fell through.

The homeowner sued the HOA in Fairfax Circuit Court for slander of title and tortious interference with contract, including a claim for “bodily injury,” and “mental anguish.” The HOA prevailed in the case, leading to the homeowner’s petition for appeal to the Virginia Supreme Court. [UPDATED: The Virginia Supreme Court refused to hear the case, meaning that the Circuit Court’s decision stands].

Another battle has been waged regarding whether the HOA’s insurance carrier had a duty to defend the HOA in the underlying litigation. When the HOA’s insurance carrier denied coverage and representation, the HOA sued the insurance carrier. The case was removed to the federal court. The 4th Circuit District Court agreed with the insurance carrier. The HOA appealed and the 4th Circuit Court of Appeals reversed the trial court and held that the insurance carrier had a duty to defend. The insurance carrier has appealed for a rehearing. [UPDATED: the insurance carrier lost its appeal and was ordered to pay the HOA $217,308.86 for the attorneys’ fees the HOA incurred].

For a brief review, the HOA provided the disclosure packet in February 2006. After the homeowner’s pending sale fell through, she sued the HOA in August 2007. As we near August 2010, the underlying case may be close to resolution, but litigation with the insurance company may be far from resolving. Based upon the amount of litigation, we can assume that the HOA’s attorneys’ fees have reached six figures. Obviously, payment for these attorneys’ fees is then passed onto the homeowners (unless the case shifts payment of the attorneys’ fees to the losing party, but even then, courts rarely award the full 100% of the incurred fees).

Many lessons can be drawn from this experience. Most importantly, HOAs need to review their insurance policies to make sure they are covered fully for worst case scenarios. Our experience has shown that “anybody can sue anybody for anything at any time.” Although the plaintiff may not win (and did not win in this case), the ensuing litigation will take abundant resources. We can help you review your documents and insurance policies with the necessary professionals to protect your HOA, and homeowner interests.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

Selecting an attorney is one of the more significant decisions made by the board of directors for a community association. Often times, the association makes its decision based upon price alone. Although “price” is a valid factor to consider, there are other important factors the board should review during its selection process. This article addresses three of the major considerations.

First, the board should determine the prospective attorney’s experience level in the representation of community associations. Attorneys for common interest communities are similar to the general counsel in major corporations because of the wide range of issues that arise. Extensive experience in many of the possible legal issues facing community associations should be a prerequisite.

Continue reading “Three Factors An HOA Should Consider When Hiring An Attorney”

When we think of the challenges of overseeing homeowners associations, we might think of overgrown lawns, late assessment payments, and aggressive pets.  But another challenge has been waiting in the wings:  the aging of America’s “baby boomer” generation, many of whom are choosing to live out their golden years in their homes.  This rising trend is presenting new and unique challenges for Community Associations.  It is the wave of the future and the future is now.

Continue reading ““Aging In Place” – How can HOAs address aging communities?”

An article in the Virginia Gazette featured a story regarding the indictment of a local attorney for the unauthorized practice of law; a criminal charge classified as a class 1 misdemeanor. Although those allegations did not involve a homeowner association, it highlights a recurring issue for volunteer boards of directors for many organizations including homeowner associations and not-for-profit organizations on which attorneys serve. This article focuses on those issues facing boards for homeowner associations (“HOAs”) but the issues are similar for other volunteer boards of directors.

Continue reading “Unauthorized Practice of Law: When unlicensed attorneys serve as HOA board members”

The Attorney-Client Privilege protects confidential communications between an attorney and his or her client.  This privilege includes communications made to the attorney and communications from the attorney. The Attorney-Client Privilege is designed to encourage clients to communicate with their attorney freely, without fearing disclosure of those communications made in the course of representation. The Attorney-Client Privilege is important because it permits clients to give their attorney complete and uncensored information, enabling their attorney to provide informed and thorough legal advice.

For community associations, the Attorney-Client Privilege belongs to the association and can only be expressly waived by the a decision of the association board or executive organ. However, the privilege can be impliedly waived based on the client’s conduct.  A determination on whether the privilege has been waived will depend on the specific facts of each case. The association will have to establish that the attorney-client relationship existed, that the communication is privileged, and that the privilege was not waived.

Here are four basic tips for the board of your Common Interest Community to follow so that it protects the association’s Attorney-Client Privilege:

Continue reading “4 Tips to help your HOA protect its Attorney-Client Privilege”

The “Shared Economy”— where economic and social activity occurs directly between individuals with the help of an online format— is reshaping our national economy. Today we can easily monetize everyday assets, including your car and home, in ways that were previously impossible.

This innovation and advancement has not occurred without growing pains, many of which have occurred in the context of real estate. Airbnb, FlipKey, HomeAway, VRBO, and others have made it relatively simple to use your house, apartment or condo as a source of income, by renting all or part of it, to temporary or transient guests.

Continue reading “Airbnb and VRBO and your Home: Regulating The Shared Economy”

The 2014 session on the  Virginia Legislative Action Committee (“LAC”) created new experiences for our committee. Each year on the LAC brings new challenges, and in my second year as Chair of the LAC, we experienced our most active General Assembly session.

The LAC’s mission is to monitor and advocate for legislation affecting HOAs and condominium associations. All of the bills cited below are effective July 1, 2014 unless otherwise noted.

Continue reading “2014 Legislative Update for Virginia HOAs”

Hard to believe that the CAI Law Seminar in Las Vegas was 7 weeks ago.  I have been meaning to report on the seminar but the practice has kept me very busy.

The Law Seminar provides a unique learning opportunity to discuss emerging trends, practices and legislative issues important to the practice of community association law. Attendees include attorneys, management professionals, and other industry leaders.

The Law Seminar was excellent this year! I attended education sessions each day that were well-presented, topical, and detailed.  My colleagues in the HOA and condominium industry have a lot of experience to share.

I attended a session that reviewed a case study on Repair Projects, Special Assessments, Association Divisiveness and Litigation.  This session provided a lot of good information.  Two of the attorneys involved in advising the association, and in defending the subsequent litigation, provided an in-depth analysis of a community that needed to move forward on repair projects but did not have sufficient funds in its reserve account.  (Sound familiar?).  The program identified the issues faced by the community, the challenges of getting consensus from the owners on the needed repairs, and the solution that the board pursued.   There are many communities in Virginia that have aging infrastructures and will soon, if not already, be facing the challenges of making repairs and having the money to do so.  The presented case study provided a road map for a major repair project.

I also had the opportunity to serve on a “Panel of Pundits.” Along with colleagues from Colorado, Massachusetts, Hawaii and New Jersey, we fielded questions from the audience concerning community association issues.

Attorneys that make the effort to attend and participate in events like these help us all to stay current on issues that affect HOAs. That enables us to provide better service and advice to our clients. Because the law changes quickly, make sure your HOA law firm stays current.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

Susan Tarley is attending the 2014 CAI Legal Seminar in Las Vegas this week. This seminar brings together all of the leading community association legal professionals and is chock-full of interesting classes. As stated in the brochure, “The Law Seminar provides a unique learning opportunity to discuss emerging trends and legislative issues important to the practice of community association law.”

On Wednesday night, Susan will attend the dinner for all attorneys who have been 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.

On Thursday afternoon, Susan will be a panelist on a Panel of Pundits. This panel of six distinguished HOA attorneys will field questions via Twitter, text message, computer, and in person. If you have a question, click here for the details and ask it!

On Friday, Dan Abrams from ABC is the keynote speaker. Finally, on Saturday, there are sessions discussing issues HOAs face in collections and insurance.  

Our attorneys participate and take leadership roles in our areas of practice in order to provide our clients with fully informed advice. By participating in events like the annual CAI Legal Seminar, we do our best to serve our clients.

We frequently blog on the importance of cooperation and relationship-building in your homeowner association or condominium association. Here is an easy and practical way to build your association’s camaraderie as James City County is sponsoring a Good Neighbor Environment Matching Grant for the fall of 2013.

The county’s stated purpose of the grant ” is to enhance the sense of community and environmental wellness of our neighborhoods through the development and accomplishment of a neighborhood sustainable landscape beautification project.” Consequently, the two categories for the grant are Physical Improvement/Sustainable Landscaping and Multi-Neighborhood Project Partnerships.

The grant is not limited to “formal” HOAs or Condo Associations, as any neighborhood association or neighborhood committee authorized “to manage and/or maintain the common areas of a community” may apply. However, such a neighbor association or committee has a few more obstacles to overcome to apply.

Applications are due on September 30, 2013, and the grants will be announced on October 15, 2013. We will make this information known to our association clients, but anybody is welcome to pass along this link to the application. Let us know if we can help your association apply for this Good Neighbor grant.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia