Requests to Inspect and Copy Community Association or Company Records: Should it be this complicated?
A Virginia Beach jury found a condominium association liable for failing to permit unit owners an opportunity to inspect and copy association records. Not only must the condo board allow inspection and copying, they must pay for an audit of the association records and pay $50,000 for the unit owners’ attorneys’ fees.
These questions arise frequently. This blog post reviews the various Virginia statutes that address the right to inspect and copy records for companies, HOAs and condominium associations.
Benefits of HOAs Part 3: The Importance of Assessments to your Community
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.
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Ban on kids playing football = housing discrimination lawsuit against Virginia HOA
Boards of Directors are empowered by statute in Virginia and often times by the governing documents of the community association to enact rules and regulations concerning common areas, common elements, recreational facilities or other areas of association responsibility. Rules related to the use of common areas or common elements and recreational facilities should be based on concerns about safety, sanitation and nuisance. In certain instances a Board of Directors may want to enact a rule to address the activities of children – limiting their pool time, forbidding children under a certain age from using recreational facilities or prohibiting certain activities on common areas or elements. Be careful, the rule you enact may violate the federal and state Fair Housing Act.
According to a Complaint filed against a Chesapeake condominium association, the association had a “Group Sports Activity” rule that banned organized sports activities in the common areas without approval of the board. Concerns were raised whether this rule banned activities such as a parent and child passing a football.The Commonwealth of Virginia’s Fair Housing Board filed a housing discrimination lawsuit against Cedarwood Condominium Association, a Chesapeake condominium association. There have not been many of these lawsuits.
Common Interest Community Board revokes a management company’s license
The Common Interest Community Board (the “CICB”) revoked a management company’s license for regulatory violations. In a case reported in the September issue of the Community Associations Institute Law Reporter (Virginia Common Interest Community Board v. Sarraga t/a Lakeside Community Management, File No. 2010-00562, June 24, 2010), the CICB revoked the license of Sarraga t/aLakeside Community Management and issued fines totaling $2,000.
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Stop in the name of the…homeowner association! – Can private HOA security forces pull you over?
Virginia’s Attorney General, Mark R. Herring, published an advisory opinion concerning private security forces used by community associations (the “Opinion”). These security forces often act as quasi-police departments and help relieve localities by providing routine patrols in private communities. In the Williamsburg area, the local police often defer to HOA security forces for regular patrols, and health and safety checks. When it comes to more serious police action, like issuing traffic tickets and arresting homeowners, the roles and authority of HOA security forces becomes less clear. This blog post discusses the role of private security forces in homeowners’ associations and the Opinion that addresses some of these concerns.
Lawsuits against HOAs are expensive and time-consuming for all
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
Three Factors An HOA Should Consider When Hiring An Attorney
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.
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“Aging In Place” – How can HOAs address aging communities?
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.
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Attorneys’ Fees and Litigation – When fees get awarded to the “Prevailing Party”
In litigation matters involving common interest communities (otherwise known as homeowners associations (“HOAs”) or condominium owners associations (“condo associations”)), the issue of awarding attorneys’ fees for prevailing parties ultimately arises. Generally, the HOA’s Governing Documents or the condo association’s Condominium Instruments contain such a provision. Otherwise, attorneys’ fees may be recoverable by statute for HOAs and condo associations.
These attorney fee-shifting provisions, either by contract or statute, are contrary to the typical “American Rule” cases in which each side pays their own attorneys’ fees. Because litigation has become so expensive to pursue, whether to award attorneys’ fees, and the amount of any award, has become separate litigation on its own at the conclusion of cases.
In the recent case of Dewberry & Davis, Inc. v. C3NS, Inc., the Virginia Supreme Court was faced with the issue of “whether the circuit court erred in applying an attorneys’ fees provision of a contract.” We had previously blogged about this case, because in the underlying contract between the parties, Dewberry & Davis, an engineering company, had limited its liability for damages. The trial court had determined the limitation of liability clause was void, pointing to a recent change to Virginia Code § 54.1-411that permitted an engineering company to include a limitation of liability clause. Because the contract predated the code change, the court determined that those changes “demonstrate that the General Assembly fully intended to alter the statute’s intent.”
The case continued to trial, and eventually, upon appeal, to the Virginia Supreme Court. This blog post explains that Supreme Court decision relating to the award of attorneys’ fees.
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Limited Liability Companies: What happens to an LLC when a Member dies?
This case has been overturned by statute. Check out this blog post for the details.
We have written about the importance of operating agreements to help succession planning for your limited liability company (“LLC”). Operating agreements can help the company with procedures to remove a member, or with procedures to permit a member to leave the LLC on his own accord. This blog post reviews a recent Virginia Supreme Court case that shows the importance, and limitations of your LLC operating agreement to set forth succession planning of a member’s interest when that member dies.
LLC Agreements
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