Rees Broome, PC

Rees Broome is proud to serve as legal counsel to your association and in our role as legal counsel we are always monitoring legislative and regulatory actions that affect our clients. The purpose of this alert is to inform you of recent regulatory activity affecting all of our Virginia community association clients.

As we have informed you in recent months, the Common Interest Community Board in Virginia has been drafting and approving regulations that affect each of our Virginia community association clients. At its most recent meeting, the Common Interest Community Board took several actions that will have a long-standing impact upon all community associations in Virginia. There are four actions from the Board’s June 9, 2011 meeting that are worthy of note for our clients:

1 - Common Interest Community Ombudsman Regulations. As we reported to you in March of this year, the Common Interest Community Board had circulated draft regulations governing the functions of Common Interest Community Ombudsman office for notice and comment. Following receipt of the comments received as part of the regulatory process, the Common Interest Community Board made several revisions to the text of the proposed Ombudsman office regulations. The current text of these regulations, which have been submitted for review by Governor McDonnell, is available using the link:

http://townhall.virginia.gov/L/ViewXML.cfm?textid=5642

The most significant of the revisions to the proposed regulations was the deletion of the requirements that the association’s complaint policy must be distributed to the members through the means of communication used by the members to communicate with the Board and each other (as created to comply with the applicable provisions of Section 55-79.75.1 of the Virginia Condominium Act and Section 55-510.2 Virginia Property Owners’ Association Act).

Following completion of the Governor of Executive Branch’s review, the regulations will be submitted for final public comment for thirty days before becoming effective. As of July 21, 2011, the Governor and Executive Branch review had not been completed. Once this review is complete, we will provide notification to all of Virginia clients using our e-mail alert system.

Since it is not currently anticipated that the Governor will veto or amend the current text of the proposed Ombudsman regulations, we anticipate that if the Executive Branch’s review of the regulations is completed on August 1, 2011, the thirty day comment period would end on August 31st, 2011. The Ombudsman regulations would then be anticipated to take effect on September 1st, which would mean that all community associations in Virginia would be required to adopt a Complaint Policy as required by Section 55-530 of the Virginia Code on or before November 30, 2011.***

***Please note that this timeline is offered merely as a guideline for our Association clients and we will be certain to update you once the Executive Branch review has been completed as this will formalize the anticipated timeline for our association clients to have a complaint policy in place for their association.

2 - Common Interest Community Manager Regulations. The Common Interest Community Board also approved further language for the Common Interest Community Manager Regulations. These particular draft regulations govern the certification and licensing requirements for management companies and their management staff. At its June 9th meeting, the Board voted to authorize staff, in consultation with the Chair of the Common Interest Community Board, to make any minor changes to the Common Interest Community Manager Regulations that might be necessary to gain approval of the final regulations during the course of the Governor and Executive Branch’s review of the proposed regulations.

The text of the current draft of these regulations can be viewed using the link below:

http://www.townhall.virginia.gov/L/ViewXML.cfm?textid=5641

As with the Ombudsman Regulations, as of July 21 2011, the proposed Common Interest Community Manager Regulations have not been approved by the Governor or Executive Branch.

3 - Condominium Regulations. The Condominium Regulations proposed by the Common Interest Community Board became effective April 1, 2011. These regulations govern the drafting and approval of initial Condominium documents by Condominium developers. Also, new regulations relating to the return of bonds and letters of credit posted by developers in connection with the initial registration of new Condominium developments were approved effective April 1, 2011.

4 - Interpretation Regarding Common Interest Community Manager Licensing Requirements. The Common Interest Community Board discussed a memorandum prepared by the Executive Director of the Board on the question of whether a Common Interest Community Manager License is required for a company that is only responsible for the collection of delinquent assessments. At its meeting, the Common Interest Community Board approved a motion noting that the definition of that management services in Section 54.1-2345 of the Common Interest Community Act includes the “collecting, disbursing, or otherwise exercising dominion or control over money or other property belonging to an Association.” Consequently, the Common Interest Community Board concluded that a license is required for any company that performs any function of a management service unless the company is otherwise exempt under Section 54.1-2347 of the Common Interest Community Act. Accordingly, the Common Interest Community Board concluded that a company that is responsible for collection of delinquent assessments must obtain a license for management services in Virginia if it does not satisfy one of the codified exemptions under 54.1-2347 of the Common Interest Community Act.

As noted above, a number of these issues are still ongoing. We will be circulating notices to our clients as these issues progress. However, if you have any questions regarding the issues addressed in this client alert, please do not hesitate to contact any of our community association attorneys at Rees Broome, PC.

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