November 20, 2023
What Happens When a HOA Fails to Timely Approve or Deny an Architectural Application?
Many homeowners experience frustration with their community associations when they sense they are going around in circles. For example, they receive notice that something must be applied for or removed because of the architectural guidelines. The homeowner determines that it is not a violation, and board members agree in a conversation. Later, the homeowner receives another notice from the HOA, again asking for the same “violation” to be corrected. Architectural disputes with HOAs go beyond mere “aesthetic” issues such as statuary, plant pots or flag displays. Most architectural applications involve major financial commitments. The architectural control committee has substantial power over the property and lives of the residents. Understanding the limits of those powers can help owners exercise greater control over their own lives.
Recorded covenants and architectural guidelines contain detailed standards and procedures that can be difficult to interpret. Often, the declaration of covenants limits the time the committee or board may take to consider an architectural application, usually 30 or 45 days. Deadlines, if properly contrived, can allow for property-related disputes to be timely resolved. What happens when a HOA fails to timely approve or deny an architectural application? Such rules say that if the HOA does not deny the application within the time allotted, it is deemed approved. Such deadlines prevent associations from desk-drawering (“sitting on”) an application to prevent it from being approved.
Not all HOAs or condominiums have such provisions in their documents. No Virginia statute imposes a 30- or 45-day limit where it is not expressed in the instruments. Without such provisions, the parties look to the doctrines of waiver or estoppel to determine if the association abandoned their right to deny. When things drag out, the homeowner and the committee often disagree as to whether the passage of time barred a denial of a particular application. For example, what if the association responds to an application with a request for additional information, or announces that a hearing will convene only a few days outside of the allotted 45? Is the 30 day or 45-day time limit more flexible than its language would suggest?
The Court of Special Appeals of Maryland (now called the Court of Appeals of Maryland) considered such a case, Raj Yadav vs. Pindell Woods Homeowners Association, Inc., in a December 26, 2017 opinion. Howard County residents, Rita and Raj Yadav planted a row of trees along their property line to enhance privacy screening between their “street front” lot and a “flag lot” behind theirs, owned by the Olaniran family. “Pipestem” driveways connecting flag lots to the right-of-way allow developers to add more lots into a subdivision. Lots using or burdened by driveway easements tend to have more legal disputes than ordinary lots. https://cowherdplc.com/problems-with-pipestems/ The Yadavs wanted to screen a line of sight between their house and the Olaniran’s driveway. The Olanirans complained about the trees. On April 28, 2014, the Yadavs applied for approval of the trees. The HOA asked the Yadavs to resubmit their application, which they did in May 2014. The HOA denied their applications. The Yadavs removed two trees and submitted a third application for the thirteen remaining trees. After the Yadavs refused to remove all but seven trees, the HOA denied the application. The HOA said that when the trees matured, they would block motorists’ sight lines. In court, the Yadavs argued that the covenants did not allow the HOA to prohibit them from planting trees wheresoever on their property. They argued that even if the HOA may regulate trees, it erroneously determined that the trees constituted a hazard. A sentence in the covenants read, “No trees or shrubs shall be located on any lot which block the view of operators of motor vehicles so as to create a traffic hazard.” Not all recorded covenants give the HOA design-control power over plants on owners’ lots. Maryland courts defer to internal decisions of organizations by applying the business judgment rule (BJR). In Maryland, exceptions to the BJR concern (1) whether the board’s decision was one they were authorized to make, i.e., “ultra vires” action, or were the result of (2) fraud or (3) bad faith. In evaluating a HOA dispute, one must first determine if the board has the authority to make a particular decision at all. Ultra vires is an important doctrine for homeowners. The Court of Appeals ruled that the BJR applied to Pindell Woods HOA’s tree decisions. In Virginia, there is another approach, that of reasonableness, which sometimes presents an intermediate standard between the strict ultra vires and deferential BJR. In my opinion, the BJR is not appropriate for design control powers of parcels of land not owned by the Association, unless it is a condominium, or the recorded instruments expressly adopt the BJR. Control over another person’s land is not properly within the “internal” functions of a corporation; it looks outward to the affairs of its members. In the Yadav case, the HOA did not determine that the trees currently presented a traffic hazard. They concluded that if the trees grew, eventually they would obstruct a line of sight. The court opinion does not discuss if this could be resolved by a condition to keep the trees trimmed. Pindell Woods’ covenants said that any application not decided by the Architectural Committee within 30 days is deemed approved:
Unless the architectural committee, by written notice to the applicant, disapproves any plans submitted or approves them only upon the satisfaction of any specified condition, as aforesaid, within thirty (30) days after such … plans are submitted the architectural committee shall conclusively be deemed for all purposes of this Declaration to have approved such plans unconditionally for each lot for which they were so submitted.
The Yadavs called for this provision to be applied by its plain meaning. The HOA wanted it to be viewed flexibly, to accommodate negotiations between the homeowner and the committee. The declaration was silent as to whether the 30-day “clock” could be paused or restarted. The Court of Appeals concluded that because the committee has the power to condition its approval, that shows a general purpose to, “create a cooperative, interactive process by which the Architectural Committee and the application negotiate a mutually acceptable resolution.” The Court of Appeals ruled that the HOA had the power to pause and restart the 30-day clock when it is trying to resolve matters cooperatively. To require the HOA to deny all applications that it is not yet prepared to accept to prevent itself from forfeiting its design-control powers would have the adverse effect of homeowners receiving mysterious denials where re-application on different terms is suggested or implicit. If the homeowner submits a clarification within 30 days, does that re-start the clock or have no significance for the question of waiver?
The Yadavs’ and Pendell Woods HOA’s negotiations continued from April to December 2014 regarding trees that had already been planted. The Yadavs did not rely upon silence to add trees. The Court of Appeals ruled that the HOA’s request for supplemental information “operated to pause the 30-day clock.” The HOA’s later denial of the application was not erroneous.
The court’s Yadav ruling reflects a desire for the HOA and homeowner to work out the details of architectural applications in earnest. Yet, the approach adopted gives the HOA leverage in such negotiations. A homeowner may find herself trapped in a salad of notices and applications. The Yadav decision assumes that HOAs will “pause” the 30- or 45-day clocks with requests or demands for additional information in a thoughtful way that does not render the deadline meaningless. The court also affirmed the award of attorney’s fees in favor of the HOA and against the Yadavs.
Contrast the Yadav outcome with the Circuit Court of Fairfax County’s approach in a 2007 unpublished decision by Judge Jonathan Thatcher. South Run Regency HOA sued Catherine K. Crosby, seeking removal of a fence she erected on her property. The declaration stated that, “all applications not acted upon within forty-five (45) days shall be deemed approved.” The architectural standards and guidelines provided that, “any time the ARB requires additional information for proper evaluation of an application, the application shall be disapproved and returned requesting more specific information.” After erecting the fence, Ms. Crosby applied on August 25, 2005 for the ARB to retroactively approve it. On September 12, 2005, the ARB sent Ms. Crosby a letter stating that the ARB needed additional information to consider the application. This letter did not deny the application, nor did it return it to her. Ms. Crosby did not respond to this letter. On October 11, 2005, the ARB voted to disapprove the application. This fell outside the 45-day time limit. Judge Thatcher found that the instruments unambiguously required the ARB to deny or return the application if additional information was required. The court entered an order in Ms. Crosby’s favor, deeming the application approved by the passage of the 45 days.
These two courts took different approaches on similar (but not identical) situations. Virginia and Maryland courts tend to apply different standards and points of emphasis in HOA architectural control matters. When a homeowner applies to her HOA for architectural approval, she ought to give careful attention to the wording of the declaration of covenants, bylaws, and the architectural guidelines.
In Virginia, there are provisions in the Property Owners Association Act and the Condominium Act that require boards and committees to conduct business in properly noticed, open meetings. Boards and committees cannot conduct business in unnoticed meetings or “work sessions.” For the board or committee to make a binding business decision on an owner’s architectural application, the vote must comport with the open meeting statutes. This means that some HOA denials of architectural decisions may be void on account of the informality by which they were made.
If a homeowner believes that the HOA is barred from denying an application because of the passage of time, it is best to consult with qualified legal counsel before embarking on a project pursuant to that applied for design, particularly where the cost to later change things could involve financial waste. Many architectural control matters involve a major addition to the house, construction of retaining walls, a swimming pool, or other expensive commitments. There are things that homeowners can do to prevent their association from leading them around in circles or allowing them to remain trapped in “limbo” where a NOV ought to be removed or an application ought to be treated as approved. The homeowner’s right to have the 30- or 45-day “clock” can easily be waived in the course of negotiations. It’s not always best to proceed with a project in the face of uncertainly, particularly if the application is incomplete or inadequately describes what is desired.
For Further Reading:
South Run Regency v. Crosby, No. CL-2006-1582, 2007 Va. Cir. Lexis 156 (Fairfax Co. 2007).
November 6, 2023
Work Group Report to Virginia Legislature Regarding Funding Reserves to Maintain Structural Components in Condominiums
Tomorrow, November 7, 2023, Virginians go to the polls to vote for all seats in the House and Senate. The 2024 session is expected to include legislative deliberation regarding the safety and affordability of aging housing stock, including condominiums. Developers and policymakers view condominiums as growing the tax base of the community while allowing for affordable housing. However, realities of condominiums present threats to unit owners, such as surprise assessments of $10,000-$45,0000, stalking neighbors, constricting rental policies, damage from leaking pipes, or even loss of one’s investment in deconversion. For owners of older condominium units with inadequate reserves and dysfunctional polity, sometimes it is best to sell the unit before the burdens become too great. However, for many unit owners, there are few housing options in their metropolitan region that they can afford. Many homeowners simply must find a way to make their current housing investment work for them.
On November 23, 2022, I posted an article to this blog, “Virginia Structural Integrity and Reserves Work Group,” concerning efforts to reform community association laws in Virginia. The 2022 General Assembly directed the Department of Professional and Occupational Regulation (DPOR) to appoint a panel of industry experts to develop recommendations for how state laws may be strengthened so that community associations can adequately fund projects necessary to renovate structural components and critical building systems. I was not a member of this work group, but I did attend one of their meetings as a public citizen. The legislature and the work group both understand that many, if not most, community associations do not have sufficient reserves to fund renovations essential to intended use, health, and safety. In April 2023, this work group published a lengthy report. I expect we will see a flurry of bills in the legislative session that convenes on January 10, 2024. For condominium unit owners, this two-month legislative session may result in a sea change that splashes waves throughout urban habitats in the Commonwealth. Failure to address such matters can lead to buildings losing insurance coverage, the inability of purchasers to obtain conventional financing, or even condemnation. If mishandled, unit owners can experience tremendous financial hardship with little guarantee that the renovation will succeed.
The industry of property managers, board attorneys, accountants, contractors, landscapers, and other businesses exert more influence over HOA policymaking than the homeowners do. Advisors and vendors to condominiums do not want boards to continue to defer maintenance until something catastrophic happens. If the advisors must tell the boards to do something difficult, they want to present it as necessary and feasible. Boards can replace the professionals with others if they do not like the service they receive. When a structural collapse or personal injury happens, the victims and unit owners often point fingers at the board and their advisors. The work group wants to facilitate reserve studies, collect assessments faster, and make contracts to replace critical components. The governing documents of common interest communities contemplate homeowners electing worthy candidates to the board to wisely fulfill legal responsibilities for the whole community. However, directors tend to make collective decisions according to their personal views, with a bias towards short-term solutions, or without doing their homework. If all the policies the work group wants are implemented, unit owners will have less control over the governance of their communities, while shouldering onerous financial obligations. Let us take a closer look at a few of the work group’s recommendations.
Use of Reserve Study Professionals: Virginia law requires associations to renew their reserve studies every five years. The work group wants to strengthen this with amendments requiring the study to be done by qualified professionals. Reserve studies evaluate the remaining life of various aspects of the common elements, and how much money ought to be set aside. This is not an easy task, because we are talking about millions of dollars. Reserve studies do not include a business plan for fundraising or bid-solicitation. The work group wants to prevent boards from doing the studies themselves, asking a committee of homeowners to do it, or relying on an estimator who is working for a contractor who wants the work. The firms that specialize in reserve studies often have professional relationships with the managers and attorneys who work closely with the boards. Even if the association purchases a professional reserve study, it may not provide all answers that are needed for the board to make decisions. With a statutory mandate to raise assessments and spend on critical components, according to the reserve study, the work group wants to keep the boards listening to the industry experts. However, boards can replace professionals with those willing to see things their way. Community associations are supposed to make important decisions in duly noticed, open meetings where owners can review the materials and speak if they so desire. An eight-figure commitment to be imposed upon the unit owners by an assessment ought to be managed in an “open” way. The board is forcing people to purchase something expensive together that they will be living with for as long as they own their homes. Such business meetings can get wild. Many unit owners are disengaged. Those who are engaged have strong opinions. There is a tendency to shift the discussion of the details out of the open and into an executive session, an informal committee, or to assign a director or manager to confer with the reserve specialist, contractor or engineer to discuss details and report back. Community associations are organized by recorded instruments that vest power in the board of directors, where the duties and prerogatives are defined. The members have the right to remove or replace the directors. Directors can change the direction things are going by replacing the professionals hired by the previous board. I agree that reserve studies ought to be done by qualified individuals. However, the problems are complex enough that regulating the professional field is not necessarily going to solve the problem. But the reserve studies will cost more because there will be fewer companies authorized to do the work.
Unit Owner Rescission of Additional Assessments: In community associations, there are situations where the members can override a board decision by a vote at a special meeting. The right of rescission may be set out in a statute or recorded instrument. I summarized statutory rescission rights in my post, “Can HOA Boards be Overridden through Group Action by Owners?” The Virginia Condominium Act allows unit owners to rescind board approved additional assessments:
All unit owners shall be obligated to pay the additional assessment unless the unit owners by a majority of votes cast, in person or by proxy, at a meeting of the unit owners’ association convened in accordance with the provisions of the condominium instruments within 60 days of the delivery or mailing of the notice required by this subsection, rescind or reduce the additional assessment.
Va. Code § 55.1-1964(E). This is a powerful tool which, if used wisely, allows unit owners to exercise oversight over board decisions. This cancels or reduces an imposed assessment without undoing related board decisions such as loans or contracts.
The work group takes aim at this procedure. Some view the provision as allowing the wrong kind of interference. The work group cites conflicts between several types of owners. For example, investors favor cosmetic improvements. Older owners tend to view reserve funding as a subsidy to future owners. The work group views boards of directors as more responsible and wiser and the unit owners as a majority as self-interested. All directors and members of condominium associations are under some sort of conflict of interest by the fact that they are investors and residents in the property subject to group decision-making. I touched upon these issues in my post, “Condominium Director Conflict of Interests and the Business Judgment Rule.” This reality is inherent, but the community still must govern itself through business decisions. Some business is to be conducted by the board, other business by the unit owners acting as a group. The owners individually retain certain rights which cannot be voted away even by 99% of the other members. Who is to say that the board or owners are more trustworthy when it comes to a huge decision? Many condominium bylaws were made when the statutory right of rescission was on the lawbooks. To take that procedure away now would in a sense rewrite the “contact.” The work group’s report fails to mention that even where the statutes do not provide an owner rescission procedure, homeowners may be able to block or undo board decisions by filing a lawsuit. In my opinion, the right of rescission ought to be retained, and broadened to include related subject-matter, because the unit owners need the ability to hit the “pause” button without necessarily having to file a lawsuit.
Use of Loans to Finance Major Renovations: The work group’s report recommends that the statutes be amended to authorize borrowing by associations for repair of capital components. A loan might make sense as a last resort for an urgent, essential project for which there are insufficient reserves in the bank but the unit owners are capable of repaying. Many people assume that HOAs and condominiums have the power to borrow money because they are businesses. The POAA and Condo Act do not authorize borrowing. The Virginia Nonstock Corporation Act lists borrowing as a corporate power. Unincorporated associations do not have an inherent ability to borrow money. However, declarations and bylaws may authorize borrowing, even for unincorporated entities. The issue of borrowing is tied to assessments. It is usually the unit owners who push for a loan option. However, bylaws typically do not have provisions that provide a framework for pass-through financing. If the board borrows money, typically the whole community becomes responsible in the event of a default. This can create controversy because responsible owners who pay off their portion initially upon demand do not want to later have to bail out their impecunious neighbors. From the lender’s perspective, the association’s cashflow is collateral, not the property itself. If poorly considered, legal reforms that loosen restrictions on condominiums borrowing money may result in unit owners becoming trapped in their investment. The condominium model was not designed around borrowing. Unit owners do not want the critical components of their building to fail. They also do not want the burdens of ownership to become like those seen in housing cooperatives or timeshares. I am concerned that the legislative proposals may address short term funding needs but change the nature of condominium investments into something more like cooperatives.
Aggressive Collection Tactics: Any attempts to fund reserves will require associations to intensify their debt collection with more liens, lawsuits, garnishments, and foreclosures. The work group recommends that the laws mandate that boards assess and collect sufficient funds to fully fund reserves. The general assembly already provided community association boards with powerful tools for debt collection. I discuss this in my article, “Memorandum of Association Assessment Lien.” The few consumer protection guardrails in the statutes for assessment liens and foreclosures are frequently ignored by HOA debt collectors. When they find themselves trapped in a cycle of community association debt collection, there are steps that a homeowner can take to protect themselves from later discovering that their HOA sold their home to an investor in foreclosure without their knowledge. For example, it is important for the homeowner to keep their association up to date with any changes to their snail mail address, and to confirm that the association acknowledged such updates.
Termination and Deconversion of Condominium: The work group’s report includes some vague statements about promoting redevelopment of condominium property. Usually, condominium termination results in substantial investment losses for those unit owners who are not in league with the developer acquiring the property. My analysis of the most recent amendments to the termination statutes are summarized in my previous post, “Proposed Virginia Legislation Would Empower Developers to Oppress Rights of Unit Owners in Sale of Terminated Condominium Developments.” Sometimes these terminations seem like legalized theft.
So where do things go from here for condominium unit owners? The work group mentions in its report that this mess arose because of the economic bias of current owners against future owners. While there is a natural human tendency to kick the can down the road, the solution for a particular community is going to be unique. Factories do not construct tailored suits. It is understandable that the industry that currently serves condominiums and HOA corporations, when their leaders are organized into such a work group would look for opportunities to present themselves and their friends as solutions. I suspect that the industry lobbyists will propose bills they will argue reflect the recommendations. However, I suspect that the language of the bills may go in a variety of directions. I hope that the General Assembly uses this as an opportunity to protect consumers. One can step back and observe that the condominium concept was flawed from the beginning and should not have spawned so many homes. However, even if legal reforms forbade new condominiums, the plight of current unit owners would remain. Reform of state laws could be of some help to condominiums struggling to address the cash crunch that plagues their efforts to renovate the critical structural components or major building systems. Despite whatever the legislature does, condominiums will still have to devise their own solutions. For many unit owners, the best means of self-protection is to sell their units while they still can. For those from whom that is not an option, they will need to plan to invest their own time and money in a group activity to resolve these problems.
Legislative Update (January 18, 2024):
The 2024 General Assembly is underway in Virginia. One proposal under consideration is House Bill No. 1209 which could fundamentally change what it means to own a condominium unit, particularly the financial obligations. Presently, if a Condominium Board makes a bad decision regarding additional assessment, let’s say they adopt a resolution to impose an additional assessment of $20,000-$40,000 per unit to do some sort of project, but the whole thing is poorly considered and needs to be redone, the unit owners can convene a special meeting to vote to rescind the additional assessment, without having to go to the trouble of removing the directors from office or file a lawsuit. HB 1209 would take the right to vote for rescission away from the unit owners. The rescission procedure could be refined through amendment, but the proponents of this bill want to do away with it entirely. Most developers did not put the rescission option into the bylaws because it was already in the statute.
Also, Virginia condominium associations do not have the ability to borrow funds unless the bylaws already allow it. HB 1209, if adopted, would allow the boards to borrow funds for any reason, only limited by what amounts the banks would be willing to lend, at whatever interest rates and terms the boards and the banks agree. Under this amendment, the boards can borrow as much as they want, and the unit owners must pay off their percentage “share” of this to sell their units. Under these amendments, condominium unit owners would need to track all of the board’s deliberations regarding borrowing money, so as to be aware of what additional burdens might be imposed on them as a unit owner. In a condominium where the board is urged to be aggressive with fundraising, this would lead to a approach to assessments whereby the unit owner would not be made aware that a large financial obligation was imposed on her personally for long after the time the loan is agreed upon. This is because boards commonly do not disclose much about their contract negotiations. This borrowing power amendment could have more consumer guardrails added, if attention is paid in the legislative process.
Every condominium unit owner in older (and newer) buildings in Virginia have a stake in this legislation.
Selected Legal Authority:
Va. Code § 55.1-1965 (Condo Act – Annual budget; reserves for capital components)
Va. Code § 55.1-1826 (POAA – Annual budget; reserves for capital components)
Va. Code § 55.1-1964 (Condo Act – Liability for common expenses; late fees)
Va. Code § 55.1-1825 (POAA – Authority to levy special assessments)
Va. Code § 13.1-826 (NSCA – General powers)
Va. Code § 55.1-1958 (Condo Act – Tort and contract liability; judgment lien)
Va. Code § 55.1-1966 (Condo Act – Lien for assessments)
Va. Code § 55.1-1833 (POAA – Lien for assessments)
June 23, 2023
Do Security Cameras in HOAs and Condominiums Infringe on Privacy Rights?
Use of security cameras is widespread in HOAs and condominiums, but it can also be controversial. Cameras are often positioned to view both the owners’ lot and nearby property. When disputes arise, homeowners want the community to take their side. However, the legal obligations often are not clear. The developer constructs the community and includes use restrictions in the land records. Thereafter, general law and technology evolve at separate paces. Residents install security cameras based on generalized fear or in reaction to a specific incident. Often, someone finds this objectionable because it records their lot or common area (or could easily be reconfigured to do so). Many associations install video cameras on common elements in response to security complaints. Video cameras allow property owners to easily monitor their property while doing other things. This can cause neighbors to feel a loss of useful value to the “open” portions of their property due to a feeling of being surveilled. . . .
March 10, 2023
Court Declares Cryopreserved Human Embryos May be Partitioned, Auctioned, and Sold
When co-owners of cannot agree as what to do with property, the ordinary remedy is to bring a lawsuit for partition. In partition, the preference is for the property to be subdivided among the co-owners. If the property cannot be equitably divided among the co-owners (such as there being a single family dwelling that takes up the land), then the entire property may be sold at auction and the proceeds divided. This is a process that most people try to avoid because it can be time-intensive for the attorneys billing by the hour.
By statute, real estate is the only property that can be partitioned. Personal property (“chattels”) can also be partitioned. On February 8, 2023, Judge Richard E. Gardiner of Fairfax County Circuit Court issued an opinion that addressed the partition of something unusual: cryopreserved human embryos. This opinion discusses a number of my own interests: property litigation, bioethics, and Virginia history. Property law can “touch and concern” just about any aspect of human relations.
The use of IVF raises numerous ethical questions, such as what to do with “leftover” stored embryos after the couple conceives the number of children they both desire to have together. People are not property, at least not anymore. The law treats stored embryos as property. At some point, the parents must start thinking of their offspring as a person. The way parents relate to their child begins before the time that the law starts treating the offspring as a person. Otherwise, the notion of trying to have (or avoid having) children doesn’t make sense. These issues will continue to present thorny questions as these technologies evolve and human moral standards change. The law plays catch-up.
Honeyhline and Jason Heidemann divorced in 2018. During the marriage, the Heidemanns used in vitro fertilization due to difficulty conceiving. This resulted in three embryos. According to the paperwork, the parties agree to joint ownership of any embryos produced. The Heidemanns used one embryo to conceive one child (a daughter) during the marriage. In the divorce, the Heidemanns signed a property settlement agreement that addressed the embryos, basically deferring their disposition to be resolved by agreement or court order at a later date. The parties agreed to continue to jointly own the embryos and pay for their storage in the meantime. After the divorce, Ms. Heidemann wanted to use the remaining embryos to conceive more children because chemotherapy rendered her infertile. Mr. Heidemann did not agree, viewing this to interfere with his asserted right of “procreational autonomy.” In November 2021, Ms. Heidemann filed a Complaint for Partition of Personal Property. The lawsuit asked the Court to award her both or one of the stored embryos.
Mr. Heidemann opposed the lawsuit with numerous arguments. First, he asserted that the embryos could not be sold because they constitute “human fetal tissue” for purposes of federal statutes. Second, the embryos were not “goods or chattels” that having monetary value and therefore could not be partitioned by statute. Third, under the PSA there could be no use of the embryos without his consent. Fourth, allowing use of the embryos without his consent would violate his 14th Amendment rights. The Court found that none of these arguments warranted short circuit of the lawsuit in Mr. Heidemann’s favor.
Judge Gardiner disagreed that the PSA precluded the action. The PSA contemplated that the embryos be disposed of by agreement or a court order. The plain meaning of the PSA did not give Mr. Heidemann veto power that could prevent a judge from determining the parties property rights in partition.
The Court did not reject Mr. Heidemann’s argument outright that he had a right of personal “reproductive autonomy” under the 14th Amendment that would prevent partition of the embryos. Instead, the Court found that such arguments would have to be considered at a later stage in litigation. I would infer that Mr. Heidemann did not argue that the 14th Amendment requires treating the embryos as something other than property.
Mr. Heidemann argued that the embryos cannot be partitioned pursuant to Va. Code § 8.01-93 because they are not “goods or chattels,” observing that they are “distinct, unique and not fungible” and thus of a character different from parcels of land. Judge Gardiner observed that Mr. Heidemann had already agreed to treat the embryos as properties by signing the PSA.
The Court observed that the “goods or chattels” referenced in the statute is not limited to personal property laying upon or attached to real estate that is also being partitioned. The opinion letter discusses the history of the partition statute. Originally, only real estate could be partitioned. The statute expanded this to include personal property, and for many years it also included people enslaved within the definition of partitionable property. By 1849, enslaved persons were partitionable in kind (divided by individual among the co-owners) or subject to sale (for example, a single person sold and the proceeds divided among the former owners). Before 1819, the law was unsettled as to whether enslaved persons were considered to be property rights appurtenant to the real estate upon which they lived and worked for purposes of partition.
I will pause my summary of the opinion to add a few thoughts of my own: Its interesting that the opinion discusses the question as to whether enslaved persons are the “direct” property of their owners or “indirectly” as tied to the owned land. Serfdom was understood to be something related to landlord-tenant law, whereby the serfs were in a binding “contractual” relation to the land upon which they lived and did agricultural labor. Personal servitude was abolished in the context of the Civil War. Good riddance! Serfdom is compared to “sharecropping,” which also includes conflates notions of employment with ties to the land. All of this is alien to our modern understanding of a contract as a bargained-for meeting of the minds. Yet, the notion of “servitudes” continues in other forms, such as real (predial) servitudes, whereby one parcel of land is yoked to another parcel by a covenant or easement. Being a sharecropper, tenant or owner of servitude-burdened property is not the same as serfdom. Yet, the concepts are not alien to each other. Once land is burdened by obligations to another person’s interest in the same or appurtenant property, the person with an interest in land so burdened cannot retain the real estate interest and walk away from the burden without the other’s permission or adjudication of a legal right. This language of servitudes lives on in easement terminology. There is a “dominant” parcel that enjoys a privilege with respect to a “servient” parcel. After slavery was abolished, in the same time frame in which “Jim Crow” laws developed (including heavy use of “sharecropping” with many blacks, but also whites), use of real servitudes, particularly restrictive covenants, developed to manage subdivisions newly created to house in the suburbs a new middle class created by the industrial revolution. Some of these “servitudes” were expressly discriminatory against African-Americans, others were irksome to everyone. Real servitudes (together with landlord-tenant law and zoning laws) developed to control people through restrictions placed on land use. Real estate, development/construction, and land use law are used to indirectly control the movement and activity of people. The relationship between real and personal property in the context of partition is important, because partition does not “clean” or redefine property (beyond the dilemma of deadlocked common ownership), it merely divides, sells or disposes of a set of rights and duties that already exist. Also consider that in the event that the terms of condominium statutes or recorded instruments do not provide a streamlined framework for disposing of the property in termination, the property in the development goes into a cumbersome, time consuming process of partition.
Getting back to the Judge Gardiner opinion. In 1819, a statute declared that “all Negro and mulatto slaves . . . shall be held, taken, and adjudged to be personal estate.” From his study of the legislative history of the partition statute, with focus on its use with slavery, Judge Gardiner concludes that the present day partition statute, Va. Code § 8.01-93 must be interpreted to include personal property not attached to land, and its use with respect to the same in not limited to situations where the goods or chattels are found on or attached to the land being partitioned. Judge Gardiner did not find that the legal status of human embryos is analogous to slavery, but his opinion stimulates such thoughts.
Judge Gardiner rejected Mr. Heidemann’s argument that frozen embryos cannot be partitioned because they cannot be sold pursuant to federal law. There is a federal statute that says that “human fetal tissue” cannot be sold for consideration such as money. The problem with this argument is that the statute defines “human fetal tissue” as tissue or cells from a dead human embryo or fetus. The embryos fought over in this lawsuit were cryopreserved. Remarkably, dead embryos or fetal tissue have greater legal protection than the living, at least in the Commonwealth of Virginia. Rejecting all of these arguments, the court overruled Mr. Heidemann’s demurrers and permitted his ex-wife’s partition suit to proceed to the next stage. Personally, I find the application of the general laws for partition in the context of human embryos to be problematic, and warranting a legislative fix, because an auction to the highest bidder of embryos seems, in my view, susceptible to corrupting of morals. But, in the absence of any other legal process, this is the only way to handle it. When the parties are deadlocked in their negotiations, the law channels them into an existing system of procedures and remedies.
March 10, 2023 Addendum:
An interesting article about this case was published yesterday, March 9, 2023. The article focuses on an aspect of the opinion that some people found troubling, that Judge Gardiner made use of the legislative history regarding partition of enslaved persons in his attempt to try to interpret the current statute. That article is by Matthew Barakat and is entitled, Judge Uses Slavery Law to Rule Frozen Embryos are Property.” This is worthwhile reading. Barakat quotes Georgetown Professor Susan Crockin saying that, “she’s not aware of any other judge in the U.S. who has concluded that human embryos can be bought and sold. She said the trend, if anything, has been to recognize that embryos have to be treated in a more nuanced way than as mere property.” However, the article does not explain what other courts have held and on what basis. The history of Virginia legislation is replete with slavery references and other horrible policies. I would agree with Professor Crockin that embryos ought not to be treated as property, which leads to the appalling result that they can be auctioned off to the highest bidder. However, it is my impression that, based purely on reading the letter opinion, that Judge Gardiner believes that the governing law of Virginia is woefully inadequate. Laws are words written in code books, case precedents, and the like. The General Assembly really needs to take action. It is the judge’s job to apply the law, and not to engage in exercises of creative writing in order to achieve results that comport with abstract notions. People feel troubled because they should.
March 14, 2023 Addendum:
Note that there currently is partition reform legislation that the General Assembly passed in its 2023 that awaits the governor’s signature. House Bill 1755 does not address the issue of frozen embyros specifically, but it does add language that would likely be litigated in such cases. The bill, among other changes, adds a new subsection B to Va. Code § 8.01-81:
“If the court orders partition in kind, it shall consider: 1. Evidence of the collective duration of ownership or possession of any portion of the property by a party and one or more predecessors in title or predecessors in possession of the property who are or were related to the party; 2. A party’s sentimental attachment to any portion of the property, including any attachment arising because such portion of the property has ancestral or other unique or special value to the party; 3. The lawful use being made of any portion of the property by a party and the degree to which the party would be harmed if the party could not continue the same use of such portion of the property; 4. The degree to which a party has contributed to the physical improvement, maintenance, or upkeep of any portion of the property; and 5. Any other relevant factor.”
Of course, these reforms are woefully inadequate to address the controversies illustrated in the February 2023 Fairfax demurrer ruling. These legislative amendments have “normal” property in mind.
Legal Authority:
Heidemann v. Heidemann, CL-2021-15372, 2023 Va. Cir. Lexis 13 (Fairfax Feb. 8, 2023).
Note that the photograph used for this blog post is a stock image downloaded from Shutterstock and does not show anything specifically referenced in the article.
February 8, 2023
2023 Statutory Amendment Would Stimulate HOAs to Fine Virginia Homeowners Even More
Fines are one of the most unpopular features of Virginia community association law. Despite the well-known tendency for HOAs and condominiums to misuse fine systems, a 2023 statutory amendment would stimulate HOAs to fine Virginia homeowners even more. Yesterday, the House of Delegates approved H.B. 2098 by a vote of 91-7. It is unclear to me what the Virginia Senate will do. In the HOA context, fines are a process for imposing a charge, usually $10.00 per day, for a perceived rule violation. Americans are accustomed to being fined by their government. For example, parking tickets or zoning notices of violation. In such instances, the agency can impose a monetary charge for a violation without first taking the resident to court. Usually the citizen can “appeal” the fine to a review board or official as an intermediary step before a court challenge. In Virginia community associations, the homeowner may be able to “appeal” a decision by the committee to the board of directors, but to go above that they usually have to go to the courts.
HOA fines differ from governmental fines in other ways. Government officials don’t ordinarily have a personal stake in the way a perceived violation is handled. By contrast, the association directors are neighbors with strong personal opinions about the rules and what they see as a problem in the community. Its common for the directors and homeowners to know of each other. It is difficult for a volunteer homeowner to separate their personal interests from their “directorial” duties regarding a perceived violation on a neighbor’s lot. Covenant enforcement is often delegated to a manager and attorney to manage. This can help ease the “interpersonal,” but the managers and attorneys have business interests in the management of covenant enforcement procedures.
2023 Virginia House Bill 2098 would change the statutes to make authorization to fine a “default” power of HOAs and condos, instead of requiring enablement by specific language in the recorded instruments. Also, it would make it easier for the association to impose additional charges for “repeat” rule violations.
I would like to use a hypothetical example to explain why I think this proposed amendment would make the world of HOA fines worse. Imagine a person in a community association who struggles to manage his property because of a physical disability. He decides to temporarily store a few personal items in plastic boxes on his patio. The boxes are visible from the sidewalk if one happens to be peering into the guy’s backyard. Someone complains about the plastic boxes to the manager. The recorded instruments say nothing about outdoor storage boxes. The recorded covenants require committee approval of any outbuildings, additions, swimming pools or structural changes to the house itself. The recorded restrictions forbid accumulation of trash or building materials. The covenants allow the board to adopt additional rules in furtherance of those contained therein. The covenants do not allow for fines, they only talk about going to court for enforcement. Ten years ago, the board voted to approve a resolution that limits items that can be kept on patios and decks to plants, furniture, grills, small appliances or other items expressly approved by the architectural committee. The patio resolution has never been challenged legally.
The manager sends a letter to the homeowner, who doesn’t come to the next meeting because of the mobility problem. The attorney explains to the board that they cannot fine the homeowner, because the existing statutes require the power to impose fines to be enabled in the recorded instruments. Va. Code § 55.1-1819(B) & § 55.1-1959(B). The HOA would have to file a lawsuit to compel compliance. Such efforts would be doubtful because the recorded instruments don’t say anything about regulation of storage boxes on the patio. The language about trash and building materials don’t quite give them this. Va. Code § 55.1-1819(A) & § 55.1-1959(A). The board has an unwritten policy to only sue homeowners as a last resort when they really want to come down hard on somebody. No suit is filed. No extrajudicial fines are imposed.
Suppose we add to the facts that H.B. 2098 is enacted as an amendment to the statutes. The HOA’s attorney sends all of her clients a newsletter announcing that the statutes no longer require the recorded instruments to specifically authorize the association to conduct fines according to Va. Code § 55.1-1819 & § 55.1-1959. With this change, the law is now the opposite: “The board of directors shall also have the authority, unless the declaration provides otherwise, to . . . assess charges against any member for any violation . . .” H.B. 2098. According to this new enactment, silence in the instruments regarding fines means that fines are allowed (instead of meaning that they aren’t allowed). In our hypothetical, the board of directors gets excited, because it seems to provide a work around. No longer would the HOA have to spend its own money pursuing a homeowner in court, with an uncertain outcome. With fines, the HOA can conduct its own hearing, where its agents act as the prosecutors, witnesses and judges of the notices of violation. With the power to conduct extrajudicial fines, the board shifts the burden to challenge onto the homeowner. As a practical effect, this emboldens the associations to be more aggressive in their approach to covenant enforcement, asserting broad, favorable interpretations of their own instruments. One of the problems of the fine statutes is that it stimulates fanciful readings of recorded instruments and adoption of regulations by the boards that go beyond what the covenants reasonably authorize.
H.B. 2098, if adopted, would present a difficulty when it comes to previously created HOAs and condos where the authority to fine was not discussed at all in the recorded instrument. Under current law, the omission of fine authorization language is construed to mean that the drafter-developer intended for the association to not have the power to fine. Given the current language of the statutes, the rules that the courts use to interpret legal texts, and the drafting of such a declaration or bylaw, it would be preposterous to read into the “contract” an understanding that the legislature could later adopt an amendment that would cause the document to switch its meaning to the exact opposite of its intended effect. A contract or deed is normally interpreted to include by implication all relevant law in existence at the time it is made. H.B. 2098, as presently worded, would seem to invite litigation regarding any retroactive effect where the association tries to use it when the declaration or bylaws are silent on the issue of fines or reference such enforcement mechanisms in a manner made confusing or uncertain by statutory changes. Contracts would be cheapened if their intentional silence on an issue is later used as an opening for the legislature to completely reverse the meaning. In a hypothetical lawsuit challenging the retroactive application of H.B. 2098, our homeowner is demonized by others in the community for selfishly attacking the HOA’s volunteer efforts to promote good order in the community. The lawsuit drags on for years, coming down to an issue of how to construe the statutes, covenants, and handbooks.
H.B. 2098, if enacted, would render community associations law “wonky-donkey” regarding fines. Ordinarily the homeowners expectations regarding the subdivision are defined by how the developer physically constructed things, what the initial purchase contracts require, and what the disclosure packet of HOA documents says. After the developer implemented such plans, and the buyers join in by purchases, to then turn that upside down by such legislation turns the tables on the homeowners unfairly. Any changes to the recorded instruments and handbooks ought to conform to the “reasonableness” requirement (already used by the courts), so that communities can make adjustments to the “contract” as a consensus and changing circumstances allow, and not by a legislative trick.
The fine statutes are important for another reason. Once imposed, the fine can be used to pursue a foreclosure against the unit owner, or it can be used to initiate a lawsuit to convert it into a money judgment from which garnishments can issue. The fines are not just irksome pieces of paper, they can be used to harass or dispossess homeowners.
H.B. 2098 also proposes to no longer require the HOA to send out an additional notice for a “repeat” violation of the same rule or covenant in the same 12-month period. I also oppose this. More “due process” is needed, not less. With this wording, associations are going to start imposing fines for things that are not the same as the initial “violation,” the only commonality being the section cited in the rules.
Yesterday, H.B. 2098 was passed by the House of Delegates, by a vote of 91-7. The bill now goes to the Virginia Senate. I don’t see this bill helping anyone other than those people who like fining people or are paid to manage the process. This bill, if enacted, will solidify some of the things that give HOAs a bad name. I don’t think that people want to wake up in early July 2023 and find a Notice of Violation in mailboxes all across Hoaville, Virginia.
I would like to see the General Assembly delete the fine language out of the statutes. No more fines, prove your damages or basis for an injunction. If a HOA wants to tell a homeowner what to do with their own property, they ought to have to stand in line at the courthouse for a hearing date, and then prove their case under the rules of evidence. The practical effect of this would be to stop certain misuses of covenant enforcement from moving forward on doubtful grounds in the first place. This would not prevent the HOA from performing its core function of common area maintenance.
UPDATE: On February 21, 2023, H.B. 2098 was DEFEATED by a vote of 8-32 after Virginia Senate floor debate. Hopefully this bill will not be brought back next year.
January 12, 2023
Are New Rail Stations Good or Bad for Neighboring Condo Unit Owners?
Many people would beam with excitement if someone told them that a new metro station will pop up within a mile of their property. If they have a condominium or cooperative, their home ownership is full of surprises because they are in a business relationship with strangers. Are new rail stations good or bad for neighboring condo unit owners? Decades ago, the Northern Virginia communities of Tysons, Reston, Herndon, Dulles and Ashburn developed around transportation infrastructure that allowed residents to easily commute to Washington, D.C.. Local streets and the Dulles Toll Road connected these homeowners to Metro’s orange line. The lower density in these communities reflected demand for quiet neighborhoods and the lack of immediate rail transport. In time, the region suffered a crush of automobile traffic. Addition of housing congests key roads. Regional leaders teamed together to bring in the silver line. Opening in 2014, Phase 1 extended the metro from Falls Church to Tysons Corner and portions of Reston. Phase 2 extended to Herndon, Dulles Airport and Ashburn. Phase 2 opened in November 2022. The extension of the silver line did more than allow more people to access public transportation closer to their homes. This new infrastructure impacted the property owners whose properties are within walking distance. Such lands became significantly more valuable. The silver line prompted local government to change the way they regulate development. Because of rail extension, more density became possible. Anyone who drives along the Dulles toll road or elsewhere along the sliver line can see construction cranes and large trucks bringing materials.
Construction of Silver Line Rail Stations: A casual observer might conclude that these changes present a financial windfall (or at least a new convenience) to anyone with land located within a mile of any new station. However, reality it is not so simple when you have dozens or hundreds of co-owners. Decades ago, many properties in Tysons, Reston, Herndon, and Ashburn were developed as residential or commercial condominiums. The builders did not plan for the construction of new metro stations where they now appear. Most of the owners who purchased units in these condominium associations did not anticipate how the addition of a metro station would later change their communities. Many of these condominium unit owners rely upon their units as their primary housing or business location. As families and businesses grow, they become more settled in. Humans naturally resist being kicked out to suit the interests of others.
Other people have their own reasons for wanting to embrace the changes. Some unit owners may already be ready to sell. Potential buyers see old buildings cluttering valuable land. Redevelopment may add taller buildings.
This tends to divide condominium associations into factions. Many unit owners want to go using the properties they chose to buy, and do not want to be pushed out. Successful people purchase their homes or locate their businesses for thoughtful reasons. There are specific reasons why a particular condo unit might be ideal for aging in place. If they wanted a temporary arrangement, they would have just signed a lease. When developers eye these pieces of land that happen to have people living or working in them, there are usually some association members who would rather sell the property to a developer now at market rates. Some see no reason to continue to maintain the aging structures as neighboring buildings are torn down and holes are filled with newer, larger buildings. However, there are numerous reasons why a unit owner’s share of the proceeds of a termination sale might be inadequate. For example, specialized health professions require expensive buildouts to make use of generic condominium units. County planners don’t really understand the value of or needs of “light industrial” land uses.
Dramatic Assessment Increases: For silver line condominium unit owners, the construction of the rail stations is not the only complication. In 2022, the General Assembly directed the Department of Professions and Occupational Regulation to establish a Work Group to develop recommended legal reforms for condominiums and HOAs. The legislature did this out of a concern that many communities need major renovations to avoid structural failure or repairs to present building system failure. On November 23, 2022, I posted an article to this blog, “Virginia Structural Integrity and Reserves Work Group.” The work group will probably recommend reforms which will lubricate the process of condominium termination, sales, and deconversion. Also, the Work Group will probably recommend legal reforms that will encourage boards to collect more money and spend that money on capital improvement projects. If fulfillment of such requirements is opposed or unsuccessful, many communities may slide towards condominium termination.
Problem of Inflation: Things are more expensive now. While the Washington, D.C. metro area has a strong real estate market, inflation impacts condominiums more than single family houses. Rising interest rates put downward pressure on sales. Inflation drives up the cost of labor and materials for construction projects. My June 6, 2022 blog post, “Renovation of Condominium Limited Common Elements” discusses how such projects are financed and managed.
Baby Boomers on the Move: The perfect storm has yet another factor. Many baby boomers have already retired or are planning to change their careers. When workers retire or shift their careers into a new phase, their interests in property refocuses. The nature of condominium unit ownership presents particular challenges to retirement age owners, which I discussed in my October 20, 2022, post, “Are Condominium Units Good for Retirement-Age Buyers.”
How Condominium Termination Rules Work: Condominium law provides procedures to bring an end to the condominium, sell the entire property and split the proceeds. This is called condominium termination or deconversion. What many people don’t understand is that if a certain amount of support exists, then the opposing unit owners can be kicked out of their units and given a share of the sale that was not negotiated with their consent. I blogged in more detail about the mechanics of condo termination in a May 14, 2015 post, “You May Be Targeted for Condominium Termination” and on February 6, 2020, “Proposed Virginia Legislation Would Empower Developers to Oppress Rights of Unit Owners in Sale of Terminated Condominium Developments.” The statutes provide few protections to insure that unit owners will obtain fair market value in termination or other considerations of their unique situation. The developer and their friends on the board tend to “drive the bus.” The statutes assume that free-market forces and the democratic governance of the association will protect the unit owners rights. However, the business of a community association is rife with conflicts of interest. Depending upon how the termination is conducted, an individual unit owner may experience a windfall or, in some cases, financial ruin.
The Virginia Condominium Act (Va. Code § 55.1-1937) provides “default” termination procedures. In residential developments, termination requires a 4/5 (80%) agreement among unit owners, or such larger majority as the instruments may specify. If no units are residential, the instruments May specify a majority smaller than 4/5 (80%). Termination is achieved by a written contract that provides for the termination of the condominium association, the sale of the property to the buyer, and the disposition of the proceeds. The real estate industry succeeded in convincing the General Assembly to streamline condominium termination to make it easier to force the sale of the units. Things get complicated when the unit owner has a mortgage that exceeds the value of the proceeds for that unit or a long-term lease.
As interest in deconversion grows, the proponents may try to use nondisclosure agreements to control the flow of information. The proponents of termination may seek to amend the declaration or bylaws to facilitate termination. Officers or directors favoring termination sale may neglect repairs or allow reserves to deplete, or they may aggressively pursue renovations because that increases the purchase value of the property. Typically interested purchasers will buy at least one unit so that they can participate in the meetings of the association as a member, or they will work closely with allied members. This can disrupt ordinary life and interfere with a family’s ability to make plans.
What can unit owners whose condominiums are located near a new rail station do to protect their interests? There are many options, including:
- Selling one’s unit before change accelerates.
- Communicating with one’s state or county elected officials about pending or anticipated legislation or ordinances.
- Litigation with the condominium association if they breach the statutes or bylaws.
- Developing alliances with other unit owners to elect friendly directors, put pressure on the board, or bring certain petitions for vote by the membership at a special meeting.
- Stay informed about things that are happening in the community.
Are new rail stations good or bad for neighboring condo unit owners? There will be loud, poorly informed voices in the community that will make themselves heard. If a condominium association is going through a major dispute or transition related to capital improvements, special assessments or a termination, such matters are usually too complicated to handle on one’s own, because there are multiple technical issues. On the legal side, an attorney is necessary to review the declaration, bylaws, amendments and the statutes to determine if what the proponents or an amendment or termination agreement is legal. Cowherd PLC leverages experience in these matters so that the unit owners can protect their own interests in an ecosystem where large groups of people and money can threaten their plans and peace of mind.
