Appeals Court Finds Indefinite HOA Assessment Provision Unenforceable

For most homeowners’ associations, the declaration is clear enough about assessments that the lot owners have little doubt whether they can be enforced. The developer has every incentive to make this clear. Community associations run on assessments as fuel. Sometimes inattentive developers hire inexperienced attorneys to write the declaration, and the language is too unclear to accomplish the desired goals. Not all covenants are sufficient to make a HOA a “property owners association” for purposes of the Virginia Property Owners Association Act. Where the declaration was not carefully drafted, the association may not be able to collect the assessments as they expected. This leaves the lot owners in a potentially adventitious position in the sense that the HOA may be less able to lord over them. The uncertainly may lead to unresolvable strive or neglected common areas.

On February 3, 2026, the Court of Appeals of Virginia published an opinion that found a declaration of covenants too indefinite to allow the association to impose assessments. Shekar and Barbara Jannah owned three lots in Terrace View subdivision in Forest, Virginia. Forest is in Bedford County, near Lynchburg. The developer recorded a declaration of protective covenants that gave an option to create Terrace View Property Owners Association. The declaration gave the developer the option to convey common areas to TVPOA. This said that TVPOA, “shall have the right to establish and collect assessments, and by accepting ownership in the subdivision each Lot Owner(s) shall be deemed to have agreed to pay the same when and as due.” The developer subsequently incorporated TVPOA. TVPOA did not do much until 14 years after the developer recorded the declaration.

Later, TVPOA imposed an Assessment Fee on the Jannah lots. The Jannah’s refused to pay the fee. They filed a declaratory judgment and injunction suit against TVPOA. The lawsuit asked the court to make several determinations:

1. TVPOA was not a “property owners association” for purposes of the Virginia Property Owners Association Act.
2. TVPOA had no authority to collect the disputed fee or any fee against them.
3. TVPOA had no authority to enforce any of the restrictive covenants.

TVPOA filed a response, asserting in defense that the Jannah’s had previously agreed to pay assessments, that he had served on the Board at a time when assessments were enforced, and they had sold a lot subject to the declaration they now contest.

For any association to qualify for the powers and remedies afforded by the VPOAA, it must have a recorded declaration that authorizes it to collect a fixed or variable assessment, and the declaration must affirmatively require the association to spend the assessments on maintaining the common areas of the development. These things must be expressly stated in the declaration. According to judicial precedent, it is insufficient for the requirement to spend the assessment on the common areas to merely be implied or inferred. For more discussion of this topic, check out my October 24, 2029 blog post, “Do I Even Have a HOA?” TVPOA pointed to language in the declaration that said that the purpose of the declaration was, “to maintain, ‘the best use and most appropriate development and improvement of said property[,] and to preserve, so far as practicable, the natural beauty of said property.’” TVPOA also said that it had adopted bylaws that require the common area to be maintained. TVPOA had contractually obligated itself to pay for electric lights at the entrance.

TVPOA pointed to a 2024 amendment to Va. Code § 55.1-1805, which added, “Nothing in this chapter shall be construed to prevent an association from levying or using assessments, charges, or fees to pay the association’s contractual or other legal obligations in the exercise of the association’s duties and responsibilities.” TVPOA argued that this amendment relaxed the VPOAA definition of a property owners association such that it now includes TVPOA. the legal standard of what must be in the declaration to make it qualify for remedies under the VPOAA. TVPOA argued that even if it is not a VPOAA association, it still can enforce the declaration by assessments.

The Court of Appeals agreed with the Circuit Court’s determination that TVPOA was not a VPOAA association. TVPOA’s board could not make it a “property owners association” simply by adopting bylaws that required it to maintain the common areas. The Court disagreed that the 2024 amendments to Va. Code § 55.1-1805 relaxed the requirement for a declaration. The General Assembly adopted that 2024 amendment after the Court of Appeals published the Burkholder v. Palisades Park Owners Association case in 2023. In Burkholder, the Court of Appeals held that the pre 2024 amendment version of Va. Code § 55.1-1805 precluded a POA from imposing assessments for the cost of lot compliance inspections, because that was not expressly authorized by the Palisades Park declaration. The declaration authorized assessments for other purposes, but not the cost of lot compliance inspections. In this 2026 TVPOA case, the Court of Appeals found that the 2024 amendment did not change the statutory definition of a “property owners association.” In Burkholder, the parties agreed that Palisades Park was a property owners association. They disagreed whether under the declaration the cost of the lot compliance inspections could be assessed against the inspected lots. The new Va. Code § 55.1-1805 does not change the definition of a property owners association, it just makes it easier for associations to assess lot owners for the obligations that it has. The determination that TVPOA is not a “property owners association” is significant. The VPOAA does contain protections for the homeowners. Overall, the benefits to the HOA of qualifying under the VPOAA outweigh the rights it affords the owners. For example, the VPOAA allows for special assessments beyond what is provided in the declaration. TVPOA cannot take advantage of this. Homeowners who are concerned about a rogue board hoarding resources and bullying its members would prefer if the VPOAA does not apply.

Even when an association does not qualify as a “property owners association” or some other common interest community recognized under Virginia statutes, it nonetheless may be a nonstock corporation or unincorporated association that can do some business. The recorded covenants may be binding as a “contract” even if it is not a VPOAA declaration. The Court of Appeals disagreed with TVPOA’s argument that their declaration was sufficient to allow it to impose and collect assessments. The Court of Appeals held that the provision at issue was to indefinite and uncertain to be enforceable. In doing so, the Court adopted the legal standard taken by North Carolina courts. Under this test used in other states (and now in Virginia), the court examines the covenant to see if it determines (1) the amount of the assessment and (2) the purpose for which it is levied. An open-ended requirement to pay the association any amount demanded for whatever purpose the board wanted is insufficiently definite to be enforced. The court may look beyond the covenant to determine the assessment amount (thus allowing variable assessments), but there must be something in the covenant that provides a “textual anchor” for the determination of the amount. This does not seem to be a “bright line” rule.

In the 2008 N.C. Court of Appeals case Willow Bend HOA v. Robinson, the covenant allowed the HOA to levy assessments to promote the “welfare” of residents. The board imposed assessments to pay the bills from the association’s attorney incurred in defense of litigation brought by a member. The court found this legitimate because an HOA is required to use an attorney in litigation. The amount of the assessment could be ascertained by reading the bills issued by the firm to the HOA.

By contrast, the TVPOA assessment provision gives no guidance as to the purpose or amount of the assessments that would be imposed. The covenant does not require TVPOA to spend any money on common area maintenance or any other purpose. For this reason, the “contract” was insufficient to enable to the court to give it an exact meaning.

The Court of Appeals considered TVPOA’s arguments that the Jannah’s’ suit was barred because they previously had paid assessments to TVPOA or alternatively, because Mr. Jannah was on the board when TVPOA had imposed assessments. The Court found such circumstances, if proven would be irrelevant to the legal issues decided on the summary judgment motion. TVPOA failed to appeal the issue of those defenses with respect to the injunctive relief. This suggests that a different standard applies regarding the defenses of waiver, estoppel and unclean hands in declaratory judgment versus injunctions.

I would not be surprised if TVPOA seeks an en banc review or appeals this decision to the Supreme Court if it has the resources to do so. Or the community associations industry may lobby the legislature to amend the VPOAA to reduce the doubt cast by this case over assessment collection. Assessment collection is HOA life blood. Any legal precedent that provides a grounds of defense against collection suits or liens interferes with the industry’s ability to do fundraising and fund-spending.

A few points in summary:

1. The 2024 amendment to Va. Code § 55.1-1805 does not redefine property owners’ associations in a way that would allow them to enforce assessments and then manage the money in a way not contemplated by the declaration. That amendment addresses Burkholder-type issues. The wording of the amendment tells us how to read the other provisions.
2. If an association does not qualify as a “property owners association” under the VPOAA, then it cannot take advantage of the statutes that make it easier to levy or collect assessments. For many associations, they will never be able to raise enough money to be able to hire a large team, tackle major upkeep obligations, or use litigation to intimidate their members.
3. Just because one’s community association is not a statutory “property owners association” does not mean that the covenants are unenforceable entirely, or that the association is not a valid entity of some kind.
4. Barring a reversal of this case on a reconsideration or appeal, the test used in other states will apply in Virginia, whereby the assessment provision must provide a way to determine (1) the amount of the assessment and (2) the purpose of the assessment. This is important to lot owners in Virginia because many declarations contain overly general like that in TVPOA’s declaration. Otherwise, the board could force the lot owners to pay for something that never should be made a part of the association’s business, such as acquiring new property, constructing common area structures not contemplated by the declaration, or other pet projects of the board.
5. Many HOA’s that do not qualify as VPOAA associations may not be able to force homeowners to pay any assessments. This is because of the overlap between the two legal standards.
6. The prior conduct of the lot owner with respect to the matters at issue may not be relevant. Here, TVPOA asserted that Jannah had participated somehow in the adoption of prior assessments and had paid at least one of those in the past. The Circuit Court found this non-determinative, and the Court of Appeals agreed. This may or may not apply in a particular case. The applicability of affirmative defenses in an equity case is fact specific. Homeowners should not go around and put into writing that they agree with a board action and then try to fight it later, because this may bar their case under its facts.
7. One may speculate that the Jannah’s paid more in attorney’s fees to litigate this case and defend the appeal than what they were asked to pay for the assessment. I doubt that they were able to recover any of those attorneys’ fees. The VPOAA attorney fee statute would not apply. Even if there is an attorney fee provision in the declaration, TVPOA has no means to raise the money to pay the fee award. In these sorts of cases, the cost of the litigation often becomes a major concern. The homeowner ought to consider whether they have the resources to match whatever the association can spend out of their funds or their insurance may provide.

Selected Legal Authority:

Terrace View Property Owner’s Assn, Inc. v. Jannah, 2026 Va. App. Lexis 59 (Ct. App. Feb. 3, 2026)

Va. Code § 55.1-1805

Burkholder v. Palisades Park Owners Association, 76 Va. App. 577 (2023).