July 16, 2021
Can HOA Boards be Overridden through Group Action by Owners?
Many owners want to know what options they have to overturn bad board decisions without using litigation and when waiting to the annual director election isn’t an option. This raises the issue of what legally binding results “community organizing” can accomplish when the board majority appears to have already made up their mind.
July 13, 2021
How a Lawyer Can Help Owners Protect their Rights in HOAs and Condominiums
According to trade association data, approximately 1,980,000 Virginians live in 778,000 homes in more than 8,7000 community associations (HOAs, condominiums, etc.). In the District of Columbia, approximately 111,000 residents live in 48,000 homes located in more than 1,300, community associations.
June 25, 2021
Can a Board of Directors Make Decisions for the HOA by Unanimous Emails?
Condominium and HOA leaders usually expect the owners and tenants to do what they tell them to do, and often struggle to back down when their authority is questioned. At the same time, boards and committees like to make decisions that affect others without being monitored or disclosing what was done.
June 11, 2021
Worlds are Colliding! When Attorneys Sit on HOA Boards
Before Jaime Harrison ran for U.S. Senate or became chair of the Democratic National Committee, he was a director on the board of a condominium in Alexandria, Virginia while I was an owner-occupant. We had annual elections for board positions. Sometimes there was an election, other times we left without voting because there was not quorum.
May 20, 2021
Making Property Decisions as the Region Reopens
On May 14, 2021, Virginia Governor Ralph Northam lifted the indoor mask mandate in light of updated CDC guidance. Governor Northam also declared that the indoor capacity restrictions and distancing restrictions will ease, effective May 28, 2021. The District of Columbia and neighboring states are also lifting restrictions, effective around the Memorial Day weekend.
April 8, 2021
Resolving HOA Enforcement Through Voluntary Compliance
When a homeowner receives a notice of violation from their HOA or condominium, they must decide if they are going to fight it, comply or file an architectural application to receive formal approval. There are many instances when the homeowner can and ought to keep the installed improvement. However, there are other situations in which it makes more sense to comply with the HOA’s request or to otherwise adjust things to address the violation. Also, HOAs frequently send out notices in error or the homeowner receives them after the violation was cured. However, the story does not always end with the voluntary compliance by the landowner. Often the covenant enforcement process will continue with additional letters or HOA hearings despite the correction. There may be pending litigation. The HOA or neighbor instigating such in or out of court complaints may have some sort of axe to grind and wants to continue the legal action vindictively. This blog post addresses the legal aspects of covenant enforcement when the accused owner has cured or abandoned the complained of structure or activity. I am not saying that the owner’s default response to a HOA letter ought to be to just obey it.
Fairfax County Circuit Court considered such questions in a 2004 decision. Rose Hall HOA filed a complaint with the court seeking an injunction and attorney’s fees against an owner, Charles H. Jelinek, whose architectural application for a black ornamental fence was denied but they installed it anyway. While suit was pending, the Jenlineks removed the complained of fence. The letter opinion of Judge Kathleen MacKay doesn’t say whether they removed the fence because it was not allowed by the language of the covenants or if the owners took it down not because they were in the wrong but to simply avoid continued legal action. The HOA filed discovery requests in an effort to continue fighting in court. The Jelineks filed a motion to have the suit dismissed on the grounds that it was now moot because the fence was removed. The HOA wanted to continue the suit, not because they thought that the fence would be put back up, but only because they wanted to get an award of attorney’s fees as the prevailing party. Did the HOA “prevail” in the litigation because the owner removed the complained of fence after suit was filed? In this suit, the HOA did not seek any damages. The court found that now that the fence is gone, the HOA cannot prevail because an injunction order cannot be entered because the grounds for the injunction is no longer at issue. Where the defendants action sought to be enjoined has been abandoned, the whole grounds for equitable relief no longer exists, and the matter ought to be dismissed. Unlike suits for money damages, cases like injunctions or declaratory judgments are in what’s called “equity jurisdiction,” which requires an actual controversy to be presently existing. This doctrine is commonly referred to as a question of “mootness” (when the alleged violation has ceased) or “ripeness” (when the offense hasn’t happened yet). The court found the case moot and dismissed it in its entirely.
In some cases, the factual context for the mootness question is less clear-cut than a complaint about a fence that has been completely removed. Sometimes suits for injunctions are more about conduct or how improvements or objects on the property are used rather than their mere existence. In cases involve flooding or erosion, the water infiltration may not occur every day, and in fact may be irregular depending upon the weather or how the defendant has configured downspouts that day, or other conditions. In some cases, an injunction may be granted even if the complained of conduct only occurred once. Some cases raises a question as to whether the complained of improvement actually violates a legal obligation owed by the landowner to the association under the governing instruments or if the HOA is overstepping its bounds. The owner may decide to reconfigure the fence, drain or other structure or vegetation to conform to the instruments (and not necessary what the manager is ordering them to do). The opponents may want to pursue the case more aggressively, arguing that the corrective activity somehow functioned as an admission that the HOA or neighbor was right and the owner was wrong. However, that may misconstrue the defendant’s actions or intentions. Also, angry people sometimes want their opponent to cease doing things related things that have always been legal as a kind of punishment.
For reasons such as these, when HOA or neighbor disputes escalate to litigation, sometimes “giving in” on certain points can be a powerful legal defense strategy, but one that must be properly navigated to resolve the dispute while adequately defending the owner’s rights.
Case Discussed:
Rose Hall HOA, Inc. v. Jelinek, et al., 66 Va. Cir. 172 (Fairfax Co. Oct. 28, 2004)(MacKay, J.).
Note that the picture associated with this blog post is a stock image and does not depict anything discussed in this article.
February 17, 2021
Role of Survey Plats in Resolving Property Disputes
When landowners purchase real estate, they get the opportunity to obtain a land survey or to save a few hundred dollars by avoiding it. During the home buying process, purchasers’ financial situation is usually stretched to their utmost limit. The owner may not understand the value of paying $200-$600 for a survey plat when there is no known issue that would be addressed by the boundary survey. But checking out “known unknowns” is an important part of buying real estate. Relinquishing the opportunity to obtain a survey before purchase is often at the buyer’s peril.
A home inspection may reveal defects in the construction or maintenance of the home that could cost hundreds or thousands of dollars to remedy. The title examination process conducted by the settlement company reveals the legal description of the property and any title problems that may exist. However, there are basic questions about what the buyer actually obtains for the purchase price that can only be answered by a land survey that reflects the findings of a title search and proper field work. For example, fences, walls, shrubs and driveways may give misleading impressions of the boundaries. Such impressions may be at odds with the dimensions of the lot as shown in the subdivision plat.
A lot may be encumbered by a pipestem driveway easement serving a lot behind the property and the location of the paved portions, trees and fences around the easement may encroach into the easement or the driveway veers off the easement. Legal disputes frequently arise between the owners of pipestem lots and the properties across which their driveways run. Purchasers are often attracted to lots adjacent to HOA common areas or public parks because many people would rather see a wooded area, pond, or creek behind one’s house, instead of other people’s backyards. However, whether publicly or privately owned, park-like areas are attractive to joggers and hikers in the neighborhood who might find it easier to cut across someone’s lawn rather than exit the woods through an established walkway. Property owners frequently use fences or shrubs to define boundaries, but it may not be apparent where one can place such things without a survey that shows the locations of boundaries and easements.
Surveys are essential to evaluating how local government zoning laws or HOA protective covenants restrict the erection of fences, trees, walls, sheds and play equipment. If a lot is on a corner, it probably has two sides that the county and/or HOA would treat as a second front yard, despite the orientation of the house and driveway on the lot. Whether a yard is deemed front, side or back may makes a big difference in determining options regarding fences and other structures. For example, owners typically cannot place tall privacy fences in yards fronting a road without written permission.
The inclination of many people is to maximize the use of their lot by constructing additions, porches, decks, outdoor living areas, treehouses, storage structures, driveway expansions, and so on to make their property more useful. However, public and private land use rules (zoning laws and HOA standards) typically make it easier to put things behind the house and more difficult to clutter the front yard. A survey can show the location of the boundary lines and the existing distances between the sides of the house to the boundaries.
In working with a surveyor, its important to know how to “shop” for the kind of survey that is most useful to the lot owner. Its easy for a surveyor to take a copy of the subdivision plat and the most recent deed, stop by the house for a few measurements, and reflect the current location of the house on the lot on a new survey. This is typically the cheapest kind of survey because it reflects a minimal effort to update previous surveying work. What is more useful is a boundary survey made that reflects any easements previously recorded. When a survey states on its face that no title report was furnished, that means that there could be an easement that reflects a substantial encumbrance or limitation on the owner’s ability to use the property the way she wants, but the plat doesn’t reflect that. It’s a kind of disclaimer that the survey has limited value. Obtaining a title report and providing it to the surveyor isn’t hard, but it’s a step that usually isn’t taken unless the owner requests it. Even if the buyer doesn’t obtain a proper survey before going to the real estate closing, it’s possible to get a title report and have a survey prepared at any time.
As an attorney representing lot owners in a variety of disputes involving neighbors, co-owners, HOAs or contractors, obtaining a survey is frequently the first “next step” discussed to properly evaluate the legal dispute so that we know where we are going. The survey informs the owner what they actually own subject to defined restrictions such as easements. This means that the owner can make informed decisions when it comes to adding or removing structures and plants to the property. Many people faced with a legal dispute want some answers that do not cost thousands of dollars. Sometimes a title report and survey focus the issues in ways that make it easier to resolve or prevent legal disputes.
February 3, 2021
What it Means for Ultra Vires HOA Actions to be Void
Wrongful legal actions by community association boards generally fall into two categories. The first are contracts, resolutions or other actions that the board generally has the authority under the declaration to take, but they failed to properly do so pursuant to the bylaws or applicable law. For example, suppose the HOA has the authority to enter into a landscaping contract, but the documents required the contract to be signed by a director and it was only signed by a manager. Or the HOA has the power under the declaration to regulate use of the service elevator, but the rules on the website have not yet been formally adopted by the board, and were only signed by one director. As another example, the declaration allows the board to adopt rules and regulations regarding parking on the common area, and the manager is towing guest cars despite the fact that the board has not adopted a parking permit system. These are the kinds of defects that can be corrected by conducting a proper meeting with a quorum and conducting necessary business according to the governing instruments. For such items, the board’s discretion is probably protected by the business judgment rule, so long as they follow the declaration. When HOA officers take actions informally, sometimes later these actions are “ratified” by formal board action with a quorum in a properly noticed meeting. It can often by difficult for lot owners who are not aligned with the majority to challenge policies on such matters, if the board can later “fix” any procedural defects by a later, properly conducted assembly. This is why HOA boards, managers and attorneys argue for a broad reading of the declaration and other governing instruments. It can be difficult for an owner to challenge a decision or policy such as this if they at one time acted in a way that seemly condoned it or failed to object. Nonetheless, just because an issue lies within the board’s discretion does not give them carte blanche. Ineffectively adopted policies are unenforceable until properly decided according to the statutes and bylaws, and they have to be enforced equitably. For these reasons, the scope of the board’s “mandate” in the development is important to directors and owners alike, but it may not be 100% clear if the governing instruments are ambiguous. Just because a covenant seems ambiguous does not mean that it is devoid of meaning or means whatever the board says. The law of property includes rules on how to interpret conflicting or ambiguous legal documents.
The other, more exciting kind of problems are where the association’s leaders act in a way that is outside the scope of their legal authority. For example, the covenants say nothing about regulation of trees and shrubs, and only talk about architectural standards for garages and sheds. If the board adopts and tries to enforce rules regarding replacement of dead trees that are cut down, such rules may be void from the get-go. As other examples, the board may be dominated by directors who want to undertake the maintenance and repair of property that is not actually a common area. The state laws and governing instruments establish parameters around which a community may regulate or spend money. Where the “line” is may not always seem clear, but the existence of such legal limits on board authority is important. If the association does not have the authority to do something, then the corporate action may be deemed “ultra vires” (Latin for “beyond the powers”). Challenges by individual owners to ultra vires HOA actions often have more “traction” or “legs” than those that concern things properly within the board’s authority. This is because “ultra vires” acts are ordinarily “void ab initio” (void at the outset).
An older, published Virginia case involved an ultra vires contract made by agents of a bank, City of Bristol v. Dominion Nat ‘l Bank, 153 Va. 71 (1929). The Virginia Supreme Court of Appeals observed that, “When the contract is once declared ultra vires, the fact that it is executed does not validate it, nor can it be ratified so as to make it the basis of suit or action, nor does the doctrine of estoppel apply.” Lawyers are always trying to find ways to make things workable despite the lack of authority. The doctrine of estoppel allows for a party to be held responsible for something because they induced another party to rely upon a representation or action that was made. What the Supreme Court was saying in City of Bristol v. Dominion National Bank was that when an action is truly ultra vires, it cannot be rendered valid because people acted as though it was. Colorfully, Justice Henry W. Holt remarked about ultra vires contracts: “As a contract it is wastepaper and as a contract worthless.” Lawyers have nightmares about court’s ruling like that about that things they draft for clients.
Justice Holt observed that an ultra vires contract may nonetheless include a remedy: “But it by no means follows that a claimant is always without remedy. There may be a recovery on an implied assumpsit for benefits conferred and kept.” So, if someone received goods or a service then they might be responsible for paying for them, on a theory of quasi-contract. The doctrine of ultra vires does not necessarily mean that everything becomes “free.”
When homeowners find themselves in legal disputes with HOA or condominium boards and managers, frequently they will be told that the association’s lack of specified authority in the governing instruments does not matter, because the lot owner waited too long to challenge what is being done, or they agreed to pay a fee or assessment, or otherwise knew about what was happening but did not quickly object. However, such arguments ignore longstanding legal principles about what it means to be a “chartered” organization. Community Associations often assert such defenses as estoppel, statutes of limitation, laches, waiver, condonation, and so on. However, if the board’s action was truly ultra vires, then those arguments may not apply.
The discussion about HOAs and ultra vires contracts and resolutions illustrates why association directors and their advisors want to be able to easily amend the governing instruments, and control that amendment process. Older HOAs and condominiums tend to have covenants and bylaws that are more “owner friendly” in terms of allocation of rights between the lot owners and the board. A valid amendment can change the size or shape of the board’s procedural requirements and/or substantive authority, potentially transforming something that would otherwise be ultra vires into legitimately within their mandate. Even the “benign” community associations are one election or one amendment away from a potentially toxic situation. The good news is that the reverse is also true: election of good directors or adoption of an improved declaration can improve the situation in a community association. Sometimes its hard to tell if the person or document being proposed would be good or bad.
(Note that the photograph associated with this blog post is a stock image and does not depict anyone or anything referenced in the article)
February 1, 2021
When a HOAs Entity Status becomes Inactive by Automatic Termination
Under Virginia law, a nonstock corporation must submit annual filings to avoid having its corporate status automatically “terminated” by the State Corporation Commission pursuant to Va. Code § 13.1-914. When people see that a corporation’s status is deemed “inactive” as terminated by a regulatory agency, they wonder if it no longer “exists,” particularly in the HOA context. It is common for HOA boards to neglect their annual registration requirements, because every one or two years a new board is elected that may not be aware of such requirements. Lot owners become interested in the meaning of the “inactive” status because HOAs are frequently demanding that members pay assessments and obey architectural restrictions. Anyone can check the status of a corporation by logging on to the SCC website. As a legal matter, the “automatic termination” of the HOA’s corporate status usually does not mean much. Under Virginia law, “incorporated” status is a feature of statutes that confer certain powers and responsibilities on a business or association that would not otherwise apply. Persons in business or associations are attracted to incorporation because of the liability shield, legal immunities available to the board of directors, and the ability to open a bank account.
Ordinarily, upon termination, the property and business of a corporation pass to the last board of directors as “Trustees in Liquidation” who are responsible for winding up the affairs of the company. Va. Code § 13.1-914. This sounds like a big deal. However, Va. Code § 13.1-916 allows a nonstock corporation to reinstate its active corporate status by filing a form and certain fees within five years of the date of automatic termination. BOOM! The corporation is “active” again. If a HOA corporation has periods of “automatically terminated” status in its history, what does that mean? Does that mean that the actions of the board of directors or officers are voided? Do all debts owed to or duties owed by the HOA vaporize? No. If the automatically terminated corporation is reinstated within the five year period, by Virginia law its as though the “termination” was never in effect:
Upon entry of the order of reinstatement, the corporate existence shall be deemed to have continued from the date of termination as if termination had never occurred, and any liability incurred by the corporation or a director, officer, or other agent after the termination and before the reinstatement is determined as if the termination of the corporation’s existence had never occurred.
Va. Code § 13.1-916.
This statute is not some sort of scheme dreamed up by a HOA industry lobbyist. The statutes for stock (for profit) corporations and limited liability companies are similar. But in any case it can be the cause of confusion. If a nonstock corporation is currently in a state of “automatic termination,” its members may not know whether will ever reinstate. According to the statutes, the last board of directors acts as trustees for the corporation, and can sue or be sued in a fiduciary capacity.
Even if the HOA’s directors or trustees fail to reinstate the corporation’s active status within five years, that does not mean that the association necessarily ceases to exist. Virginia law allows for unincorporated associations, including property owners associations. Of course, an unincorporated association does not enjoy the legal powers of an incorporated association. But that does not mean that it ceases to exist. This is because the incorporated status is a legal characteristic of the group, and not its cause for existing. When HOAs are automatically terminated for over five years, sometimes their leaders decide to re-incorporate. Corporate law includes the notion of a business maintaining continuity that perpetuates beyond the change of business form.
As a side note, some community associations in Virginia are initially organized in a manner that does not contemplate incorporation. Condominium associations are usually not incorporated. Some HOAs are initially organized as unincorporated associations and the covenants may not accommodate future incorporation without amendment. Such associations may need to amend their declaration if they incorporate.
Remember that a property owners’ association is not some sort of local government entity created by a municipal charter coming from the state capital. When a community association law problem arises, the starting point of any legal analysis is the declaration of covenants and any amendments. That is the document that the courts treat as the “contract” between the lot owners and the association.
Update (Feb. 5, 2021):
The 2018 Mendez case in Fairfax Circuit Court is instructive about what can happen with a “lapsed” nonstock HOA corporation. The Huntington Forest HOA negligently allowed their corporate status to lapse for longer than five years, while continuing to function through a board of directors. When the board later realized what had happened, they re-incorporated the homeowners association with the SCC. The Circuit Court observed that the declaration of covenants “survived” the automatic termination of the corporation’s existence. Upon termination, the property of the association is held by the last board of directors as trustees in liquidation. However, the POAA does not require for property to be formally owned by the incorporated HOA entity to endure in its status as a common area. The POAA looks to whether the common areas are designated as such in the declaration, and whether the association is obligated to maintain or operate the common areas. The Circuit Court found the nonstock corporation holding the “new” SCC charter to be in continuity with the original throughout the functioning yet unincorporated period of its organizational history. The Court found that the newly incorporated entity to be the “true” Huntington Forest HOA board, and not the trustees in liquidation of the terminated one. The “new” corporation was not owed legal recognition because it was calling itself the same HOA or was performing the functions as before. The court, in essence, ruled that this is NOT one of those instances where a group of interested neighbors get together and form a nonstock corporation for the purposes of collecting dues and telling people what to do with their land. The subdivision maintained continuity through the declaration of covenants as the principal governing instrument. The outcome of the Mendez case may have been different if the declaration had different language or had been amended in a way that was incompatible with the reincorporation.
Mendez v. Huntington Forest HOA, 99 Va. Cir. 160 (Fairfax Co. Jun. 4, 2018).
January 27, 2021
Modernizing HOA Law or Exploiting a Crisis?
“Never let a good crisis go to waste.” -Winston Churchill.
The Virginia General Assembly is currently in session. One interesting bill to Virginia homeowners is 2021 HB1816. This bill seeks to amend the Property Owners Association Act and Virginia Condominium Act regarding the use of “electronic means” for meetings and voting. Making videoconference a larger and better part of HOAs and condominiums is a good thing. But this flawed bill ought to undergo changes necessary to protect Virginia landowners and the integrity of the community association “open meeting” policies in place in Virginia.
I am a practicing attorney who represents lot owners and unit owners in community association matters. Sometimes my clients are in opposition to association boards, and in other cases they are dealing with a dispute with a neighbor where they are aligned on the same side as the board. I am familiar with the essential role of already existing “open meeting” statutes for community association in establishing procedural safeguards. To the extent that state law gives associations substantial power, these open meeting rules must be preserved and strengthened.
As Virginia law currently stands, the statutes require almost all deliberations of boards of directors to be conducted in properly-noticed meetings that owners are able to attend or follow along and participate in contemporaneously. The POAA (and Condo Act) prohibits boards and committees from doing business in informal “work sessions” or email exchanges (with very limited exceptions for executive session). Va. Code § 55.1-1816. This is important, because most HOAs have the power under their governing instruments and the POAA to adopt rules and regulations that can impose limits on how they can use or improve their property. Va. Code § 55.1- 1819. This is significant because the ability to use or improve property is an essential aspect of its value as an investment, and the freedoms we enjoy as Americans have to be exercised somewhere, and the home is the most important place for exercising freedoms of all kinds. The “open meeting” requirements for HOAs and Condos, which are supposed to (supposedly) function as “mini-democracies”, are similar to the open government laws that require local government board members to conduct all business (with very limited exceptions) in noticed meetings.
HB1816 would weaken these protections, and in associations where safeguards are not otherwise enshrined in their governing instruments, facilitate common practices by HOA boards, committees, and managers to circumvent the “open meeting” requirements by making important decisions for the community by text message, email, telephone, or informal social gatherings.
HB1816 , in the amendments to § 55.1-1832(F) and § 55.1-1935(E), would allow any meeting of a HOA or condominium, be it a board meeting, committee meeting, or annual or special meeting of the members to be conducted by “electronic means.” Most Virginians are now familiar with various forms of videoconference, be it Zoom, WebEx, Google Meets, Microsoft Teams, GoToMeeting or other similar programs. The Coronavirus has made these technologies a common practice. I have previously posted about the use of remote meeting technology in my December 2020 article, Presenting to HOA Boards and Committees in Remote Hearings. I use these services and think that they are a great thing. I think that they ought to be used in Condominium and HOAs because they have the power to increase participation by many members who may not otherwise be able to participate because of a disability, mobility concerns, inability to drive, or childcare obligations. This also promotes access to justice because homeowners are more likely to be able to retain an attorney to help them in such hearings because it reduces travel time.
In 2020, the General Assembly passed special, emergency legislation that helped for association boards to meet and conduct business during the coronavirus epidemic. I posted analyses of that in my May 2020 post, Virginia Temporarily Relaxes HOA Open Meeting Statutes for Coronavirus. HB1816 would work to make that permanent and more. It’s the “more” part that is a problem.
The problem with HB1816 is not that it facilitates use of these videoconference programs in HOAs is that it goes well beyond that. In conjunction with other changes, HB1816 seeks to broaden the definition of “electronic means” in Va. Code § 55.1-1800 and § 55.1-1900 to include “teleconference, videoconference, internet exchange, or other electronic methods.” Those statutes incorporate the definitions found in Va. Code § 59.1-480 of the Uniform Electronic Transactions Act. That statute defines “Electronic” as “relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.” But the referenced statute doesn’t define “internet exchange” or “other electronic methods”. The definition as written is broad enough to encompass text message and email correspondence between board members, committee members and/or members. This is a terrible way for HOAs and condominiums to decide important questions such as enactment of million dollar budgets, to change rules to governing the use of land in the subdivision, or to impose penalties against an owner for an alleged rule violation. In many HOAs and condominiums, this would facilitate boards changing the rules on an informal basis, as they see fit. Founding Father John Adams believed that the USA ought to be “a government of laws, not of men.” In other words, everyone has to follow the laws (or the declaration or contract), including the rulers or directors. HB1816 would in many cases cause the POAA to reflect a public policy that the rules and standards in the governing documents simply don’t matter, its whatever the board wants. The is because HB1816 would remove statutory protections requiring HOA boards to follow their own rules and to not change the rules whenever they want to do something different.
HB1816 easily passed the House of Delegates and now sits in the General Laws Committee of the Virginia Senate. I hope that it does not get out of that committee, without changes to the definition of “Electronic Means.” Note that passage of this bill as written would not be “game over” for homeowners dealing with HOA bullies. But failure to fix the language would “bless” all sorts of mischief that needs to be stopped. Boards still need to follow the declaration and bylaws and the other protections of the POAA and common law. But legal reforms ought to make the law better and more clear, not the opposite. It appears to me that certain people are promoting this bill at this time to try to exploit the pandemic before it is over, by use of this bill which is ostensibly to help people do social distancing. For these reasons, I do not support HB1816. I think that the definition of “Electronic Means” needs to be revised, to only include technologies similar to Zoom, WebEx, MS Teams and the like, and to not include text message, chat rooms or emails.
January 28, 2021 Update:
On the evening of January of January 27, 2021, the Virginia Senate General Laws Committee reported out SB 1183 which appears to be a bill originating in the senate that is identical, or nearly so with, HB1816. This legislation has not yet been voted on by the full senate.
February 9, 2021 Update:
Around February 5, 2021, the Virginia Senate postponed further action on HB1816 and SB 1183 to the General Assembly’s “special” 2021 session which is essentially an extension of time for the “general” session.
Close of Special Session Update:
In the General Assembly’s 2020 Special Session 1, HB1816 was passed by both legislative chambers and signed by Governor Northam.
Referenced Legal Authority:
Va. Code § 55.1-1800 (POAA Definitions – Existing Law)
Va. Code § 55.1-1816 (POAA Board Meetings – Existing Law)
Va. Code § 55.1-1832 (POAA Technology – Existing Law)
Va. Code § 55.1-1900 (Condo Act Definitions – Existing Law)
Va. Code § 55.1-1935 (Condo Act Technology – Existing Law)
Va. Code § 55.1-1949 (Condo Act Meetings – Existing Law)
HB1816 (General Assembly Website)
SB1183 (General Assembly Website)
Who Is My Virginia Legislator?
(the photo for this post is a stock image and doesn’t depict anyone having to do with this post)
December 23, 2020
The Negativity Effect in Real Estate Decision-making
Kids, we are counting down the final days to Christmas 2020. Many of my readers are familiar with the 1957 Dr. Seuss book, “The Grinch Who Stole Christmas.” In honor of the Grinch and the Whos, I would like to share a few insights from a 2019 book I recently finished reading, “The Power of Bad: How the Negativity Effect Rules Us and How We Can Rule It” by John Tierney and Roy F. Baumeister. “The Power of Bad” is not a book about property matters per se. That said, I think that the principles of the negativity effect animate much of what is going on in real estate. The authors define the negativity effect as, “the universal tendency for negative events and emotions to affect us more strongly than positive ones.” There are many examples of this. If you visit a restaurant, and the experience is overall positive, but there is one discrete problem, then the customer walks away remembering the negative thing. When people read hotel reviews or other online ratings, they look to the bad reviews and tend to give more weight to descriptive negative reviews even if there are other positive ones for a business. On a larger scale, Anti-Terrorism is a good example. After one tragic, evil event the government makes all sorts of decisions, some warranted, but many unnecessary and harmful. In fact, the threat of terrorism is less of a risk than being struck by lightning. Empirical studies show that it often takes 3-4 good experiences to cancel out the effect of one bad experience on someone’s perceptions of a person, organization, or place. The negativity effect makes people susceptible to manipulation, particularly by media organizations chasing viewership through eye-catching news of the latest problems, a politician or candidate developing a voter base through fear, or merchants selling some product. Of course, there are bad things that people need to know to protect themselves against. The psychological power of bad experiences and associations distorts decision-making by warping perceptions through exaggerating a potential risk or threat.
The book does not go into the topic of real estate, but I can see how policymakers and property owners are particularly susceptible to negativity. Owners are afraid that their homes will become less useful, attractive, or valuable because of something that happens. Threats to one’s home affect people in deeply personal ways. Many fear an external threat to their enjoyment of their home, be it criminals taking over the neighborhood, increased traffic from new development, or a home-based business popping up next door. It is commonplace for people to buy homes subject to restrictive covenants that give power to HOA directors to impose fines for architectural “violations.” In effect, many paying extra each month to have someone tell them what to do with their own property. Why does this happen? The negativity effect convinces many (but not all) landowners that the threat of other people ruining the neighborhood by breaking the architectural restrictions outweighs the risk that the HOA may overstep its authority. However, the architectural violations that HOAs often find with owners’ properties rarely pose any substantial threat to the value or use of neighboring real estate.
The Power of Bad book provides an example of how workplace disciplinary systems can illustrate effects of the negativity bias. This example reminded me of the systems of fines used in many HOA communities. The food company, Frito-Lay discovered that workers in a Texas factory were writing obscene messages on potato chips before bagging them. During investigation, corporate discovered that the factory used a new “progressive discipline” system to deal with tardiness and safety violations. After a first “violation,” the worker’s file was noted and she was given a verbal warning. If there was another violation, the worker would be brought into an office to acknowledge receipt of a written violation notice. At that moment, the worker would feel like they were being forced to admit something without being given a chance to defend themselves. The employee was given another black mark in the file whether they sign the violation notice or not. If there was a third violation, the employee would be given an automatic three-day suspension without pay. The worker would return to the plant even angrier. The subsequent violation notice resulted in termination. Tierney and Baumeister saw this toxic disciplinary system as illustrating the “The floggings will continue until morale improves” management approach. Frito-Lay discovered that the managers hated the disciplinary system as well, because it eroded professional relationships and made them unpopular. Instead of making the disciplinary process more equitable by ratcheting-up punishments evenly, it caused the factory to become more arbitrary. The managers avoided handing out violations until they just could not stand a worker anymore, after which they tried to railroad that problem employee through the stages of the disciplinary system so they would be terminated. Frito-Lay ended up scrapping this progressive disciplinary system in favor of a different design. This “progressive” disciplinary system reminds me of the dysfunctional covenant enforcement and dues collection systems many homeowners or condominium associations use to implement board policies. When owners receive rule violation notices, they frequently observe that the rule is not being enforced in the community, and their property does not really break the rules, but others are. Sometimes the notice states that a hearing was held without the owners knowing that their case was even before the board. Often, the board does not even have the authority to adopt the rule quoted in the violation letter. When owners receive fines for things that do not actually violate any legal obligation they have to the HOA, they lose motivation to maintain their property to keep up the neighborhood. Vindictive and incompetently managed rule violation systems can actually diminish the natural impulses that people often have to work in their yards to keep pace with their neighbors. Some people may become more worried about violation notices than actually yardwork. Sometimes bogus violation notices, fines, and late fees are focused on owners who are particularly unpopular with the board members or managers. Once associations record liens or institute foreclosures, the owner can feel “trapped” in a situation where they have few options other than paying a large monetary demand that includes items the collector is not entitled to, lying low and hoping that a suit or lien does not come, or retaining an attorney to solve the problem. These bad experiences can actually get away with these improper things, leaving them with few outlets other than posting attacks against the board or managers on social media (the contemporary version of scribbling on potato chips). Compounding things, there are people on the internet highlighting all of the “bad” about HOAs, to enhance the public’s attention to these issues, in the hopes that HOAs will become abolished and punish the malefactors (certain directors, managers, attorneys, etc.). This can detract from more useful discussions about how owners can, through education or working with an attorney, develop strategies for solving their own problems with HOAs. Sometimes news articles or social media posts, taken in the aggregate, actually re-enforce the false belief that it is futile to resist HOA bad behavior. But this is not true. It is common for landowners to successfully avoid, prevent, solve, or escape legal difficulties involving their neighbors or community associations. This happens all the time, but the news reports and social media buzz focuses on the hopeless cases because they draw more attention. If an owner has a problem with a homeowner’s association, they should not stop their research at doomsayer articles about other communities where a problem spiraled into a disaster. Those articles may be true, but they are not going to identify solutions that someone can use in their own situation. If an owner already purchased the house in a community association, they cannot wait for their HOA to be abolished in the future, because that is not going to happen. Often, the best thing is for the owner, a board member, neighbor, attorney, or other advisor to try to help the owner to resolve the problem before it becomes a larger financial burden, cause additional property damage, further limit the use of property, or mushroom into a larger interpersonal conflict. In what I have seen, landowners who cultivate positive vibes within themselves and their relationships are the ones that have the resiliency necessary to overcome the injustices they suffer. The Whos of Whoville were thankful and undeterred in the face of the Grinch’s scheming. My favorite chapters in “The Power of Bad” are the ones that talk about how positivity can overcome negativity and the negativity bias can be mitigated. In real life, one cannot count on the Grinch to have a change of heart when you need him to. In real estate matters, quite often overcoming the negativity bias involves refocusing away from vindication and shame to identifying tools (facts, resources, people, laws, etc.) that can be harnessed to solve the problem, which sometimes requires going before a judge, but often can be done in the context of settlement. Sometimes re-framing bad HOA covenants, rules or statutes as the byproduct of the negativity effect can convince decision-makers to interpret them narrowly and decline to enforce them in a particular instance. In HOA matters, often the answer to the problem can be found in a recorded declaration or other instrument that applies to the facts but has been ignored because people commonly think of the HOA as the organization you get rather than what is or is not expressed in the rules.
Note that the photo used for the blog post is just a stock image and does not depict anything referenced in my article.
December 18, 2020
Presenting to HOA Boards and Committees in Remote Hearings
Following enactment of 2020 General Assembly legislation, most HOAs and condominiums in Virginia carry on business through “remote” videoconferencing technology such as Zoom, WebEx and Microsoft Teams. Because of the Coronavirus, Americans of all ages are now more familiar with this technology. In the HOA context, boards and committees use remote hearings to decide matters that significantly impact the lives and property of many people. This presents challenges owners do not ordinarily face when using zoom for other reasons, such as religious services, educational programs, or social gatherings. Zoom allows owners to participate in HOA meetings and hearings that is in some ways more convenient than before. Travel time is unnecessary. The owner may be able to avoid arranging for childcare. On the flipside, the owner will not be able to present their arguments or requests by simply showing up at a meeting location in person with a folder of materials. In this blog post, I would like to identify certain issues that an owner must consider when a HOA schedules an architectural application or notice of violation for decision at a remote hearing.
The Technology Itself. Before the hearing, the owner should become familiar with the software being used. One tech-friendly judge in Fairfax recommends that attorneys practice using WebEx with a friend or family member to make sure they can access a meeting through both the video and audio features. Many people find it easier to use a headset or their cell phone because such devices often have better speakers and microphones than laptops and tablets. WebEx, Zoom, Microsoft Teams and Google Meet are not the same.
The Notice of the Hearing. Procedural “Due process of law” consists of (1) the right to be heard by the judge or official, (2) decision by a neutral tribunal, and (3) adequate advance notice of that hearing and the subject matter at issue. HOAs and condominiums usually give affected owners notice of scheduled meetings and how to access the meeting. However, sometimes an affected owner is not given adequate notice for one reason or another. If an owner submits an application or complaint to the HOA, they ought to monitor their emails and the information available online to see if anything is happening. Sometimes an affected owner can identify themselves as such to the HOA and be notified of hearings before they occur.
Recording the Videoconference or Downloading a Recording. With limited exceptions, HOA boards and committees must conduct business, deliberate, and make decisions in “open” meetings, and that rule also applies when they use remote technology. In Virginia and some other states, owners have a right to record the meeting. Some associations record the meetings themselves and post the videos online after the meeting. However, the owner often cannot rely upon the HOA to make a recording and then make that available. There are several reasons why an owner would want to preserve such information. Sometimes neighbors or board members will say something in a meeting and then later deny that it was said or change their position. The record can lock them in. Also, if the HOA decides that the owner has legal grounds to challenge, whether on appeal within the HOA or in a court of law, the record of what happened in the HOA meeting is valuable to explain what happened and why.
How to Present One’s Position. In these hearings, its common for the “chair” to give owners a certain number of minutes to present their request, opposition or position to the board or committee. Usually, the directors or committee members read the written submissions beforehand, but not always. The owner may be required or well-advised to put things together in a written submission. In the case of architectural approvals, the declaration or guidelines will usually set forth specific information that must be included in the application in order for the committee to hear and approve it. Sometimes HOAs approve applications that are facially incomplete or will impose application requirements not found in the governing instruments. In architectural control matters, the burden is on the applicant to explain what they want and to show why this is proper. An owner supporting or opposing an application, complaint or violation notice ought to be aware of what the guidelines require or forbid. An owner or her attorney can put more information into a written submission than can ordinarily be stated in a limited amount of time. Its common for the written materials to be presented to the viewers. For this reason, visual aids such as photographs, drawings, surveys, and diagrams may present better than an email in 10-point type. Many attorneys organize their presentation into a PowerPoint or PDF slide presentation that they submit to the HOA for review beforehand. Remember that these meetings typically occur in the evening, when directors and committee members are already thinking about dinner, anxious to call it a day or feel fatigued. The owner ought not to overwhelm the HOA with voluminous, repetitive written or emailed submissions.
During the Meeting Itself. The members of the board and committee know each other and the HOA’s management staff. However, the owner or attorney may not be familiar with who is on the board or committee and who the chair or manager is. The board or committee members may not introduce themselves, leaving participants to guess who is a decisionmaker or not. An owner can find out who is on the board of committee before the meeting starts. One wants to know whether someone speaking is on the board or not. One ought to introduce oneself when talking and to again state your name if you speak again, so people know who they are. So, I would start by saying “John Cowherd, attorney for Homer Simpson, neighbor to the applicant Ned Flanders.” If I spoke again, I might say “John Cowherd” again but not repeat the details of my role again each time. Once one is allowed to speak, sometimes they are interrupted by another participant or are forcibly “muted” by a chair or staff person in mid-sentence. This is why I like written submissions. Sometimes boards will use “executive session” to confer with one another and their attorney without the other parties participating. Another bad practice is to tell participants that the portion of the hearing for their matter is concluded, and then after certain owners leave the electronic meeting, they will discuss it again later.
The use of remote videoconference technology has real advantages to lot owners, because they can participate in HOA proceedings from the convenience of their own homes. If used properly, Zoom can increase owner participation and the overall effectiveness of governance. If the hearing is conducted online, the owner can have any qualified, licensed attorney represent them, regardless as to where the attorney lives in the country. If used properly, videoconferences can increase access to justice because its easier to find an attorney to dial in to a remote meeting than show up at a specific place on a weeknight. That said, many HOAs do not like dealing with attorneys. Remote technology can make it easier for the hearing to be recorded. Despite these advantages, technology provides additional practical tools for HOAs to evade open meeting requirements, “mute” objectors, and disregard governing instruments. What will happen to HOA meetings after the Coronavirus Epidemic is over? Some associations may revert to entirely “in-person” meetings and hearings. Others may continue with remove videoconferencing, or adopt a “hybrid” approach, where owners have the option of attending in person or accessing remotely. Overall, I expect videoconference technology to be more widely used for a variety of purposes after the epidemic than before. After everyone can get the vaccine and masks are set aside, we will be dealing with a variety of legal repercussions of the epidemic shutdowns for years to come.
Note that the photo associated with this blog post is a stock image that does not depict anything referenced in the article.