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New law to regulate HOAs statewide
A new state law may affect homeowners who live in neighborhoods governed by homeowners associations, condominium associations, cooperative associations and like entities.
The law, which the General Assembly passed this year and which went into effect July 1, states that all management associations that provide services to a common interest community must now meet certain statewide regulatory standards and must obtain a license to do business by Jan. 1, 2009.
In addition, property owners' associations and condominium associations must also obtain a "fidelity bond" or an "employee dishonesty insurance policy" ranging from a minimum of $10,000 to $1 million.
Attorney Bill Marr, a founding member of the Herndon Community Association Coalition, said the law came about as a result of an unsolved case in which an estimated $2.2 million from hundreds of Northern Virginia condominium and homeowners associations was discovered missing in late 2007.
According to Marr, HOA managers and boards will now be regulated by the Department of Professional and Occupational Regulation.
The new law requires that associations pay an annual assessment of 0.02 percent of their annual gross assessment income, up to $1,000, in addition to the already existing annual requirement and fee.
Betsy Johns, vice president and controller of property management company National Realty Partners, said associations' budgets will likely have to go up to cover the costs of licensing and education, as well as paying for the fidelity bond.
"This will have to be paid for by the entities being regulated through the collection of fees," she said.
According to Johns, the new regulations will result in additional costs to associations, which may pass down to the homeowners.
"HOA management fees and dues may increase due to the requirements of this new law," said Herndon Councilman and HCAC President Charlie Waddell.
But representatives of some of the larger HOAs in Loudoun said they do not anticipate the new law causing a hike in assessment rates and said it most likely will not have a major impact on them or their residents.
"I don't see there being a large effect on us," said Laura Plummer, president of the Ashburn Farm Homeowners Association. "There will be some things we need to do a bit differently... but I think we've pretty much been doing all these things all along. Now there is just a governing body that says you have to do these things."
Cliff Keirce, president of the Broadlands HOA in Ashburn said it's too early to tell what type of effects there could be and he hasn't been fully briefed on the changes.
"From a few things I've heard and seen, these new laws far exceed what would be necessary to protect against another Koger situation," he said.
Lansdowne HOA president Jeff Brown agreed that some of the changes might be overreaching.
"I don't see it as a bad thing necessarily," he said. "It is a little early to tell. Certainly it strikes me as overkill."
The new law also establishes a "Common Interest Community Board," made up of 11 members appointed by the governor, who will appoint a statewide ombudsman – a property rights attorney assisting homeowners in understanding and exercising their rights in resolving issues with their associations.
In addition, HOAs and other property management companies will be required to disclose all post-closing fees and approved minutes of board or association meetings for the preceding six calendar months under the law's provisions.
Does anyone know if this will help make an HOA actually enforce the covenants they're supposed to enforce? If not, can anyone recommend a remedy for getting an HOA to enforce the covenants, when letters to the GM and oral presentations to their Board don't create action?
Posted by Eagle_Eye
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