Martin & Raynor, P.C. - Sale of a Lot in a Development Subject to the Virginia Property Owners' Association Act

Sale of a Lot in a Development Subject to the
Virginia Property Owners' Association Act
January 1, 2002

Martin & Raynor, P.C.
1228 Cedars Court
Charlottesville, Virginia 22903-4801
Telephone: (434) 817-3100
Fax: (434) 817-3110

Virginia Property Owners’ Association Act applies to developments subject to a declaration initially recorded after January 1, 1959.
1. Development means real property located within the Commonwealth subject to a declaration
  1. which contains both lots and common areas;
  2. which makes any lot owner by virtue of lot ownership a member of an association; and
  3. which obligates the lot owner to pay assessments provided for in a declaration. Lots can be residential or occupied for recreational purposes or both.
2. Declaration means any instrument, however denominated, recorded among the land records of the county or city in which the development or any part thereof is located that either
  1. imposes upon the association maintenance or operational responsibilities for the common area in an amount in excess of $150 per year per lot as a regular annual assessment or
  2. creates the authority in the association to impose on lots, or on the owners or occupants of such lots, or on any other entity any mandatory payment of money in an amount in excess of $150 per year as a regular annual assessment in connection with the provision of maintenance and/or services for the benefit of the lots or the common areas.
3. Common area means property within a development which is owned, leased or required by the declaration to be maintained or operated by a property owners’ association for the use of its members and designated as common area in the declaration.
Contract Disclosure.
1. A person selling a lot shall disclose in the contract that:
  1. The lot is located within a development which is subject to the Act.
  2. The Act requires the seller to obtain from the property owners’ association an association disclosure packet and provide it to the purchaser.
  3. The purchaser may cancel the contract within three days after receiving the disclosure packet or being notified that the association packet will not be available.
  4. If the purchaser has received the association disclosure packet, the purchaser has a right to request an update of such disclosure packet.
  5. The right to receive the association disclosure packet and the right to cancel the contract are waived conclusively if not exercised before settlement.
2. The information contained in the association disclosure packet shall be current as of a date specified on the association disclosure packet. The seller may cancel this contract
  1. within three days after the acceptance of the contract, if on or before the date that the purchaser signs the contract, the purchaser receives the association disclosure packet or is notified that the disclosure packet will not be available;
  2. within three days after receiving the association disclosure packet or notice that the packet will not be available if the association disclosure packet is hand delivered; or
  3. within six days after the postmark date, if the association disclosure packet or notice that the packet will not be available is sent to the purchaser by United States mail. The purchaser may also cancel the contract, without penalty, at any time prior to settlement if the purchaser has not been notified that the association disclosure packet will not be available and the packet is not delivered to the purchaser.
Contents of association disclosure packet and other requirements.
1. Association requirements: The association shall make available to an owner or
  his authorized agent within fourteen days after receipt of a written request therefor and receipt of the appropriate fee, an association disclosure packet, which, upon receipt, the seller shall deliver to the purchaser. The information contained in the association disclosure packet shall be current as of a specified date within 30 days of the date of the contract. If hand-delivered, the written request and fee are deemed received on the date of delivery. If sent by United States mail, the request and fee are deemed received six days after the postmark date.
2. Required Contents:
  1. The name of the association and, if incorporated, the state in which the association is incorporated and the name and address of its registered agent in Virginia;
  2. A statement of any expenditure of funds approved by the association or the board of directors which shall require an assessment in addition to the regular assessment during the current year or the immediately succeeding fiscal year;
  3. A statement, including the amount of all assessments and any other mandatory fees or charges currently imposed by the association and associated with the purchase, disposition and maintenance of the lot and to the right of use of common areas, and the status of the account;
  4. A statement whether there is any other entity or facility to which the lot owner may be liable for fees or other charges;
  5. A statement of the status and amount of any reserve or replacement fund and any portion of the fund allocated by the board of directors for a specified project;
  6. A copy of the association’s current budget or a summary thereof prepared by the association, and a copy of its statement of income and expenses or a statement of its financial condition for the last fiscal year for which such statement is available;
  7. A statement of the nature and status of any pending suit or unpaid judgment to which the association is a party which either could or would have a material impact on the association or its members or which related to the lot being purchased;
  8. A statement setting forth what insurance coverage is provided for all lot owners by the association, including any fidelity bond maintained by the association, and what additional insurance would normally be secured by each individual lot owner;
  9. A statement that any improvement or alteration made to the lot, or uses made of the lot or common area assigned thereto by the prior lot owner, are not in violation of any of the instruments referred to in paragraph (l) hereof;
  10. A statement setting forth any restriction, limitation or prohibition on the right of a lot owner to place a sign on the owner’s lot advertising the lot for sale;
  11. A statement setting forth any restriction, limitation or prohibition on the right of a lot owner to display any flag on the owner’s lot including, but not limited to reasonable restrictions as to the size, place and manner of placement or display of such flag and the installation of any flagpole or similar structure necessary to display such flag;
  12. A copy of the current declaration, the association’s articles of incorporation and bylaws, and any rules and regulations or architectural guidelines adopted by the association;
  13. A copy of the notice given to the lot owner by the association of any current or pending rule or architectural violation; and
  14. Certification, if applicable, that the association has filed with the Real Estate Board the annual report required by Section 55-516.1; which certification shall indicate the filing number assigned by the Real Estate Board and the expiration date of such filing.
Miscellaneous.
1. Failure to receive copies of such documents shall not excuse any failure to comply with the provisions thereof.
2. The association shall have no obligation to deliver the disclosure packet to the purchaser of the lot. The disclosure packet required by this section shall not, in and of itself, be deemed a security within the meaning of Section 13.1-501.
3. The purchaser may submit a copy of the contract to the association with a request for assurance that the information required by this section previously furnished remains materially unchanged, or if there have been material changes, a statement specifying such changes. The purchaser shall be provided with such assurances or such statement within ten days of the receipt of such request by the association. The purchaser may be required to pay a fee for the preparation and issuance of the requested assurances. The fee shall reflect the actual cost incurred by the association in providing such assurances but shall not exceed fifty dollars.
4. The association may charge a fee for the preparation and issuance of the disclosure packet required by this section. The fee shall reflect the actual cost of the preparation of the packet, but shall not exceed $100.
5. When a disclosure packet has been issued as required by this section, the association shall, as to the purchaser, be bound by the statements set forth therein as to the status of the assessment account and the status of the lot with respect to any violation of any of the instruments referred to as of the date of the statement unless the purchaser had actual knowledge that the contents of the disclosure packet were in error.
Sanctions on association.
1. If the association has been requested to furnish the disclosure packet and has been paid the appropriate fee, its failure to provide the disclosure packet in substantially the form provided herein within fourteen days from the actual receipt of the request by an officer, director or agent of the association shall be deemed a waiver of any claim for delinquent assessments or of any violation of the delinquent assessments or of any violation of the declaration, bylaws, rules and regulations, or architectural guidelines existing as of the date of the request with respect to the subject lot.
2. The association shall be liable to the seller in an amount equal to the actual damages sustained by the seller in an amount not to exceed $500.
3. The purchaser shall nevertheless be obligated to abide by the declaration, bylaws, rules and regulations, and architectural guidelines of the association as to all matters arising after the date of settlement of the sale.
Exemptions.
1. A disposition of a lot by gift;
2. A disposition of a lot pursuant to court order if the court so directs;
3. A disposition of a lot by foreclosure or deed in lieu of foreclosure;
4. A disposition of a lot that is zoned for or otherwise restricted to nonresidential use; or
5. A disposition of a lot to a person or entity who is not acquiring the lot for his own residence or for the construction thereon of a dwelling unit to be occupied as his own residence, unless requested by such person or entity. If such disclosures are not requested, a statement in the contract of sale that the purchaser is not acquiring the lot for such purpose shall be conclusive and may be relied upon by the seller of the lot. The person or entity acquiring the lot shall nevertheless be obligated to abide by the declaration, bylaws, rules and regulations, and architectural guidelines of the association as to all matters.