ASSOCIATION COVENANT

ENFORCEMENTUsing your Documents to Help Maintain Your Neighborhood

I. The Ground Level – Your Governing Documents

A. Declaration1. Declaration is the recorded document

that affects and attaches to the title to the real property

2. Likely where your powers are• Assessments• Violations• Attorneys fees/late fees

3. Difficult to amend – usually requires a super-majority of members (75%)

B. Bylaws1. Not recorded (unless you are in a

condominium)2. Instructions on meetings, boards,

voting, and general operation of the Association

3. More easily changed, usually just by Board vote  Bylaws are not

always easily changed!

C. Articles of Incorporation1. Sometimes voting powers are here.2. Sometimes Art of Inc. are “ahead in

line” to the Bylaws. 3. Art of Inc. are only available where your

entity is a corporation• On file at VA State Corporation

Commission• If your association is not

incorporated, you will not have Art of Inc. 

How does this affect the Association? Does it limit the power of the Board? Does the Association have the

power to enforce covenants? Is there a

benefit to not incorporating the

Association?If your association is not incorporated, you will not have Articles of Inc.

D. Rules/Regulations1. These are rules for conduct on common

area2. Can also include design guidelines

GUIDELINES

REGULATIONS

RULES

COMPLIANCE

E. Policies/Procedures1. These are procedures for how the

Association conducts itselfa. Collections Resolution• Demand letters, late fees, etc.• Keep in mind Va Code §55-513.3

(amended in 2014):§ 55-513.3. Assessments; late fees. Except to the extent that the declaration or any rules or regulations promulgated pursuant thereto provides otherwise, the board may impose a late fee for, not to exceed the penalty provided in § 58.1-3915, any assessment or installment thereof that is not paid within 60 days of the due date for payment of such assessment.

§ 58.1-3915. Penalty for failure to pay taxes by December 5.Except as otherwise provided by ordinance under § 58.1-3916, any person failing to pay any county, town and city levies on or before December 5 shall incur a penalty thereon of five percent, which shall be added to the amount of taxes or levies due from such taxpayer, and which, when collected by the treasurer, shall be accounted for in his settlements. No penalty shall be imposed for failure to pay any tax if such failure was not the fault of the taxpayer.

Policies/Procedures (cont.)b. Some attorneys interpret this to

require late fees to be limited to 5%.c. Language of the statute states

“except to the extent that the declaration provides otherwise” – this appears to allow for higher late fees if specifically written in the Declaration.• May even permit a Board to set a

higher late fee, so long as the Board is given that authority in the Declaration.

Policies/Procedures (cont.)d. FDCPA has restrictions on third-party

collectors• 30 day notice requirement• The Association is the “original

creditor” so FDCPA doesn’t apply

Managers and attorneys must adhere to all FDCPA regulations!

Policies/Procedures (cont.)2. Due Process Resolution

a. This is the procedure for holding hearings, finding owners in violation, etc.

b. Can be part of a larger “Enforcement Policy” that also contains a collections policy

c. Be sure to follow requirements of VA. Code §55-513 as to notice of hearings, notice of results• Strict timing requirements• Don’t make your policy any

stricter than current law

Policies/Procedures (cont.)3. Complaints Policy

a. Required to be in place by CICB• A procedure for owners to

complain to the Ombudsman’s office about the Board/Association

4. Parking Policy b. Note what kinds of vehicles are

restricted, and be very detailed. § 58.1-3915. Penalty for failure to pay taxes by December 5.

c. Enforcement:• Stickers •

Towing• Paint curbs •

Reserved Spaces

II. The First Floor – Someone’s Done Something WrongA. Monetary Violation: Unpaid amounts owed to

the Association1. Who keeps the accounts?2. How late is late? Decide when you will

send accounts to legal, then always send them at that point (Fair Housing)

3. Beware of the five-year statute of limitations• Debts older than 5 years are

uncollectible if not previously secured by a judgment

• Once you obtain a judgment and record in land records, your judgment is valid for 20 years. o Garnish anytime during that 20 years.o Judgment lien remains on the property until

sold or foreclosed.

B. Non-Monetary Violation: Actions or Omissions

1. Property inspectionsa. Conduct them regularly and

consistently• Have a schedule and establish

the process in advance• Give your owners notice that

inspections will be happeningo You want them to clean it up, give them

a chance to do so before inspections.

• Document the violations with dated pictures

Non-Monetary Violation: Actions or Omissions (cont.)

b. Educate volunteers before inspecting• Fair Housing requirements – you

cannot give your neighbor a break

• Potential personal liabilityc. Have oversight of the volunteers by

a board member• Give them someone to report

back to• Someone needs to gather all the

information/photos and process them

III. The Second Floor – The Board Takes Action

A. Fiduciary Duties of the Board1. Duty to meet regularly to conduct

business of Association2. Duty to Enforce the Documents3. Duty to Maintain the Property

a. Preserve property values

B. Notice of Violation1. Law changed in 2014 – must now give

notice to the owner of the violation and a reasonable opportunity to correct the violation BEFORE setting the hearing date. Va. Code § 55-513(c):

Before any action authorized in this section is taken, the member shall be given a reasonable opportunity to correct the alleged violation after written notice of the alleged violation to the member at the address required for notices of meetings pursuant to § 55-510. If the violation remains uncorrected, the member shall be given an opportunity to be heard and to be represented by counsel before the board of directors or other tribunal specified in the documents.

C. Notice + A Hearing1. Must be sent out at least 14 days prior2. Must at least provide an opportunity for

a hearing.a. Best approach: Schedule an actual

hearing date in conjunction with the Board’s next meeting

b. If the homeowner appears, discuss the issue

c. If they do not appear, discuss as a board in their absence, and render a decision

What constitutes an ongoing violation?

• Things that need to be

repainted/repaired• Clean up items

• Incorrectly parked cars (commercial

vehicles, etc)

What constitutes a one-time violation? Very fact specific:• Trash cans left on

street at the wrong time (and later

removed)

D. Results Notice1. Must be sent out within 7 days of the

hearing date2. Must state the Board’s decision:

a. You are found to be in violation. If not corrected by X date, you will be assessed $10/day for up to 90 days

b. One-time violations are $50

Results Notice (cont.)

3. The Board may also decide to suspend privileges: parking/rec passes, voting, etc.a. Some docs provide that voting

rights are suspended for nonpayment

b. 55-513 provides that rights can be suspended for being 60 days in arrears

You must STILL first do the Notice + Hearing steps!

E. The “Violation Charges” Phase1. TAKE PICTURES!

a. Time and date stamped are bestb. Make them clear, not blurry, and

wide-angle enough to see the problem in relation to other items• For example: If someone left a

trashcan on the curb, don’t take a close up of the trash can – I can’t tell from the picture whether it is in the right place or not!

2. Keep a detailed log bookc. The person taking pictures and

keeping the log book should be prepared to testify at trial.

IV. The Third Floor – Filing a Lawsuit

A. The Warrant in Debt1. Can be filed for money damages

a. The unpaid assessmentsb. The Violation chargesc. Other fees (late fees/attorney fees)

2. Be sure to have a payment history showing credits for payments received.

Filing a Lawsuit (Cont.)

3. If there is a large running balance, be prepared to explain why – and to trace the account back to zero. Record keeping is really important! a. Keep in mind that when dealing with

people’s private info, the Association should take steps to protect it

b. Debtor interrogatories often have SSN’s included

c. Avoid making personal collection calls to the delinquent homeowner

B. Warrant in Debt (WID) can also be filed for a court order to abate the violation.1. This is relatively new practice area

(2011):

2. The court order usually requires action by a certain date.

Va. Code § 55-513(F): After the date a lawsuit is filed in the general district or circuit court by (i) the association, by and through its counsel, to collect the charges or obtain injunctive relief and correct the violation or (ii) the lot owner challenging any such charges, no additional charges shall accrue. If the court rules in favor of the association, it shall be entitled to collect such charges from the date the action was filed as well as all other charges assessed pursuant to this section against the lot owner prior to the action. In addition, if the court finds that the violation remains uncorrected, the court may order the unit owner to abate or remedy the violation.

Warrant in Debt (cont.)3. If the owner does not comply, the

owner has now disobeyed a court order, and the Association may bring a Rule to Show Cause, which is a contempt of court actiona. The owner then appears before the

judge to explain why he did not obey the court’s order

b. The Association can ask for additional attorneys fees and a stricter court order

c. If the owner fails to appear at a Rule to Show Cause, the court can issue a bench warrant for his arrest (Capias)

V. Rooftop – The Last Stop

A. Collecting on your money judgment1. Debtor interrogatories2. Wage Garnishments3. Bank garnishments4. Writ of Fiere Facias

B. Taking Other Enforcement Action1. Towing

a. There are County rules for towingb. Follow your parking policy

2. Mowing lawnsc. Some associations have vacant

homes – foreclosures, etc.d. Liability issue – what if someone

gets hurt on the property – who will insure?

e. If you choose to mow the lawn of a foreclosed home – BE CAREFUL.• Some banks have contacts –

realtors – who can correct issues.