2019 Legislative Update: New and amended laws impacting commercial real estate and community association clients

On July 1, 2019, new laws passed during the 2019 General Assembly session will go into effect in Virginia.  As we do every year, Sands Anderson's Commercial Real Estate and Community Associations Groups have reviewed this new slate of laws to identify those that may impact you as someone interested in these fields.  One of the most notable changes was the emergency legislation (House Bill 2287 / Senate Bill 1422) passed by the General Assembly to address the impact of the Game Place, LLC decision on lease requirements, which we've previously addressed in detail here.

Also of note was House Bill 2342 / Senate Bill 1373, an update to Virginia Code § 15.2-2303.4.  Since its original enactment in 2016, this statute has proven challenging for property owners and localities alike in its treatment of residential rezoning applications. Specifically, the statute operates to define what constitutes an "unreasonable proffer" in the residential rezoning context, prohibits such proffers, and provides a cause of action for applicants who encounter such proffers.  Due to the complicated nature of this statute and the severe consequences for a violation, the law had the unintended effect of significantly chilling the dialogue and exchange of ideas between applicants and local governments.  The changes made to the statute reflect an effort to address these negative impacts and at least someone reinvigorate communications between the applicant and locality.  Time will tell whether, and to what extent, these revisions prove successful.

Furthermore, pursuant to Senate Bill 1080, this year will bring a complete recodification of Title 55, where Virginia's laws governing real estate and community associations are located.   Look for a more detailed update on the recodification from us in the weeks to come.

Excerpts from these and other pertinent bill summaries prepared by the Virginia Division of Legislative Services are included below.  For the full summaries, simply click on the applicable bill number.

 Civil Procedure

• Senate Bill 1638 - Newspapers; legal notice and publications; requirements. This bill alters the requirements for newspapers that may be used for legal notices and publications by (i) changing the publication and circulation requirement from 24 consecutive weeks to at least 50 of the preceding 52 weeks and requiring such publication be in printed form; (ii) requiring that such a newspaper provide general news coverage of the area in which the notice is to be published; and (iii) requiring that such a newspaper have a periodicals mailing permit issued by the United States Postal Service. The bill further provides that a newspaper that lacks a periodicals permit issued by the United States Postal Service may petition the circuit court for the jurisdiction in which such notices or publications are to be published, as opposed to where such newspaper is located as current law requires, for the authority to be certified as a newspaper of general circulation. The bill further allows a locality that determines that no newspaper published in such locality otherwise meets the requirements that enable it to be a newspaper for the use of such notices and publications to petition the circuit court in the jurisdiction in which such notices and publications are to be published for the authority to be published in another medium. The bill specifies that such petition shall not be filed without majority approval of the locality's local governing body. The bill requires that any newspaper authorized to publish such notices and publications shall also (a) print such notices and publications in a prominent location in such newspaper with an identifying heading in boldface letters no smaller than 24-point type and (b) maintain at least three years' worth of print archives of such newspaper and make such archives available for public inspection. The bill further requires that a newspaper shall post a notice on the newspaper's website, if such a website is published by such newspaper, and on a searchable, statewide repository website established and maintained as a joint venture of the majority of Virginia newspapers as a repository for such notices. The bill provides that any notice published on a website shall be accessible to the public at no charge.
• House Bill 2655 / Senate Bill 1450 - Eviction Diversion Pilot Program. This bill establishes the Eviction Diversion Pilot Program (the Program), consisting of specialized dockets within the existing structure of the general district courts for the cities of Danville, Hampton, Petersburg, and Richmond. The Program is established as a pilot program that has a delayed effective date of July 1, 2020, and that expires on July 1, 2023. The purpose of the Program is to reduce the number of evictions of low-income persons. Parties to an unlawful detainer action in participating jurisdictions will be directed to participate in the Pilot Program upon certain findings by the court. The Virginia Housing Commission (the Commission) shall request data from the Executive Secretary of the Supreme Court of Virginia for the evaluation of the Program's effectiveness and potential benefits and costs. The bill tasks the Commission with making recommendations for legislative action to the General Assembly, the Chairmen of the Senate Committees on Finance, General Laws and Technology, and Courts of Justice, and the Chairmen of the House Committees on Appropriations, Finance, General Laws, and Courts of Justice prior to the 2023 Session.

Community Associations / Common Interest Communities

• House Bill 1853 / Senate Bill 1537 - Virginia Property Owners' Association Act; home-based businesses. This bill provides that if a development is located in a locality classifying home-based child care services as an accessory or ancillary residential use under the locality's zoning ordinance, the provision of home-based child care services in a personal residence shall be deemed a residential use unless (i) expressly prohibited or restricted by the declaration or (ii) restricted by the association's bylaws or rules. The bill is a recommendation of the Virginia Housing Commission.
• House Bill 1962 - Common Interest Community Board; issuance of compliance orders. This bill authorizes the Common Interest Community Board to issue orders requiring governing boards and developers under the (i) Condominium Act (§ 55-79.39 et seq.), (ii) Virginia Real Estate Time-Share Act (§ 55-360 et seq.), and (iii) Virginia Real Estate Cooperative Act (§ 55-424 et seq.) to take affirmative action to correct certain conditions to come into compliance with relevant statutory requirements. Currently the Board is limited to temporary and permanent cease and desist orders.
• House Bill 1031 - Common interest communities; disclosure packets. This bill requires that as a prerequisite to charging any fees for the preparation of disclosure packets, both professionally managed property owners' associations and property owners' associations that are not professionally managed must register with the Common Interest Community Board, file annual reports, and make annual assessment payments. Additionally, a professionally managed property owners' association must provide the disclosure packet electronically if so requested by the requester in order to charge fees. The bill allows a property owners' association that is not professionally managed to charge fees at the option of the seller or the seller's agent for (i) expediting the inspection, preparation, and delivery of the disclosure packet; (ii) providing an additional hard copy of the disclosure packet; and (iii) providing third-party commercial delivery service. A property owners' association that is not professionally managed may also charge and collect fees for inspection of the property, the preparation and issuance of an association disclosure packet, and such other services as provided by professionally managed property owners' associations as long as the association provides the disclosure packet electronically if so requested by the requester and complies with the other requirements of collecting fees for disclosure packets by professionally managed property owners' associations.
• House Bill 2030 / Senate Bill 1538 - Common interest communities; dissemination of annual budget, reserve for capital components. This bill requires common interest communities under the Condominium Act, the Property Owners' Association Act, and the Virginia Real Estate Cooperative Act (the Acts) to make available to members either the common interest community's annual budget or a summary of the annual budget prior to the beginning of each fiscal year. The bill requires that the five-year cash reserve study required under the Acts include a statement that outlines the amount of the reserves recommended in such study as well as the amount of current cash available for replacement of the reserves. The bill also requires the Common Interest Community Board to prepare guidelines for the development of reserve studies for capital components

• House Bill 2081 - Common Interest Community Board; association fees; Common Interest Community Management Information Fund.  This bill eliminates annual assessments levied by the Common Interest Community Board. The bill allows for the collection of application, renewal, and annual reporting fees set by the Board in accordance with a biennial assessment of the Common Interest Community Management Information Fund similar to the assessment required by the Callahan Act (§ 54.1-113), but at no time shall such fee exceed $25 unless such fee is based on the number of units or lots in the association.

• House Bill 2385 / Senate Bill 1580 - Condominium Act and Property Owners' Association Act; delivery of condominium resale certificates and association disclosure packets; right of purchaser to cancel contract. This bill provides that a purchaser of a unit subject to the Condominium Act or a lot subject to the Property Owners' Association Act who receives a condominium resale certificate or association disclosure packet that is not in conformity with law may cancel the contract for such unit or lot (i) within three days after the date of the contract if the resale certificate or disclosure packet is received on or before the date that the purchaser signs the contract; (ii) within three days of receiving the resale certificate or disclosure packet if the resale certificate or disclosure packet is hand delivered, delivered by electronic means, or delivered by a commercial overnight delivery service or the United States Postal Service, and a receipt obtained; or (iii) within six days after the postmark date if the resale certificate or disclosure packet is sent to the purchaser by United States mail. 

• House Bill 2647 - Condominium Act; meetings of unit owners' associations; proxy voting. This bill provides that any proxy shall be void if not signed by or on behalf of the unit owner. The bill also provides that if the unit owner is more than one person, any such unit owner may object to the proxy at or prior to a meeting of the unit owners' association, whereupon the proxy shall be deemed revoked. Under current law, the proxy of any person is void if not signed by a person having authority, at the time of the execution thereof, to execute deeds on behalf of that person.

• House Bill 2694 - Property Owners' Association Act; association meetings; notice by email. This bill allows members of property owners' associations to elect to receive notice of meetings of the association by email in lieu of the current requirement that such notice be sent by United States mail or hand delivered, provided that in the event that such electronic mail is returned as undeliverable, notice is subsequently sent by United States mail.

Eminent Domain

• Senate Bill 1421 - Eminent domain; entry upon private property; calculation of just compensation; damages. This bill makes various changes to provisions related to entry upon private property in an eminent domain proceeding, including (i) requiring that the number of persons for whom permission to inspect the premises is sought be included in a request for permission to inspect private property for the purposes of a project wherein the power of eminent domain may be exercised; (ii) requiring the notice of intent to enter the property to include all of the information contained in the request for permission to inspect the property; (iii) requiring the court to award fees for up to three experts or as many experts as are called by the petitioner at trial, whichever is greater, if the petitioner damages the property during its entry; (iv) removing the requirement that the damage must be done maliciously, willfully, or recklessly for the owner to be reimbursed for his costs; and (v) removing the option that the owner may be reimbursed for his costs if the court awards the owner actual damages in an amount 30 percent or more greater than the petitioner's final written offer made no later than 30 days after the filing of an answer in circuit court or the return date in general district court.

The bill also provides the method by which just compensation for the taking of property in an eminent domain proceeding is calculated. The bill provides that the body determining just compensation shall ascertain the value of the property to be taken and the damages, if any, that may accrue to the residue beyond the specific enhancement in value, if any. The bill further outlines the considerations that may be used to determine the market value of the property before the taking and the residue after the taking.

Finally, the bill allows a person to recover damages resulting from reformation, alteration, revision, amendment, or invalidation of a certificate in an eminent domain proceeding. The bill provides that an owner may recover costs incurred if the taking of land in an eminent domain proceeding is abandoned, in full or in part. The bill does not apply to condemnation proceedings in which the petitioner filed, prior to July 1, 2019, a petition in condemnation or a certificate of take or deposit.

General Real Estate Interests

• House Bill 2287 / Senate Bill 1422 - Lease agreements; requirements; emergency.  This bill specifies that a lease agreement or other written document conveying a non-freehold estate in land is not invalid, unenforceable, or subject to repudiation by the parties to such agreement on account of, or otherwise affected by, the fact that the conveyance of the estate was not in the form of a deed. Current law requires a lease for a term of more than five years to be in the form of a deed. The bill further replaces all references throughout the Code to "deed of lease" with the term "lease." This bill is in response to The Game Place, L.L.C., et al. v. Fredericksburg 35, LLC, 295 Va. 396, 813 S.E.2d 312 (Va. 2018).

• Senate Bill 1080 - Revision of Title 55.  This bill creates proposed Title 55.1 (Property and Conveyances) as a revision of existing Title 55 (Property and Conveyances). Proposed Title 55.1 consists of 29 chapters divided into five subtitles: Subtitle I (Property Conveyances), Subtitle II (Real Estate Settlements and Recordation), Subtitle III (Rental Conveyances), Subtitle IV (Common Interest Communities), and Subtitle V (Miscellaneous). The bill organizes the laws in a more logical manner, removes obsolete and duplicative provisions, and improves the structure and clarity of statutes pertaining to real and personal property conveyances, recordation of deeds, rental property, common interest communities, escheats, and unclaimed property. The bill has a delayed effective date of October 1, 2019, and is a recommendation of the Virginia Code Commission.

• Senate Bill 1292 - Virginia Residential Property Disclosure Act; required disclosures.  This bill adds to the required residential property disclosure that is furnished by the owner to a buyer (i) that the owner of residential real property makes no representations or warranties as to the condition of the real property with regard to any conveyances of mineral rights and (ii) that before purchasing residential property, a buyer should exercise due diligence in determining whether property is located in a special flood hazard area by contacting the Federal Emergency Management Agency (FEMA) or visiting the website for FEMA's National Flood Insurance Program or for the Virginia Department of Conservation and Recreation's Flood Risk Information System.
• Senate Bill 1449 - Virginia Residential Executory Real Estate Contracts Act. This bill creates the Virginia Residential Executory Real Estate Contracts Act establishing provisions applicable to such contracts. The bill defines a residential executory real estate contract as an installment land contract, lease option contract, or rent-to-own contract by which a purchaser acquires any right or interest in real property other than a right of first refusal and occupies or intends to occupy the property as his primary residence. The bill also provides for the Board for Housing and Community Development to develop and make available on its website best practice provisions for residential executory real estate contracts. As introduced, this bill was a recommendation of the Virginia Housing Commission.

Landlord / Tenant

• House Bill 1660 - Landlord and tenant; renter's insurance; disclaimer.This bill provides that if a rental agreement does not require the tenant to obtain renter's insurance, the landlord must provide a written notice to the tenant, prior to the execution of the rental agreement, stating that (i) the landlord is not responsible for the tenant's personal property, (ii) the landlord's insurance coverages do not cover the tenant's personal property, and (iii) if the tenant wishes to protect his personal property, he should obtain renter's insurance. The bill also requires such notice to inform the tenant that any such renter's insurance obtained by the tenant does not cover flood damage and advise the tenant to contact the Federal Emergency Management Agency (FEMA) or visit the websites for FEMA's National Flood Insurance Program or the Virginia Department of Conservation and Recreation's Flood Risk Information System to obtain information regarding whether the property is located in a special flood hazard area. The bill provides that any failure of the landlord to provide such notice does not affect the validity of the rental agreement.
• House Bill 1898 / Senate Bill 1445 - Virginia Residential Landlord and Tenant Act; tenant's right of redemption.This bill extends the amount of time that a tenant may have an unlawful detainer dismissed to two days before a writ of eviction is delivered to be executed if the tenant pays all amounts claimed on the summons in unlawful detainer to the landlord, the landlord's attorney, or the court.
• House Bill 1923 - Virginia Residential Landlord and Tenant Act; noncompliance with rental agreement; tenant's right to reasonable attorney fees. This bill provides that a tenant is entitled to reasonable attorney fees when a tenant successfully raises as a defense the landlord's noncompliance with the rental agreement and the court enters judgment in favor of the tenant.
• House Bill 1227 / Senate Bill 286 - Landlord and tenant law; transient lodging as primary residence for fewer than 90 consecutive days; self-help eviction. This bill clarifies that the availability of the use of self-help eviction in certain circumstances to the owner of transient lodging shall not preclude such owner from pursuing any civil or criminal remedies under the laws of the Commonwealth.
• House Bill 2054 / Senate Bill 1676 - Virginia Residential Landlord and Tenant Act; rental agreement; provisions made applicable by operation of law.This bill requires a landlord to offer the tenant a written rental agreement containing the terms governing the rental of the dwelling unit and setting forth the terms and conditions of the landlord tenant relationship. The bill provides that in the event a written rental agreement is not offered by the landlord, a rental tenancy shall be deemed to exist by operation of law and establishes the terms and conditions of that tenancy. This bill is a recommendation of the Virginia Housing Commission. 
• House Bill 2262 - Managing agent of landlord.This bill clarifies that for the purposes of signing pleadings and other papers and obtaining a judgment for possession or for rent or damages in general district court, the managing agent of a landlord may act on behalf of the business, provided that he is acting pursuant to the written property management agreement.
• House Bill 2304 - Landlord and tenant; renter's insurance obtained by landlord on behalf of tenants; notice of waiver of subrogation provisions. This bill requires a landlord that has obtained renter's insurance coverage on behalf of his tenants to include, as part of the summary of the insurance policy or certificate evidencing the coverage as currently required by law, a statement regarding whether the insurance policy contains a waiver of subrogation provision. The bill provides that any failure of the landlord to provide such summary or certificate, or to make available a copy of the insurance policy, shall not affect the validity of the rental agreement.

Localities / Zoning

• House Bill 1649 / Senate Bill 1594 - Zoning violation penalties. Local boundary agreements.This bill allows all localities, in adopting a voluntary boundary agreement, to attach to their petitions to the circuit court a Geographic Information System (GIS) map depicting the boundary change. Under current law, such use of a GIS map is permitted only regarding the boundaries of certain named localities
• House Bill 1913 / Senate Bill 1663 - Subdivision ordinance; sidewalks.This bill allows any locality to include provisions in its subdivision ordinance requiring that where a lot being subdivided or developed fronts on an existing street and the provision of a sidewalk, the need for which is substantially generated and reasonably required by the proposed development, is in accordance with the locality's adopted comprehensive plan, the locality may require the dedication of land for, and construction of, a sidewalk on the property being subdivided or developed.
• House Bill 2139 - Transfer of development rights; specified sending and receiving areas. This bill authorizes a locality to designate receiving areas or receiving properties that shall receive development rights only from certain sending areas or sending properties specified by the locality. The bill also authorizes a locality to provide for areas defined similarly to urban development areas in the ordinance relating to the transfer of development rights. Current law only authorizes inclusion of urban development areas.
• House Bill 2229 – Affordable housing; waiver of fees. This bill provides that a locality may by ordinance provide for the waiver of building permit fees and other local fees associated with the construction, renovation, or rehabilitation of housing by a private-sector entity that is pursuing an affordable housing development. The bill provides that a locality may determine in its ordinance what constitutes affordable housing and may set other conditions on the waiver of fees as it determines appropriate.
• House Bill 2342 / Senate Bill 1373 - Conditional rezoning proffers. This bill makes extensive changes to conditional zoning provisions first enacted in 2016. Specific amendments include the addition of provisions stating that no local governing body shall require any unreasonable proffer, as described in current law. Under current law, no locality may request or accept any unreasonable proffer. Other changes (i) allow an applicant to submit any onsite or offsite proffer that the applicant deems reasonable and appropriate, as conclusively evidenced by the signed proffers, and (ii) state that nothing in the bill shall be deemed or interpreted to prohibit communications between an applicant or owner and the locality or to prohibit presentation, analysis, or discussion of the potential impacts of new residential development or other new residential use on the locality's public facilities. The provisions of the bill are effective as to any application for a rezoning filed on or after July 1, 2019, or for a proffer condition amendment amending a rezoning that was filed on or after July 1, 2019, or to certain other pending applications. The bill also provides that an applicant with a pending rezoning application for a rezoning or proffer condition amendment that was filed prior to July 1, 2016, may continue to proceed under the law as it existed prior to that date, and an applicant with a pending rezoning application filed on or after July 1, 2016, but before July 1, 2019, or proffer condition amendment application amending a rezoning for which the application was filed on or after July 1, 2016, but before July 1, 2019, may continue to proceed under the law as it existed during that period.
• House Bill 2375 - Adoption of zoning ordinance.This bill provides that if a local governing body reduces the time period by which a planning commission shall review a proposed zoning ordinance amendment to less than 100 days, the governing body shall hold at least one public hearing on the proposed reduction of the commission's review period and publish notice of such public hearing in a newspaper having general circulation in the locality at least two weeks prior to the public hearing date and publish the notice on the locality's website, if one exists.
• House Bill 2621 / Senate Bill 1091 - Site plan approval; decommissioning certified solar energy equipment, facilities, or devices.This bill requires a locality, as part of the local legislative approval process or as a condition of approval of a site plan, to require an owner, lessee, or developer of real property to enter into a written agreement to decommission solar energy equipment, facilities, or devices upon certain terms and conditions, including right of entry by the locality and financial assurance

Taxes and Assessments

• House Bill 1816 - Land preservation tax credit; allowable time to claim credit. This bill extends the amount of time a taxpayer is allowed to claim the land preservation tax credit to either (i) December 31 of the second year following the calendar year of the eligible conveyance if the conveyance was made on or after January 1, 2020 or (ii) December 31 of the third year following the calendar year of the eligible conveyance if the conveyance was made before January 1, 2020. Under current law, the credit must be claimed by December 31 of the first year following the calendar year of the conveyance.
• House Bill 2060 - Real estate with delinquent taxes or liens; appointment of special commissioner; increase required value.This bill increases the required assessed value of property for the purpose of a locality appointing a special commissioner to convey property with delinquent taxes or liens to the locality in lieu of sale at public auction (i) from $100,000 to $150,000 in Norfolk, Richmond, Hopewell, Newport News, Petersburg, Fredericksburg, and Hampton and (ii) from $50,000 to $75,000 in all other localities.
• House Bill 2365 - Special assessment for land preservation; optional limit on annual increase in assessed value. This bill authorizes localities that require use value assessment and taxation to provide by ordinance that the annual increase in the assessed value of eligible property shall not exceed a specified dollar amount per acre.
• House Bill 2705 - Historic rehabilitation tax credit. This bill provides that the $5 million per year limit on the amount of historic rehabilitation tax credit that may be claimed by each taxpayer, which currently expires on January 1, 2019, shall apply to all future taxable years.

If you have any questions or want to discuss any of these changes further, connect with one of the members of our Commercial Real Estate or Community Associations practice groups.