Virginia State Bar

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Real Property

A Section of the Virginia State Bar.

Meeting Minutes - January 16, 2004

Minutes of the Virginia State Bar
Real Property Section
Board of Governors

Williamsburg, Virginia

The Winter Meeting of the Board of Governors of the Real Property Section of the Virginia State Bar was held on Friday, January 16, 2004, at Room 127 of the Marshall Wythe School of Law in Williamsburg, Virginia.

The following persons were in attendance: Paula S. Caplinger, Douglass W. Dewing, Ray W. King, Jean Mumm, Deborah Merz, Jim Downey, Jane Marum Roush, Courtland L. Traver, Susan Pesner, Larry McElwain, Lisa Murphy, Eric Zimmerman, Grice McMullen, Steve Gregory, John David Epperly, Stephen R. Romine, Nancy Kern, Lee Hickok, David Helscher, Louis Rogers, Wayne Glass, James E. Plumhoff, Joe Cochran, Susan Siegfried, Karen Davis, Mark Williamson, Rick Richmond and Harry Purkey. Douglass W. Dewing, Secretary of the organization, kept the minutes.

Ms. Caplinger called the meeting to order at 1:02 p.m. (See official Agenda below.) and the attendees introduced themselves. Ms. Caplinger also circulated the roster to permit correction of any errors in addresses (physical or electronic) and telephone numbers.

Ms. Caplinger introduced Pia Trigiani, who presented the second substantive law program for this year's meetings, on the topic of homeowner's associations.

Ms. Trigiani noted there were four types of community associations: planned communities, condominiums, cooperatives and time shares. There are three characteristics of associations: automatic membership, governing documents creating the relationship and mandatory assessments. The primary distinction between the types of associations hinges on who owns the common area. In a planned community, it is generally a non-stock corporation. In a condominium, each unit owner owns an undivided interest. In a cooperative, the corporation owns both the common elements and the units. Associations provide three functions: business, governance and community. Association type developments are proliferating as government shifts some of the burden of providing services to the private sector. Association developments also create or foster a sense of community involvement. Among the evidence for such involvement was a notation that association members have higher voting rates than the public at large. Association communities house an increasing percentage of Americans, with the latest statistics showing 1 of every 6 Americans lives in a community association development. Since 1970, 1 in 3 residential units built has been in an association governed community.

Association concepts are rooted in the common law. The earliest associations were cooperative apartments, dating to the mid- to late-1800s and early 1900s. The concept grew as suburban communities grew. Subdivisions and condominiums increased as FHA financing options increased. Among the statutes affecting associations in Virginia were the Horizontal Property Act (§55-79.1, et seq), which was superceded by (but not repealed by) the Condominium Act (§ 55-79.39, et seq) in 1974; the Property Owner's Association Act (§ 55-508, et seq) (which superceded the Subdivided Land Sales Act (§ 55-336)), enacted in 1989; the Real Estate Cooperative Act (§ 55-424, et seq), enacted in 1982; and the Real Estate Time Share Act (§ 55-360) (1981). Other statutes providing structure to associations include the Non-Stock Corporation Act (§ 13.1-801, et seq) and the Common Interest Community Management Information Fund (§ 55-528). Other legislation affecting associations include local ordinances relating to property uses, zoning and building code compliance; Fair Housing laws and, more recently, the Telecommunications Act of 1996.

She closed the presentation by noting that because of the variety of issues that arise while representing associations, it is the "last bastion of a general practice."

The minutes of the meeting for September 12, 2003, were presented. Upon motion duly made and seconded, those who attended the September 12 meeting unanimously approved the minutes. Those not in attendance at the September 12 meeting abstained.

The financial report showed the Section incurred $1016.97 in expenses during the first quarter reporting period. These expenses did not include expenses related to the most recent issue of the Fee Simple. The balance remaining in the Section's account at the State Bar is $28,358.03.

Ms. Caplinger introduced Nancy Kern of Virginia CLE. She joined CLE from a firm in Charlottesville and will coordinate real estate seminars for them.

The Advanced Real Estate Seminar remains scheduled for April 2 and 3, 2004, at Kingsmill in Williamsburg. The Board of Governors meeting will precede the seminar at 10 a.m. Attendance has been low in the past, and all members of the section were encouraged to attend. Ms. Caplinger stated at least 100 attendees are needed to reverse a trend in which Virginia CLE loses money. There was a general discussion of obstacles to the program's success: the length of time it takes; the convenience of electronic programs; the lack of applicability to the ordinary practitioner. Mr. Traver noted a survey appearing in the Fee Simple may provide direction for the Section on where it should go and help develop topics real estate practitioners need. Ms. Pesner recalled the Advanced Seminar was designed with several objectives, including a desire to expand the horizons of the practitioners and to provide a setting in which the practitioners could mingle socially, as well as professionally. Mr. McElwain reported the ethics section (Tom Spahn) was expanded to two hours in this year's program, so as to fulfill the entire requirement. Other topics include the 2003 ALTA endorsements (Bob Bozarth), the Loudoun County zoning litigation (John Foote), the Future of the Real Estate Practice (Court Traver) and a potpourri of topics of general interest (Gus Bauman).

Ms. Mumm presented the schedule for the Annual Real Estate Seminar: May 4 in Fairfax; May 5 in Norfolk; May 12 in Roanoke; and May 13 in Richmond. The program will include the recent cases and legislative developments components as in years past, and there will be an Ethics section. Jim McCauley will present materials on CRESPA. Bankruptcy and foreclosures round out the program. A request was made that the foreclosure materials include portions on the nonjudicial foreclosure of condominium and homeowners association liens.

Mr. Dewing reported the construction law section was cosponsoring the Summer CLE program. The tentative working title was "Contractors are from Mars, Architects are from Venus: What is an Owner to do? The 1997 AIA Contract Forms Revisited." The panelists for the program will be Webb Moore (Hirschler Fleischer) for the owner, Bill Thurston (Marchant Thurston Honey and Blanks) for the contractor, and Jim Lowe (Hayes, Seay, Mattern and Mattern) for the architect. The program will be held in the same room as last year: at the Holiday Inn Sunspree, beginning at 11 a.m.

Ms. Caplinger reported on discussions with the Better Annual Meeting committee of the State Bar. Their position remains no CLE credit if not a paid attendee of the Annual Meeting. Ms. Caplinger polled the membership during the interim period between board meetings. She reported 46 votes in favor of continuing the program and 2 votes against. In a special meeting of the board, 9 of the 12 board members agreed to continue the program. Mr. Richmond noted our section was the only to have commented on the practice, and that the Bar continued to encourage attendance at the Annual Meeting for more than just the educational programs.

In other Old Business, Ms. Caplinger noted the Bar had agreed to a student writing contest with a cash prize, and publication in the Fee Simple. Mr. Schonberger will report on additional details at the next meeting. Mr. Howard is looking for suggestions to increase the judicial membership of the Section. Mr. Waugaman is actively seeking volunteers to assist with the First Day in Practice, which recruited 60 new members for the section. Mr. Zimmerman presented a draft Mission Statement for review, comment and consideration. It was noted that any change in the mission statement would require the approval of the State Bar. Mr. Traver pointed out the membership survey appearing in the November issue of the Fee Simple. Noting the looming approval of "bundling of services" regulations from HUD, he suggested that the entire real estate practice picture could change in the very near future, as real estate brokers take over the role of coordinating real estate service providers for closings.

Under New Business, Ms. Caplinger announced that she attended the ABA unauthorized practice of law meeting. She was surprised at the number of states which had not dealt with the issue at all, or were just starting to address the issue, and proud that Virginia was so far out in front of the rest of the nation. She supplied names and contact information of the board with other attendees, and encourage them to contact us with any questions. Ms. Pesner stated the section was lucky to have Jim McCauley as a member, as he was nationally renowned in the areas of ethics and bar regulation. Mr. Traver seconded the thought by noting Mr. McCauley was the first ethics counsel to even attempt to familiarize themselves with the real estate field.

Ms. Caplinger passed on a question she received from a practitioner in the field. Seller and buyer entered a contract to sell real estate, and then buyer suggested seller transfer title to a trust, which buyer would set up so the buyer was the trustee and the seller was the beneficiary. The trust was to last until the closing and deed recorded, and then terminate. The practitioner noted this appeared to be a blatant attempt to avoid paying recording taxes. The general sense of the discussion was that this was a mild effort compared to those in other states, such as Maryland and New York.

Ms. Trigiani noted the General Assembly was going into a long session. Prefiling is complete and the sense of the VBA is that the legislators will attempt to deal with all the bills quickly in order to focus their attention on the budget bill. The VBA has a proposal (HB 449) to rewrite the condominium statute to avoid the result in the Wachovia/Colchester decision. The bill extends the time in which an association may enforce its lien from 24 to 36 months and adds a right of redemption for the consumer. There is also a bill which addresses concerns regarding valuation of leasehold estates, especially in office buildings.

On behalf of Mr. Howard, Ms. Caplinger reported the section membership stands at 1850 active members. This makes the section the second largest section in terms of active members. When all members are counted, the section falls to third position. Any ideas for increasing membership among "inactive" members (judges for example) would be appreciated.

Mr. Dewing reported on behalf of the technology committee that the General Assembly was on the internet. The entry to their site to track bills by number or sponsor is: http://leg1.state.va.us/lis.htm The. Information Technologies Agency revised the standards for restricting remote access to court controlled websites. The "business use" language was removed from the applications for access. The revised standard may be found at http://www.vita.virginia.gov/docs/psg.cfm.

The deadline for articles for the next issue of the Fee Simple will be April 21, 2004. Among the topic ideas discussed were "how to" comply with the Patriot Act, money laundering statutes and the terrorism executive order in an ordinary real estate practice; the settlement agent release act; land sales contracts, the Uniform Electronic Recording Act, the Uniform Environmental Covenants Act, brownfields, 1031 exchanges, concerns arising during multi state transactions, benefits of incorporation by churches, vested rights in light of the Suffolk BZA case.

Mr. McMullen noted the Commercial Real Estate subcommittee met after the September meeting. The subcommittee organized itself into two person teams and scheduled each team for a future article for the Fee Simple. They continue to meet via conference call.

The Creditors Rights and Bankruptcy subcommittee arranged to provide speakers on the topic of foreclosures for all four annual real estate seminar locations.

The Ethics subcommittee will meet after this meeting.

Ms. Merz and Ms. Meir are working on an article for the Fee Simple emphasizing the importance of backing up data on a small office PC, drawing examples from the hardships which befell a solo practitioner whose hard drive self-destructed.

Mr. King reported that the State Bar receives over 3000 complaints annually. Fortunately, a very small percentage of these arise in real estate matters. He also reported that when a complaint involves both an ethics complaint and a CRESPA violation, the Bar will try the two proceedings together at the District level (or before a 3 judge panel, depending on the preference of the respondent).

Mr. Richmond reported that a minor defect had been found in the conservation easement forms used by the Outdoor Foundation, affecting the possible deductability of the gift. This is to be addressed during this session of the General Assembly. The defect does not appear to be a factor in the Piedmont Environmental Council forms of easement.

There being no further business, upon motion duly made, seconded and unanimously passed the meeting was adjourned at 2:57 p.m.

Respectfully Submitted,

Douglass W. Dewing

Secretary

 

 

AGENDA
WINTER MEETING OF THE BOARD OF GOVERNORS
OF THE REAL PROPERTY SECTION OF THE VIRGINIA STATE BAR
1:00 p.m. - 3:00 p.m. January 16, 2004
Marshall Wyth School of Law, Room 127
Williamsburg, Virginia

 

1. Welcome/Introductions-Caplinger

2. Presentation (1:05 a.m. -1:20 a.m.): Homeowner's Associations - Trigiani

3. Approval of minutes from September 12, 2003 meeting-Caplinger

4. Financial Report-Dewing

5. Annual CLE Seminars

A. Introduction of Nancy Kern of Virginia CLE - Caplinger
B. 8th Annual Advanced Real Estate Seminar (April 2 and 3, 2004, Kingsmill, Williamsburg, VA)-McElwain/Hickok/Kern
C. 22nd Annual Real Estate Practice Seminar( May 4, 2004-Fairfax, May 5, 2004-Norfolk, May 12, 2004-Roanoke and May 13, 2004-Richmond) -Kern
D. Annual Summer CLE (June 18, 2004)-Dewing

6. Old Business

A. Report on Summer CLE Program interaction with VSB-Caplinger
B. Updated and revised list of Officers, Board Members and Area Representatives-Caplinger
C. Fee Simple newletter/article contest-Schonberger/Butler/Traver
D. Recommendations on how to increase judicial membership in Section-Howard
E. First Day in Practice-Need volunteers for meeting-Waugaman
F. New Bar Members (Discount card/VA CLE discount on forms?)-Waugaman
G. Ad Hoc Subcommittee Report (Mission statement, goals, increasing membership, meeting the needs of our members)-Zimmerman
H. Membership Survey-Traver

7. New Business

A. ABA UPL Subcommittee-Caplinger
B. Budget 2004-2005-Caplinger

8. Subcommittee Reports

A. Membership*-Howard
B. Programs*-See Item 5 above
C. Technology*-Dewing
D. Fee Simple*-Butler and Traver-Spring submissions deadline: April 21, 2004-Ideas for articles.
E. Commercial**-McMullan and Williamson
F. Creditors' Rights and Bankruptcy**-Wood
G. Ethics**-Davis
H. Land Use and Environmental**-Blaine
I. Title Insurance**-Gregory and Waugaman
J. Residential*-Meier

(*= Responsible for a substantive article for the Fall Fee Simple)
(**= Responsible for a substantive article for the Spring Fee Simple)

9. Liaison Reports

A. Bar Counsel-King
B. Old Dominion Bar Association-Holmes

10. Adjourn

(If previously scheduled with subcommittee members, optional subcommittee meetings may follow Board meeting.)