Rules for Property Managers, Common Interest Communities, Short-term Rentals Enacted

This article was edited on June 7, 2017.

The Virginia General Assembly passed measures affecting Realtors® and your clients during the 2017 legislative session. NVAR and the Virginia Realtors® lobbied successfully on your behalf for legislation introduced as part of our 2017 Realtor® Legislative Agenda.

All of the measures summarized below were signed into law by Governor Terry McAuliffe (D). They will become effective July 1, 2017. Please visit www.NVAR.com for more information about all of the new laws impacting our industry and to find out how you can help protect Realtors® through the Northern Virginia Realtors® Political Action Committee.

REALTOR® BILLS

Transfer of Security Deposits upon the Sale of a Dwelling Unit (HB 1623 - Yancey; SB 991 - Dance)
Codifies common law practice in which the tenant in a foreclosed unit may remain in the unit as a month-to-month tenant until the new owner gives notice of termination.

Provides that, until the new owner terminates the month-to-month tenancy, the terms of the terminated rental agreement remain in effect, except that the tenant may pay rent (i) to the new owner; (ii) to the property manager of the owner, if any; or (iii) into a court escrow account.

Provides that the current owner of rental property will transfer any security deposits to the new owner at the time of the transfer of the rental property. If a management agreement exists, this law allows a property manager to transfer the security deposit to the current owner prior to settlement and to provide written notice to the tenants, versus having to obtain the written consent of the owner and tenants.

Licensee Responsibilities - Transfer of Escrow Funds and Foreclosures (HB 2281-Leftwich; SB 966-Obenshain)
Allows for a written property management agreement to continue in place following a foreclosure on a month-to-month basis until terminated by either the property manager or the new owner, unless a shorter period is specified in the property management agreement. Provides that if rent is paid to a real estate licensee acting on behalf of the landlord as a property manager in a unit which has been foreclosed on, the managing agent may collect the rent and place it into an escrow account following receipt. In the event of foreclosure, a real estate licensee will not transfer any funds to a landlord whose property has been foreclosed upon.

Allows a property manager who elects to terminate a property management agreement, to transfer any funds held in escrow to the landlord without his consent, provided that the property manager provides written notice to each tenant.
 
POA Act Amendments (HB 2045-J. Miller; SB 1231-Stanley)
Condo Act Amendments (HB 2274-D. Marshall; SB 1255-DeSteph)
Allows the Common Interest Community Board to assess a monetary penalty against any property owners' association or common interest community manager for failure to deliver the association disclosure packet or resale certificate within 14 days. States that the CIC Board may receive a complaint directly from any person aggrieved by an association's failure to deliver the resale certificate or disclosure packet within the time period required.

Except as expressly authorized in the declaration or condo instruments, no property or unit owners' association can require the use of any “for sale” sign that is (i) an association sign or (ii) a real estate sign that does not comply with the requirements of the Real Estate Board. An association may, however, prohibit the placement of signs in the common area and establish reasonable rules and regulations that regulate (a) the number of real estate signs, so long as at least one real estate sign is permitted; (b) the geographical location of real estate signs; (c) the manner in which real estate signs are affixed to the property; and (d) the period of time after settlement when the real estate signs will be removed.

Prohibits a property or unit owners' association from requiring any owner to execute a formal power of attorney if the owner designates a real estate licensee to represent his or her clients before the association; requires the association to recognize such representation if the association is given a written authorization signed by the owner confirming representation.

Clarifies the Condominium Act to provide a right of cancellation if the purchaser has not been notified that the resale certificate will not be available and the resale certificate is not delivered to the purchaser.
 
Amendments to the Residential Disclosure Act (HB 2034-J. Miller)
Allows for electronic delivery of the form to the potential purchaser. Renames the "red-flag" disclosure statement the "buyer to beware" statement and adds the following buyer to beware statements:
•    The owner makes no representations with respect to underlying conservation or other easements.
•    The owner makes no representations with respect to an underlying community development authority.



Requires that an owner with knowledge of either of the following shall provide a written disclosure stating such: (i) any pending enforcement actions under the Statewide Building Code that affect the safe, decent, sanitary living conditions of the property, which the owner has been notified of in writing by the locality, or (ii) any pending violation of the local zoning ordinance that the violator has not remedied.

OTHER BILLS OF INTEREST

Assistance Animals; Fair Housing Rights and Responsibilities (HB 2006-Carr; SB 1228-Barker)
Sets out the rights and responsibilities under the Virginia Fair Housing Law with respect to maintaining an assistance animal in a dwelling. Establishes a process through which a person with a disability may submit a request for a reasonable accommodation to maintain an assistance animal in a dwelling, including supporting documentation from a person with whom the tenant has a therapeutic relationship, verifying the disability and need for an accommodation. The Act prohibits the charging of a pet fee or deposit or any additional rent to maintain an assistance animal, but requires the tenant to be responsible for any physical damages caused by the animal.

Establishes definitions for "assistance animal," "major life activities," "therapeutic relationship," and "physical or mental impairment."

Allows for a request for accommodation to be denied if (i) the person is not disabled; (ii) there is no disability-related need for the accommodation; (iii) the accommodation imposes an undue financial and administrative burden on the person receiving the request; or (iv) the accommodation would fundamentally alter the nature of the operations of the person receiving the request.

Residential Landlord and Tenant Act (HB 2033-J. Miller)
Provides that the Virginia Residential Landlord and Tenant Act applies to all residential tenancies, but allows a landlord who owns no more than two single-family residential dwelling units subject to a rental agreement to opt out of the Act by stating so in the rental agreement.

Conforms general landlord and tenant law relating to residential tenancies to the Act, including the security deposits, lease terms, notice, and disclosure provisions. Sets requirements for the application and disposition of security deposits and allows the landlord, for unclaimed security deposits, to submit such funds to the State Treasurer rather than the Virginia Housing Trust Fund. Changes the requirement that a landlord make reasonable efforts to advise the tenant of the right to be present at the landlord's inspection to a requirement that written notice of the right be provided.

Establishes that any activity involving a criminal or willful act that also poses a threat to health and safety by the tenant or authorized occupants, guests, or invitees is an immediate non-remediable violation for which the landlord may terminate the tenancy.

Authorizes a landlord to dispose of the property of a deceased tenant if a personal representative has not been appointed by the circuit court. The landlord may proceed with the disposal after providing 10 days' notice.

The Act: (i) provides that authorized occupants, guests, or invitees must vacate the dwelling unit after the death of a sole tenant; (ii) allows a landlord to request during the pendency of an unlawful detainer action an order requiring the tenant to provide the landlord with access to the dwelling unit; (iii) adds oil to the utilities that may be included in ratio utility billing; (iv) requires the landlord to provide a written security deposit disposition statement following a move-out inspection and provides for the landlord to seek recovery for additional damages discovered after the security deposit disposition has been made; and (v) authorizes a landlord to retain an attorney to prepare or provide any required written notice and permits the use of an electronic signature or an electronic notarization.

Liens for Water and Sewer Services (SB 1189-Edwards)
Provides that no lien may be placed on the property of an owner when a lessee or tenant has delinquent fees for water or sewer charges until the locality has made reasonable collection efforts and practices, including (i) applying the security deposit to the payment of the outstanding balance, and (ii) either filing for the Setoff Debt Collection Program or placing the account with a debt collection service. A lien against the lessee or tenant is equivalent to a lien for unpaid taxes. When a locality does not require a security deposit from a lessee or tenant to obtain water and sewer services, the locality shall waive its lien rights against the property owner. A locality or authority cannot deny service to a new lessee or tenant when there are unpaid fees for services to a previous lessee or tenant unless a lien against the property owner is placed on the property.

Short-Term Rentals (SB 1578-Norment)
Authorizes localities to establish a short-term rental registration of persons offering property for short-term rental and allows for reasonable registration fees to be charged. Exempts: (i) individuals licensed by the Real Estate Board and properties managed by real estate licensees; (ii) individuals registered under the Virginia Time-Share Act; (iii) individuals licensed by the Department of Health to provide lodging; or (iv) any individuals licensed or registered with the locality related to the rental or management of real property, including licensed real estate professionals, hotels, motels, campgrounds, and bed and breakfast establishments. “Short-term rental” is defined as the provision of a room or space suitable for sleeping or lodging for less than 30 consecutive days in exchange for a charge for the occupancy. Authorizes localities to impose penalties not to exceed $500 per violation on persons who violate the registry ordinance and allows the locality to prohibit persons from renting property if they violate the registry ordinance on multiple occasions. Nothing in the Act supersedes existing local authority to regulate the short-term rental of property through general land use and zoning authority.

Amends the Alcoholic Beverage Control (ABC) Act to clarify that certain property rented on a short-term basis is considered a bed and breakfast establishment for purposes of ABC licensing.

Property Owners' Association Act Amendment of Declaration (HB 1554-Bulova)
Except as otherwise provided in the declaration of a property owners' association, the Act provides that a declaration may be amended by a two-thirds vote of the owners.

Tenant Obligations Related to Pest Extermination (HB 1869-Lopez)
Provides that in addition to complying with the terms of a rental agreement, a tenant is obligated to be financially responsible for the added cost of treatment or extermination of any insects or pests due to the tenant's unreasonable delay in reporting the existence of the insects or pests or the tenant's fault in failing to prevent infestation of any insects or pests in the area occupied.

Washington Metrorail Safety Commission Interstate Compact (HB 2136-LeMunyon; SB 1251-Barker)
Authorizes Virginia to become a signatory to the Washington Metrorail Safety Commission Interstate Compact. The compact establishes a state safety oversight authority for the Washington Metropolitan Area Transit Authority (WMATA) Rail System, pursuant to the mandate of federal law, to review, approve, oversee, and enforce the safety of the WMATA Rail System. This legislation was necessary to ensure that Virginia receives Federal Transit Administration funding. This funding is being withheld until Virginia, Maryland and the District of Columbia pass identical legislation.