By Mary Beth Coya
Issues Include Independent Contractor Status, HOA/Condo Packets, Mineral Rights Disclosures and More
THE UPCOMING GENERAL ASSEMBLY SESSION, scheduled to convene on Jan. 9, will be the even-year “short” session of 45 days. Within this timeframe, the Virginia Legislature will have significant issues to consider.
Chief among them will be how to handle the state conforming to federal tax reform legislation passed by Congress and the redistricting of legislative districts, which the court requires the state to undertake. Implementation of Medicaid legislation passed last year will continue. Serious transportation issues up for discussion include funding improvements for I-81 to southwest Virginia and local government requests for transportation authorities, such as the Northern Virginia Transportation Authority.
Meanwhile, Realtor® associations will pursue a legislative agenda to address issues their members face in the marketplace.
INDEPENDENT CONTRACTORS VS. EMPLOYEES:
In numerous states, Realtor® brokers have faced lawsuits pertaining to the recognition of 1099 contractors vs. employees. In most cases, the lawsuit revolves around workers compensation issues but can manifest in other ways. Several years ago, we obtained clarification that real estate licensees who are 1099 contractors are exempt from workers compensation claims.
We will ask that all references to “employees” be removed from the statute governing licensees to clarify that a 1099 independent contractor is a different relationship than an employee.
INCOMPLETE HOA/CONDO PACKETS:
There was a Fairfax County Circuit Court case concerning the right of the purchaser to withdraw from the sale if he or she receives an incomplete HOA disclosure packet. The court held that delivery of an incomplete packet starts the three-day right of rescission.
A case out of Tidewater, VA states that an incomplete packet means delivery of the packet has not occurred, so until a completed packet is delivered, the purchaser retains a right of rescission.
To provide clarity for the courts, Virginia Realtors® will seek to explain the definition of “incomplete packet” in the delivery of resale certificates and disclosure packets.
HOA/CONDO DISCLOSURE OF COMMUNITY DEVELOPMENT AUTHORITIES:
Local governments have the authority to create Community Development Authorities (CDAs) for the purpose of financing, designing and constructing certain infrastructure improvements. Homeowners within a CDA may be subject to additional rates, fees or charges (“assessments”) for the use of services furnished by the CDA. The CDA should be included in land records and title searches; however, there are instances where residents were unaware of current or future assessments on their property.
In Chesterfield County, homeowners have been notified by the county that they are responsible for special assessments, up to $8,000 per lot. Not only are the homeowners required to pay the assessment, they are also concerned that the assessment will decrease the value of their home. While CDAs have been added to the Residential Property Disclosure form, many homeowners are first becoming aware of the fees post-closing.
We will seek to add “Community Development Authorities” to the summary cover sheet required with resale certificates and disclosure packets.
RESIDENTIAL PROPERTY DISCLOSURE OF MINERAL RIGHTS:
In land sales, mineral rights may not necessarily transfer with the land but are held as separate owner interests.
When a seller owns acreage but not the mineral rights, prospective buyers are often hesitant to finalize a purchase out of concerns that minerals may be mined or extracted from their property by a separate owner of the mineral rights. When the owner of mineral rights has sold or dispensed the asset, and the last owner or recipient of any dispensed asset is unknown, the land owner does not know what recourse he or she has.
Realtors® will introduce legislation to add mineral rights to the Residential Property Disclosure statement.
UNLICENSED REAL ESTATE ACTIVITY:
The practice of real estate without a license is illegal in Virginia, however, illicit activity still occurs. Currently, the burden of proof is “beyond a reasonable doubt” (95 percent burden of proof and the case goes to the Commonwealth Attorney).
The Realtor® proposal would add all DPOR licensees to the Virginia Consumer Protection Act. An individual would then be able to file a lawsuit against the person practicing without a license. Commonwealth Attorneys or others could pursue the case.
EVICTION DIVERSION PROGRAM:
We will support legislation that the Virginia Housing Commission is drafting to create a court-processed “eviction diversion program” for “at risk” tenants. This will include a payment plan for tenants who would otherwise be evicted for owing $500 or less.
A report from Princeton University showed that Virginia had a large number of evictions, especially in Richmond and Northern Virginia. A closer analysis found that the story had numerous f laws. For instance, the report did not include New York and California where there are many rental properties. Importantly, the study did not distinguish between the act of filing an unlawful detainer and following through with an eviction. Also, it did not distinguish between nonpayment of rent evictions and those filed for other lease violations, such as criminal activity. The unlawful detainer is the first step in the process, and further study found that the large majority of cases were resolved between the landlord and tenant and did not result in an eviction.
Realtors® have participated in the Housing Commission review to identify short-and long-term strategies to reduce Virginia evictions.
A number of years ago, Virginia homebuilders successfully sought legislation that amended the proffer system – a system where builders “voluntarily” offer proffers to the locality (land for schools or parks, payment for an interchange related to the property, affordable housing units, etc.), in exchange for additional density in the developed project. In some localities, these proffers had become excessive – substantially adding to the cost of housing. Unfortunately, for many Northern Virginia localities where the proffer system had worked well for years, the unintended consequence of the legislation was to virtually halt rezonings.
The builders association has drafted new legislation that seeks to add flexibility back to the law to make it workable for all localities.