                                 CODE OF VIRGINIA

MANAGEMENT, REGULATION, AND CONTROL OF SUBDIVISIONS WITH COMMON FACILITIES OR
PROPERTY OWNERS&#8217; ASSOCIATIONS; ASSESSMENTS; LIENS (§ 55.1-2305)

A. The covenants, deed restrictions, articles of incorporation, bylaws, or other
instruments for the management, regulation, and control of subdivisions that
include facilities or amenities for which the lot owners are assessed on a
regular or special basis for the use, enjoyment, and maintenance of such
facilities or amenities shall provide for at a minimum:

   1. Formation of an association to be composed of lot owners within the
   subdivision, such formation occurring prior to the sale of the first lot
   within the subdivision by the developer;

   2. A description of the areas or interests to be owned or controlled by the
   association, including those facilities or amenities for which the lot owners
   are subject to regular or special assessments;

   3. The transfer of title, control, and maintenance responsibilities of common
   areas and common facilities to the association, which transfer is to take
   place no later than at such time as the developer transfers legal or equitable
   ownership of at least 75 percent of the lots within the subdivision to
   purchasers of such lots or when all of the amenities and facilities are
   completed, whichever occurs first, but in no event any sooner than two years
   from the date the developer sells his first lot within the subdivision should
   the developer elect to retain title to the common areas and common facilities
   for such period. The transfer of such title, control, and maintenance
   responsibilities required of the developer shall not exonerate the developer
   from the responsibility of completion of the common areas and facilities once
   the transfer takes place.
   				Nothing in this section shall preclude the developer from transferring the
   common areas and common facilities for consideration, provided that (i) such
   consideration does not exceed the lesser of the fair market value of such
   common areas and common facilities at the time of transfer or the actual cost
   expended by the developer for such common areas and common facilities and (ii)
   the developer affirmatively discloses the following information to the
   purchaser, in writing, at the time the initial contract of purchase is signed:
   				a. That the common areas and common facilities will be transferred only
   upon payment of consideration by the association;
   				b. The terms upon which such transfer will be made; and
   				c. An estimate of the amount of consideration to be paid by the
   association.
   				In the event the developer seeks payment for the areas or facilities
   transferred, the association shall have the option of deferring such payment,
   evidence by a deed of trust note covering a period of not less than five years
   at the legal rate of interest allowed in the Commonwealth and secured by a
   deed of trust covering the areas or facilities transferred;

   4. Procedures for determining and collecting regular assessments to defray
   expenses attributable to the ownership, use, enjoyment, and operation of
   common areas and facilities transferred to the association;

   5. Procedures for establishing and collecting special assessments for capital
   improvements or other purposes;

   6. Procedures to be employed upon the annexation of additional land to the
   existing subdivision that shall disclose whether or not per capita assessments
   on account of such annexation shall be subject to an increase, in the event
   additional amenities or common facilities are provided lot owners within the
   subdivision;

   7. Such procedures and restrictions, if any, that apply to the voluntary or
   involuntary resale of a lot within a subdivision by a purchaser or his agent,
   which shall be established prior to the sale of the first lot by the developer
   within the subdivision;

   8. Monetary penalties or use privilege and voting suspension of members for
   breaches of the restrictions, bylaws, or other instruments for management and
   control of the subdivision, or for nonpayment of regular or special
   assessments, with procedures for hearings for the disciplined members;

   9. Creation of a board of directors or other governing body for the
   association with the members of the board or body to be elected by a vote of
   members of the association in good standing at an annual meeting or special
   meeting to be held not later than six months after the transfer of the areas
   of facilities provided for in subdivision 3;

   10. Enumeration of the power of the board of directors or governing body that
   is consistent with and not otherwise provided by law;

   11. The preparation of an annual balance sheet and operating statement for
   each fiscal year with provision for distribution of a copy of the reports to
   each member of the association in good standing within 90 days after the end
   of the fiscal year;

   12. Quorum requirements for meetings of members of the association who are in
   good standing; and

   13. Such other provisions as may be required by the Virginia Nonstock
   Corporation Act (&#xA7; 13.1-801 et seq.) if the association is a Virginia
   nonstock corporation.

B. Any developer of a subdivision, successor or otherwise, when such subdivision
is subject to the provisions of this chapter, shall be obligated to complete the
facilities and amenities as promised and outlined in subsection A by the initial
developer of the subdivision subject to the transfer of title, control, and
maintenance responsibilities of common areas and common facilities to the lot
owners&#8217; association. The foregoing shall not be deemed to apply to any
purchaser at foreclosure or grantee in a deed in lieu of foreclosure, provided
that the purchaser or grantee is a financial institution and the mortgagee,
creditor, or beneficiary under the instrument being foreclosed or giving rise to
the deed in lieu of foreclosure. For the purposes of this subsection,
&#8220;financial institution&#8221; means a bank, savings institution, real
estate investment trust, insurance company, pension or profit sharing trust, or
other institution regularly engaged in the business of making real estate loans.
For purposes of this subsection, the lot owners&#8217; association shall not be
deemed a developer if at a meeting of its members in good standing a vote is
taken and at least 50 percent of the members vote to be exempt from the
requirements of this subsection.

C. The association, once formed and in existence, and the title owner of the
common areas and common facilities within the subdivision and which has been in
existence for a period of at least five years shall have the authority to pass
special assessments against and raise the annual assessments of the members of
the association and to collect such assessments from such members according to
law, if the purpose in so doing is for the maintenance of such common areas and
common facilities. The authority granted and conferred upon the association by
this subsection exists only where the restrictions and covenants of record do
not contain specific language that precludes the adoption of special assessments
or increases the annual dues or assessments.

D. The association shall have a lien on every lot within its subdivision for
unpaid regular or special assessments levied against such lot in accordance with
the provisions of this chapter. The lien, once perfected, shall be prior to all
other liens and encumbrances except (i) real estate tax liens on such lot, (ii)
liens and encumbrances recorded prior to the perfected lien, and (iii) any sums
unpaid on any first mortgages or first deeds of trust recorded prior to the
perfection of the lien for regular or special assessments and securing
institutional lenders. The provisions of this subsection shall not affect the
priority of mechanics&#8217; and materialmen&#8217;s liens.
			Notwithstanding any other provision of this chapter, or any other provisions
of law requiring documents to be recorded in the miscellaneous lien books or the
deed books of the clerk&#8217;s office of any court, from July 1, 1978, all
memoranda of liens arising under this subsection shall, in the discretion of the
clerk, be recorded in the miscellaneous lien books or the deed books in such
clerk&#8217;s office. Any memorandum shall be indexed in the general index to
deeds, and such general index shall identify the lien as a lien for subdivision
regular or special assessments.
			The association, in order to perfect the lien given by this subsection, shall
file before the expiration of 90 days from the time such regular or special
assessment became due and payable in the clerk&#8217;s office of the county or
city in which the subdivision is situated a memorandum, verified by the oath of
the president of the association, which shall contain:

   1. A description of the subdivision;

   2. The name or names of the owners of the lot;

   3. The amount of unpaid regular or special assessments currently due or past
   due applicable to the lot, together with the date when each fell due; and

   4. The date of issuance of the memorandum.
   				The clerk in whose office the memorandum is filed shall record and index
   such memorandum as provided in this subsection, in the names of the persons
   identified in such memorandum, as well as in the name of the association. The
   cost of recording the memorandum shall be taxed against the person found
   liable for any judgment or order enforcing such lien. It is lawful for the
   memorandum to be filed as one statement listing the information required in
   subdivisions 1 through 4 and each of the lot owners whose property within the
   subdivision is liened. The cost of filing shall be as provided in subdivision
   A 2 of &#xA7; 17.1-275.
   				Any lien perfected pursuant to this section may be enforced by filing a
   civil action to conduct a judicial foreclosure in the circuit court in the
   county or city where the lot is located or a nonjudicial foreclosure. No
   foreclosure of any lien perfected under this section shall be initiated after
   120 months from the time when the memorandum of lien was recorded. The filing
   of a civil action to enforce any such lien by foreclosure through judicial
   means or issuance of notice of nonjudicial foreclosure shall be regarded as
   the institution of an action under this subsection. Nothing in this subsection
   shall be construed to extend the time within which any such lien may be
   perfected. Nothing shall preclude the association from filing a single action
   listing all unpaid delinquent and enumerated lot owners as defendants and
   obtaining judgment against those so adjudicated by the court hearing the
   action. The association may conduct a judicial or nonjudicial foreclosure sale
   upon a lot against which the association has perfected one or more liens
   pursuant to this section if the total sums secured are in excess of $5,000,
   exclusive of attorney fees and costs.
   				The judgment in an action brought pursuant to this subsection shall
   include, without limitation, reimbursement for costs and attorney fees,
   together with the interest at the maximum lawful rate for the sums secured by
   the lien from the time each sum became due and payable.
   				When payment or satisfaction is made of a debt secured by the lien
   perfected by this subsection, the lien shall be released in accordance with
   the provisions of &#xA7; 55.1-339. For the purposes of &#xA7; 55.1-339, the
   president or secretary of the association is the duly authorized agent of the
   lien creditor.
   				Nothing in this subsection shall be construed to prohibit the recovery of
   sums for which this subsection creates a lien.
   				Any lot owner within the subdivision having executed a contract for the
   disposition of the lot is entitled, upon request, to a recordable statement
   setting forth the amount of unpaid regular or special assessments currently
   levied against that lot. Such request shall be in writing, directed to the
   president of the association, and delivered to the principal office of the
   association. Failure of the association to furnish or make available such a
   statement within five business days from the receipt of such written request
   shall extinguish the lien created by this subsection as to the lot involved.
   Payment of a fee not exceeding $15 may be required as a prerequisite to the
   issuance of such a statement if the bylaws of the association so provide.

E. If, upon July 1, 1978, and a subdivision becoming subject to the terms and
requirements outlined in subdivisions A 1 through 8 have not been performed,
then the requirements shall have to be fully complied with within a period of 90
days from July 1, 1978, and upon failure to fully perform all of such
requirements within the 90-day period the failure so to do shall constitute a
violation of this subsection.

F. Each lot owner within a subdivision that falls within the scope of this
chapter shall be responsible for his pro rata share of the cost of maintaining
the common facilities and common areas owned by the association. For purposes of
this subsection, &#8220;common facilities and common areas&#8221; means only the
roads and lakes within the subdivision, and &#8220;maintaining&#8221; includes
any orderly program for the continued upkeep and improvement of such roads and
lakes. The association has the responsibility of determining the pro rata share
assessed against each lot owner, and such amount assessed shall be in addition
to the annual or special assessment otherwise obligated by each member of the
association.

G. If a subdivision of land meets the requirement in subdivision 2 of the
definition of subdivision as provided in &#xA7; 55.1-2300, then the property
owners&#8217; association of the subject subdivision has the powers and duties
enumerated in subsections C, D, and F as well as the rights and authority to
establish those procedures outlined in subdivisions A 4, 5, and 6 and the
penalties in subdivision A 8, and also has the obligations imposed by such
subdivisions and those of subdivisions A 9 through 12.

HISTORY: 1978, c. 510, § 55-344; 1980, c. 546; 1989, c. 68; 1993, c. 36; 1996,
c. 77; 2019, c. 712; 2024, cc. 55, 349.