TITLE 18. PROFESSIONAL AND OCCUPATIONAL LICENSING

COMMON INTEREST COMMUNITY BOARD

Proposed Regulation

Title of Regulation: 18VAC48-70. Common Interest Community Ombudsman Regulations (amending 18VAC48-70-10 through 18VAC48-70-50, 18VAC48-70-70, 18VAC48-70-90, 18VAC48-70-100, 18VAC48-70-110).

Statutory Authority: §§ 54.1-2349 and 54.1-2354.4 of the Code of Virginia.

Public Hearing Information:

January 8, 2025 - 10 a.m. - Department of Professional and Occupational Regulation, Perimeter Center, Second Floor Conference Center, Board Room 3, 9960 Mayland Drive, Richmond, VA 23233.

Public Comment Deadline: February 14, 2025.

Agency Contact: Anika Coleman, Executive Director, Common Interest Community Board, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-8510, FAX (866) 490-2723, or email cic@dpor.virginia.gov.

Basis: Section 54.1-2354.4 of the Code of Virginia requires the Common Interest Community Board to establish by regulation a requirement that each association shall establish reasonable procedures for the resolution of written complaints from the members of the association and other citizens.

Purpose: As mandated by the General Assembly, the proposed amendments protect the public welfare, in part, by establishing and clarifying the (i) requirements for an association complaint procedure; (ii) requirements for development, adoption, and distribution of the complaint procedure; (iii) requirements for retention of records of association complaints; (iv) procedure for the filing of a notice of final adverse decision (NFAD) with the Office of the Check-In, Check-Out (CICO) and review of an NFAD by the CICO; and (v) provisions for a final determination made by the CICO regarding an NFAD.

Substance: The proposed amendments include:

1. 18VAC48-70-10 is revised to incorporate statutory terms from §§ 54.1-2345, 54.1-2354.1, and 55.1-2307 of the Code of Virginia. The section is also revised to add the term "common interest community laws and regulations" and to clarify the meaning of other defined terms. The section is further revised to remove provisions that establish regulatory requirements and replace defined terms for which a statutory definition is incorporated by reference.

2. 18VAC48-70-50 is revised to (i) incorporate requirements pertaining to the association compliant procedure that are currently in the definition for "association complaint procedure" in 18VAC48-70-10; (ii) update provisions regarding delivery of notices to a complainant to state that such notices must be hand delivered, mailed, or delivered by third-party courier, with proof of delivery. Currently, the regulation requires that such notices must be either hand delivered or mailed by registered or certified mail; (iii) increase from seven to 14 days the time period for an association to provide a complainant with written acknowledgment of receiving the complaint following the association's receipt of the complaint; and (iii) provide that notice of the date, time, and location where the association complaint will be considered by the association be provided to the complainant at least 14 days prior to consideration, unless otherwise agreed to in writing. Currently, the regulation provides that notice be given "within a reasonable time."

3. 18VAC48-70-90 is revised to (i) remove the requirement that the NFAD include applicable association governing documents and (ii) to relocate a provision that establishes the date of a final adverse decision from the definition of "adverse decision" in 18VAC48-70-10.

4. 18VAC48-70-100 is revised to incorporate provisions from an existing board guidance document regarding consideration of requests to waive or refund NFAD filing fees.

5. Clarifying changes are made to 18VAC48-70-110 to provide that (i) an NFAD is not complete and will not be reviewed until the NFAD filing fee has been received or a waiver of the fee has been granted and (ii) information that was not part of a final adverse decision will not be considered in the review of the NFAD.

Issues: The primary advantages to the public and regulated community include providing clarification to provisions of the regulation, ensuring the regulation complements Virginia law and reflects current agency procedures, and reducing regulatory burdens. There are no identifiable disadvantages to the public or the Commonwealth. It is not anticipated that the regulatory change will create any substantial disadvantages to the regulated community.

Department of Planning and Budget Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia and Executive Order 19. The analysis presented represents DPB's best estimate of the potential economic impacts as of the date of this analysis.¹

Summary of the Proposed Amendments to Regulation. The Common Interest Community Board (board) proposes to amend the Common Interest Community Ombudsman Regulations to update and clarify the provisions of the regulation and ensure that it conforms to statute. This action proposes changes to (i) requirements for an association complaint procedure, (ii) requirements for filing a notice of final adverse decision, and (iii) provisions regarding the waiver of filing fees.

Background. This regulation addresses common interest communities (CICs), which are defined in statute as "real estate subject to a declaration containing lots, at least some of which are residential or occupied for recreational purposes, and common areas to which a person, by virtue of the person's ownership of a lot subject to that declaration, is a member of the association and is obligated to pay assessments of common expenses."² Examples of CICs include condominiums, cooperatives, retirement communities, and some townhomes. Each CIC has an association that represents its property owners. This regulation, which was originally promulgated in July 2012, requires associations to "have a written process for resolving association complaints from members and citizens."³ It outlines the minimum requirements for an association complaint procedure, to include the process for consideration of a complaint by the association, and notification to the complainant of the association's final determination on the complaint. To the extent that a final determination of the association does not result in the cure or corrective action sought by the complainant, it is considered an "adverse decision" or "final adverse decision" as defined in the regulation. 18VAC48-90 allows complainants who are dissatisfied with the adverse decision to file a notice of final adverse decision in writing on forms provided by the Office of the CIC Ombudsman at the Department of Professional and Occupational Regulation (DPOR). As part of their submission, they must submit a $25 filing fee. The CIC board proposes to increase the time the association has to provide written acknowledgment of its receipt of a complaint (to 14 days from seven days) and add that notice of the meeting where a complaint will be considered must be provided at least 14 days before it is held, unless otherwise agreed to in writing. Currently, the regulation just requires notice of the meeting "within a reasonable time" before it is held. Lastly, the Health and Human Services Poverty Guidelines would be used to determine whether the $25 filing fee for the notice of final adverse decision can be waived by the board.⁴ The board also seeks to make a number of clarifying edits.

Estimated Benefits and Costs: The proposed amendments largely serve to clarify and update the regulation and are not expected to create new costs. CIC associations could benefit from having 14 rather than seven days to provide written acknowledgement of a complaint, and complainants would likely benefit from the requirement that they be notified of a meeting at least 14 days before it is held. While the board is currently authorized to waive the $25 filing fee if it would cause undue financial hardship to the complainant, specifying that such determinations would be based on the federal poverty guidelines would enhance clarity and transparency.

Businesses and Other Entities Affected. The proposed amendments would affect the 6,983 registered CIC associations and 152 licensed CIC management companies and could indirectly affect all the residents of CICs to the extent that they need to go through the complaint procedure. The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.⁵ An adverse impact is indicated if there is any increase in net cost or reduction in net benefit for any entity, even if the benefits exceed the costs for all entities combined.⁶ As the proposed amendments neither increase net costs nor reduce net benefits, no adverse impact is indicated.

Small Businesses⁷ Affected.⁸ The proposed amendments do not adversely affect small businesses.

Costs and Other Effects. To the extent that small businesses pay for the practitioner licensure fees, their costs would increase commensurately with the proposed increases. Small businesses that operate training programs would face higher costs due to the increase in training program fees.

Alternative Method that Minimizes Adverse Impact. There are no clear alternative methods that both reduce adverse impact and meet the intended policy goals.

Localities⁹ Affected.¹⁰ The proposed amendments do not affect costs for local governments.

Projected Impact on Employment. The proposed amendments do not affect total employment.

Effects on the Use and Value of Private Property. The proposed amendments neither affect the use and value of private property nor real estate development costs.

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¹ Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

² See https://law.lis.virginia.gov/vacode/title54.1/chapter23.3/section54.1-2345/.

³ See https://townhall.virginia.gov/L/ViewAction.cfm?actionid=2956.

⁵ Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

⁶ Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation. As a result, DPB has adopted a definition of adverse impact that assesses changes in net costs and benefits for each affected Virginia entity that directly results from discretionary changes to the regulation.

⁷ Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁸ If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

⁹ "Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹⁰ Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency Response to Economic Impact Analysis: The Common Interest Community Board concurs with the economic impact analysis prepared by the Department of Planning and Budget.

Summary:

Pursuant to Executive Directive One (2022) and Executive Order 19 (2022), the proposed amendments primarily consolidate and clarify the regulation. Additionally, substantive proposed changes (i) increase the time an association has to provide written acknowledgment of its receipt of a complaint to 14 days; (ii) add that notice of the meeting where a complaint will be considered must be provided at least 14 days before the meeting is held; and (iii) include the Health and Human Services Poverty Guidelines as the mechanism for determining whether the $25 filing fee for the notice of final adverse decision can be waived by the board.

18VAC48-70-10. Definitions.

A. Section 54.1-2345 of the Code of Virginia provides definitions of the following terms and phrases as used in this chapter:

Association

Board

Common interest community

Common interest community manager

Declaration

Governing board

Lot

B. Section 54.1-2354.1 of the Code of Virginia provides the definition of the following term as used in this chapter:

Director

C. Section 55.1-1900 of the Code of Virginia provides definition of the following term as used in this chapter:

Condominium instruments

D. Section 55.1-2307 of the Code of Virginia provides definitions of the following terms as used in this chapter:

Governing documents

Resale certificate

E. The following words, terms, and phrases, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise. a different meaning is provided or is plainly required by context:

"Adverse decision" or "final adverse decision" means the final determination decision issued by an association pursuant to an association complaint procedure that is opposite of, or does not provide for, either wholly or in part, the cure or corrective action sought by the complainant. Such decision means all avenues for internal appeal under the association complaint procedure have been exhausted. The date of the final adverse decision shall be the date of the notice issued pursuant to subdivisions 8 and 9 of 18VAC48-70-50.

"Association complaint" means a written complaint filed by a member of the association or a citizen pursuant to an association complaint procedure. An association complaint shall must concern a matter regarding the an action, inaction, or decision by the association, governing board, or managing agent, or association inconsistent that is in conflict with applicable common interest community laws and or regulations.

"Association complaint procedure" means the written process adopted by an association to receive and consider association complaints from members and citizens. The complaint procedure shall include contact information for the Office of the Common Interest Community Ombudsman in accordance with § 54.1-2354.4 of the Code of Virginia. An appeal process, if applicable, shall be set out in an association complaint procedure adopted by the association, including relevant timeframes for filing the request for appeal. If no appeal process is available, the association complaint procedure shall indicate that no appeal process is available and that the rendered decision is final.

"Association governing documents" means collectively the applicable organizational documents, including the current and effective (i) articles of incorporation, declaration, and bylaws of a property owners' association, (ii) condominium instruments of a condominium, and (iii) declaration and bylaws of a real estate cooperative, all as may be amended from time to time. Association governing documents also include, to the extent in existence, resolutions, rules and regulations, or other guidelines governing association member conduct and association governance.

"Common interest community laws or regulations" means Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia; Chapter 18 (§ 55.1-1800 et seq.), 19 (§ 55.1-1900 et seq.), 20 (§ 55.1-2000 et seq.), or 21 (§ 55.1-2100 et seq.) of Title 55.1 of the Code of Virginia; or the regulations of the board.

"Complainant" means an association member or citizen who makes a written complaint pursuant to an association complaint procedure.

"Director" means the Director of the Department of Professional and Occupational Regulation.

"Record of complaint" means all documents, correspondence, and other materials related to a decision made pursuant to an association complaint procedure.

18VAC48-70-20. Submission of documentation.

Any documentation required to be filed with or provided to the board, director, or Office of the Common Interest Community Ombudsman pursuant to this chapter and Article 2 (§ 54.1-2354.1 et seq.) of Chapter 23.3 of Title 54.1 of the Code of Virginia shall must be filed with or provided to the Department of Professional and Occupational Regulation.

18VAC48-70-30. Requirement for association to develop an association complaint procedure.

In accordance with § 54.1-2354.4 of the Code of Virginia, each association shall will have a written process for resolving association complaints from members and citizens. The association complaint procedure or form shall will conform with the requirements set forth in § 54.1-2354.4 of the Code of Virginia and this chapter, as well as the association governing documents, which shall must not be in conflict with § 54.1-2354.4 of the Code of Virginia or this chapter.

18VAC48-70-40. Establishment and adoption of written association complaint procedure.

A. Associations filing an initial application for registration pursuant to § 55.1-1835, 55.1-1980, or 55.1-2182 of the Code of Virginia must certify that an association complaint procedure has been established and adopted at as of the date of registering or within 90 days of registering with the board.

B. An association that has been delinquent in registering the association and filing its required annual reports is still required to have an established and adopted written association complaint procedure. At the time such an association files an application for registration, it must certify that an association complaint procedure has been established and adopted by the governing board.

C. The association shall will certify with each annual report filing that the association complaint procedure has been adopted and is in effect.

18VAC48-70-50. Association complaint procedure requirements.

The association complaint procedure shall must be in writing and shall include the following provisions in addition to any specific requirements contained in the association's governing documents that do not conflict with § 54.1-2354.4 of the Code of Virginia or the requirements of this chapter.

1. The association complaint must be in writing.

2. A sample of the form, if any, on which the association complaint must be filed shall will be provided upon request.

3. The association complaint procedure shall must include the process by which complaints shall be are delivered to the association.

4. The association complaint procedure must include contact information for the Office of the Common Interest Community Ombudsman in accordance with § 54.1-2354.4 of the Code of Virginia.

5. The association shall must provide written acknowledgment of receipt of the association complaint to the complainant within seven 14 days of receipt. Such The acknowledgment shall will be hand delivered or, mailed by registered or certified mail, return receipt requested, or delivered by third-party courier, with proof of delivery to the complainant at the address provided, or if consistent with established association procedure, by electronic means, unless prohibited by the governing documents, provided the sender association retains sufficient proof of the electronic delivery.

5. 6. Any specific documentation that must be provided with the association complaint shall must be clearly described in the association complaint procedure. In addition, to the extent the complainant has knowledge of the law or regulation applicable to the complaint, the complainant shall will provide that reference, as well as the requested action or resolution.

6. 7. The association shall must have a reasonable, efficient, and timely method for identifying and requesting any additional information from the complainant that is necessary for the complainant to provide in order to continue processing the association complaint. The association shall will establish a reasonable timeframe for responding to and for the disposition of the association complaint if the request for information is not received within the required timeframe.

7. 8. Notice of the date, time, and location that the matter will be considered shall will be hand delivered or, mailed by registered or certified mail, return receipt requested, or delivered by third-party courier, with proof of delivery to the complainant at the address provided or, if consistent with established association procedure, delivered by electronic means, unless prohibited by the governing documents, provided the sender association retains sufficient proof of the electronic delivery, within a reasonable time at least 14 days, unless otherwise agreed to in writing, prior to consideration as established by the association complaint procedure.

8. 9. After the final determination is made, the written notice of final determination shall will be hand delivered or, mailed by registered or certified mail, return receipt requested, or delivered by third-party courier, with proof of delivery, to the complainant at the address provided or, if consistent with established association procedure, delivered by electronic means, unless prohibited by the governing documents, provided the sender association retains sufficient proof of the electronic delivery, within seven days.

9. 10. The notice of final determination shall must be dated as of the date of issuance and include specific citations to applicable association governing documents, common interest community laws, or regulations that led to the final determination, as well as the registration number of the association. If applicable, the name and license number of the common interest community manager shall must also be provided.

10. 11. The notice of final determination shall must include the complainant's right to file a Notice notice of Final Adverse Decision final adverse decision with the Common Interest Community Board via the Common Interest Community Ombudsman and the applicable contact information.

12. An appeal process, if applicable, must be set out in an association complaint procedure, including relevant timeframes for filing the request for appeal. If no appeal process is available, the association complaint procedure must indicate that no appeal process is available and that the rendered decision is final.

18VAC48-70-70. Maintenance of association record of complaint.

A. A record of each association complaint filed with the association shall must be maintained in accordance with § 54.1-2354.4 A 1 of the Code of Virginia.

B. Unless otherwise specified by the director or his the director's designee, the association shall must provide to the director or his the director's designee, within 14 days of receipt of the request, any document, book, or record concerning the association complaint. The director or his the director's designee may extend such timeframe upon a showing of extenuating circumstances prohibiting delivery within 14 days of receiving the request.

18VAC48-70-90. Filing of notice of final adverse decision.

A complainant may file a notice of final adverse decision in accordance with § 54.1-2354.4 B of the Code of Virginia concerning any final adverse decision that has been issued by an association in accordance with this chapter.

1. The notice shall must be filed within 30 days of the date of the final adverse decision.

2. The notice shall must be in writing on forms provided by the Office of the Common Interest Community Ombudsman. Such The forms shall request will include the following information:

a. Name and contact information of complainant;

b. Name, address, and contact information of association;

c. Applicable association governing documents; and

d. c. Date of final adverse decision. The date of final adverse decision will be the date of the notice issued pursuant to subdivisions 8 and 9 of 18VAC48-70-50.

3. The notice shall must include a copy of the association complaint, the final adverse decision, reference to the laws and regulations the final adverse decision may have violated, any supporting documentation related to that accompanied the final adverse decision, and a copy of the association complaint procedure.

4. The notice shall must be accompanied by a $25 filing fee or a request for waiver pursuant to 18VAC48-70-100.

18VAC48-70-100. Waiver of filing fee.

A. In accordance with § 54.1-2354.4 B of the Code of Virginia, the board may, for good cause shown, waive or refund the filing fee upon a finding that payment of the filing fee will cause undue financial hardship for the complainant.

B. The board will use the current U.S. Department of Health and Human Services (HHS) Poverty Guidelines to establish the threshold for whether a filing fee will be waived or refunded as a result of financial hardship. The HHS Poverty Guidelines, as updated annually in the Federal Register, are available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines.

C. In order to determine whether the complainant requesting the waiver or refund of the filing fee is at or below the HHS Poverty Guidelines, the complainant must submit to the board supporting documentation satisfactory that provides proof of income.

D. A waiver or refund of the filing fee will be granted if proof of income submitted is at or below the then-current HHS Poverty Guidelines.

18VAC48-70-110. Review of final adverse decision.

A. Upon receipt of the notice of final adverse decision from the complainant, along with the filing fee or a board-approved waiver of filing fee, the Office of the Common Interest Community Ombudsman shall will provide written acknowledgment of receipt of the notice to the complainant and shall will provide a copy of the written notice to the governing board and, if applicable, the common interest community manager of the association that made the final adverse decision. The notice of adverse decision is not complete and will not be reviewed until the filing fee has been received or a waiver of filing fee has been granted by the board.

B. In accordance with § 54.1-2354.4 C of the Code of Virginia, additional information may be requested from the association that made the final adverse decision. Upon request, the association shall will provide such information to the Office of the Common Interest Community Ombudsman within a reasonable time.

C. Information that was not part of the final adverse decision will not be considered.