Title of Regulation: 18VAC48-70. Common Interest Community Ombudsman Regulations (amending 18VAC48-70-40).

Statutory Authority: § 55-530 of the Code of Virginia.

Public Hearing Information:

September 26, 2016 - 10 a.m. - Department of Professional and Occupational Regulation, Perimeter Center, 9960 Mayland Drive, Suite 200, Training Room 2, Richmond, Virginia 23233

Public Comment Deadline: November 18, 2016.

Agency Contact: Trisha Henshaw, 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 55-530 I of the Code of Virginia authorizes the Common Interest Community Board to prescribe regulations to accomplish the purpose of Chapter 29 (§ 55-528 et seq.) of Title 55 of the Code of Virginia (Common Interest Community Management Information Fund).

In addition, § 55-530 E of the Code of Virginia requires the board to establish by regulation a requirement that each association establish reasonable procedures for the resolution of written complaints from the members of the association and other citizens.

Section 54.1-201 E of the Code of Virginia authorizes regulatory boards to promulgate regulations in accordance with the Administrative Process Act necessary to assure continued competence, to prevent deceptive or misleading practices by practitioners, and to effectively administer the regulatory system administered by the regulatory board.

Purpose: 18VAC48-70-40 currently allows an association 90 days from the date the association files an application for registration with the board to establish and adopt a complaint process. The 90-day grace period for establishment of the complaint process was intended to allow new associations time to establish the mandated complaint process; however, some associations are registering that have been in existence for many years, but have never registered with the board. This amendment will provide homeowner protection by ensuring that associations have a complaint process regardless of their registration status.

Substance: The proposed regulation amends 18VAC48-70-40 by removing the provision applicable to associations registered with the board before July 1, 2012, as the subsection is no longer relevant. In addition, the proposed regulation allows 90 days for establishing a complaint procedure for new associations, but requires any other association filing an initial application to certify that an association complaint procedure has been established and adopted at the time the registration application is filed.

Issues: The primary advantage to the public is that the revisions will improve clarity of the regulations as they pertain to establishment of the complaint process and provide additional homeowner protection by making clear that the establishment of a complaint procedure is not related to the association's registration status. There are no identified disadvantages to the public.

The advantage to the Commonwealth is twofold: (i) the change reflects the importance that is placed on ensuring homeowners have access to a complaint process in which to have their grievances addressed prior to filing any complaint with the Office of the Common Interest Community Ombudsman and (ii) the change eliminates any discrepancy between statute and the board's current regulations regarding the status of registrations and the requirement to have a complaint process. No disadvantage for the Commonwealth has been identified.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Common Interest Community Board (Board) proposes to amend its ombudsman regulations to clarify that new co-op associations, condominium associations and property owner associations have to establish and adopt complaint procedures within 90 days of filing with the Board but that existing associations must have complaint procedures in place when they register with the Board.

Result of Analysis. Benefits likely outweigh costs for these proposed changes.

Estimated Economic Impact. Current regulation requires that associations "filing an initial application for registration must certify that an association complaint procedure has been, or will be, established and adopted by the governing board within 90 days of such filing." Board staff reports that the intent of the Board was that only new associations would have 90 days after filing to adopt complaint procedures but that existing associations would already have adopted complaint procedures and would not need an extra 90 days.

To clarify this language for regulated entities, the Board now proposes to split this requirement into two parts and only include the 90-day allowance in the part that addresses new associations. As this is not a substantive change, no entities are likely to incur costs on account of the proposed regulation. To the extent that these changes make the requirements of the Board more clear, interested parties will benefit from having a regulation that is more easily understood.

Businesses and Entities Affected. Board staff estimates that there are approximately 5,900 community associations registered with the Board. All of these entities, as well as any future registrants, will be affected by this proposed regulation.

Localities Particularly Affected. No locality will be particularly affected by this regulatory change.

Projected Impact on Employment. This proposed regulation is unlikely to have any impact on employment in the Commonwealth.

Effects on the Use and Value of Private Property. This proposed regulation is unlikely to have any impact on the use or value of private property.

Real Estate Development Costs. This proposed regulation is unlikely to affect real estate development costs.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, 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."

Costs and Other Effects. Small businesses in the Commonwealth are unlikely to incur any costs on account of this proposed regulation.

Alternative Method that Minimizes Adverse Impact. Small businesses in the Commonwealth are unlikely to incur any costs on account of this proposed regulation.

Adverse Impacts:

Businesses. Businesses in the Commonwealth are unlikely to incur any costs on account of this proposed regulation.

Localities. Localities in the Commonwealth are unlikely to see any adverse impacts on account of this proposed regulatory change.

Other Entities. No other entities are likely to suffer any adverse impact on account of this proposed regulation.

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

Summary:

The proposed amendments clarify that new condominium, cooperative, and property owners' associations must establish and adopt complaint procedures within 90 days of filing with the Common Interest Community Board, but that existing associations must have complaint procedures in place when they register with the board.

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

A. Associations registered with the board before July 1, 2012, shall establish and adopt an association complaint procedure within 90 days of July 1, 2012.

B. A. Associations filing an initial application for registration pursuant to § 55-79.93:1, 55-504.1, or 55-516.1 of the Code of Virginia must certify that an association complaint procedure has been established and adopted at the date of registering or will be established and adopted by the governing board within 90 days of such filing 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 certify with each annual report filing that the association complaint procedure has been adopted and is in effect.