Title of Regulation: 18VAC48-70. Common Interest Community Ombudsman Regulations (adding 18VAC48-70-10 through 18VAC48-70-130).

Statutory Authority: §§ 54.1-201 and 54.1-530 of the Code of Virginia.

Public Hearing Information:

March 3, 2011 – 10 a.m. - Department of Professional and Occupational Recreation, 9960 Mayland Drive, 2nd Floor, Board Room 1, Richmond, VA

Public Comment Deadline: March 18, 2011.

Agency Contact: Trisha Henshaw, Executive Director, Common Interest Community Board, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-8510, FAX (804) 527-4298, or email cic@dpor.virginia.gov.

Basis: Section 55-530 I states that "[t]he Board may prescribe regulations which shall be adopted, amended or repealed in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) to accomplish the purpose of this chapter." In addition, § 55-530 E states that "[t]he Board shall 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. . . "

Section 54.1-201 states in part that regulatory boards shall 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.

The regulation is mandatory to implement Chapters 851 and 871 of the 2008 Acts of Assembly.

Purpose: The new regulation establishes the requirement that each association must establish reasonable procedures for (i) the resolution of written complaints from the members of the association and other citizens, (ii) recordkeeping related to complaints filed, (iii) forms and procedures to be provided, (iv) transmittal of information to members regarding the Office of the Common Interest Community Ombudsman, and (v) filing a notice of final adverse decision with the board. The new regulation is necessary to implement Chapters 851 and 871 of the 2008 Acts of Assembly. The goal of the regulation is establish the requirements for associations to handle complaints and provide information to the public for filing a notice of adverse decision with the board in accordance with Chapters 851 and 871.

Substance: The regulation includes provisions required pursuant to § 55-530 E, F, G, and I of the Code of Virginia. This includes, but may not be limited to, requirements for the association complaint process, process for filing a notice of final adverse decision, submitting an inquiry to the Office of the Common Interest Community Ombudsman, and related provisions.

Issues: The primary advantage to the public is that associations will be required to establish and utilize written complaint procedures to ensure the resolution of complaints from their members, and to inform their membership of the right to file a notice of final adverse decision with the board if the association issues a final decision adverse to their complaint. No disadvantage to the public could be identified.

The primary advantage to the Commonwealth is that the regulation will require association complainants to seek resolution within their association prior to filing any complaint with the Office of the Common Interest Community Ombudsman. No disadvantage to the Commonwealth could be identified.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to § 55-530, the Common Interest Community Board (Board) proposes to establish new regulations to require that common interest community (CIC) associations set rules for receiving and considering complaints from members and other citizens. Specifically, these proposed regulations will 1) require CIC associations to distribute their complaint policies and procedures to members, 2) require the maintenance of association complaint records, 3) set time frames in which CIC associations must complete certain actions, 4) indicate the consequences for failure of an association to establish and utilize a complaint procedure and 5) establish procedures and forms for filing a notice of final adverse decision.

Result of Analysis. The benefits likely exceed the costs for most proposed provisions of these new regulations. There is insufficient information to ascertain whether benefits outweigh costs for one of these proposed provisions.

Estimated Economic Impact. In 2008, the legislature made significant changes to the statutory provisions governing CICs. Amongst these changes was a requirement that the Board promulgate regulations that mandate CIC associations establish reasonable procedures for the resolution of written complaints from the members of an association and other citizens. By statute, associations must 1) maintain a record of complaints for at least a year, 2) provide complaint forms or written complaint procedures to complainants and 3) provide the Board with information, upon request, about complaints that have been referred to the Board after an associations final adverse decision.

The statute allows complainants to give notice of a final adverse decision to the Board within 30 days, with payment of a $25 fee and in accordance with the regulations that the Board is required to promulgate. The statute allows the Board to waive or refund the $25 fee for good cause shown.

The Board now proposes regulations in accordance with its statutory mandate. These regulations include:

1) pertinent definitions,

2) a stipulation that any documents that are required to be provided to the Board, or its director, shall be filed with the Department of Professional and Occupational Regulation (DPOR),

3) a requirement that CIC associations adopt written complaint procedures either within 90 days of promulgation of these regulations or within 90 days of initial registration with the Board,

4) a requirement that associations certify, in each required annual report, that their complaint procedures are current and in effect,

5) specific requirements for association complaint procedures which include a time frame of seven days for associations to provide written acknowledgement of the receipt of a complaint and to provide a written notice of final determination after that determination is made,

6) requirements, in accordance with the statute, for distribution of association complaint procedures,

7) a requirement that associations maintain record of complaints in accordance with statute and a requirement that associations provide documents requested by the director within 14 (calendar) days,

8) notice that associations that fail to comply with these promulgated regulations are subject to penalties set by the legislature, and

9) procedures for the Board receive and review any final adverse decisions that are referred to the Board by complainants.

Most of the provisions of these regulations closely follow and, in some cases, further clarify the statutory requirements with which CIC associations must comply; while there will be costs (bookkeeping costs, costs for providing documentation to the Board and costs for providing required notifications to complainants) associated with these requirements, they can be attributed to the underlying legislation rather than these proposed regulations. To the extent that these regulations allow affected entities to better understand their statutory obligations, these proposed regulations will provide a benefit for those entities.

The provisions of these proposed regulations that entail the Board setting time frames that are outside the statutory framework are the seven day time frame for notification of receipt of complaint, the seven day time frame for notification of final determination and the 14 (calendar) day time frame for CIC associations to provide documentation when requested by the Board or the director. DPOR reports that the Board chose to keep all time frames in calendar days to provide consistency throughout the regulations and that they chose time frames that they considered sufficient for both small and large associations to be able to provide required notifications or gather and deliver required documents. These provisions may, however, put small associations (that have fewer business days per week) at a distinct disadvantage in being able to meet regulatory requirements. Since these are new regulations that will newly impose these requirements, there is no information yet that would indicate whether smaller associations would be disadvantaged enough to outweigh the benefits of having regulatory time frames that allow complainants to receive required notifications quickly and the Board to gather required information expeditiously.

Businesses and Entities Affected. DPOR reports that there are approximately 4,650 CIC associations currently registered with the Board.

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

Projected Impact on Employment. This regulatory action will likely have no impact on employment in the Commonwealth.

Effects on the Use and Value of Private Property. This regulatory action may change the way some CIC associations manage their complaint processes.

Small Businesses: Costs and Other Effects. Small businesses CIC management firms may incur bookkeeping, documentation and mail costs on account of this regulatory action.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The Board may wish to change their 7 and 14 calendar day time frames for associations so that these time frames are counted in business days. This would allow associations with varying numbers of business days per week the same chance to comply with this regulatory provision.

Real Estate Development Costs. This regulatory action will likely have no effect on real estate development costs in the Commonwealth.

Legal Mandate. 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 Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: Concur with the approval.

Regarding the comments pertaining to the sufficiency of seven days for notification of receipt of complaint, seven days for notification of final determination, and 14 days for an association to provide documentation when requested by the board or the director, the timeframes were established after deliberate consideration and are consistent with similar timeframes contained in the Property Owners' Association Act and the Condominium Act. The timeframes specified were carefully considered by the board, including their applicability to both large and small associations. The committee that developed the regulations consisted of a broad representation of individuals, including members of associations, common interest community managers, and attorneys specializing in common interest communities.

The two separate provisions that require notification of receipt of complaint to the complainant within seven days (subdivision 4 of 18VAC48-70-50) and notice of the final determination within seven days (subdivision 8 of 18VAC48-70-50) are to ensure prompt notification and are consistent with similar timeframes contained in the Property Owners' Association Act and the Condominium Act. Specifically, § 55-513 B of the Property Owners' Association Act provides the requirements by which an association must abide before imposing charges or suspension of a members right to use facilities. One of the requirements is the members' opportunity to be heard before any such charges or suspension may be imposed. The statute specifies that the hearing result must be delivered to the member within seven days of the hearing. In addition, § 55-79.80:2 of the Condominium Act includes provisions mirroring those contained in § 55-513 B of the Property Owners' Association Act, including the seven-day notification provision. The requirement that the notice of final determination be delivered to the complainant within seven days is necessary because the complainant must meet the statutorily mandated timeframe of 30 days for filing the notice of final adverse decision. If the board authorized a longer time period, then the complainant could have difficulty compiling the necessary information to file a notice of final adverse decision within the 30-day timeframe.

The regulation that requires an association to provide documentation requested by the board or the director within 14 days of the request (18VAC48-70-70 B) includes a provision for extending the timeframe specified upon a showing of extenuating circumstances prohibiting delivery within 14 days of receiving the request. In addition, the regulation is consistent with similar requirements for common interest community managers (which requires production of documents within 10 days of a request by the board). Further, this provision is necessary for ensuring the protection of the welfare of the public by requiring prompt response from the association when the department is reviewing a notice of final adverse decision submitted by a citizen.

Summary:

The proposed regulation requires that common interest community (CIC) associations set rules for receiving and considering complaints from members and other citizens. Specifically, the proposed regulations (i) require CIC associations to distribute their complaint policies and procedures to members, (ii) require the maintenance of association complaint records, (iii) set time frames in which CIC associations must complete certain actions, (iv) indicate the consequences for failure of an association to establish and utilize a complaint procedure, and (v) establish procedures and forms for filing a notice of final adverse decision.

CHAPTER 70
COMMON INTEREST COMMUNITY OMBUDSMAN REGULATIONS

Part I
General

18VAC48-70-10. Definitions.

Section 55-528 of the Code of Virginia provides definitions of the following terms and phrases as used in this chapter:

Association

Board

Common interest community

Declaration

Director

Governing board

Lot

Section 55-79.41 of the Code of Virginia provides definition of the following term as used in this chapter:

Condominium instruments

The following words, terms, and phrases, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

"Adverse decision" or "final adverse decision" means the final determination 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 citizen pursuant to an association complaint procedure. An association complaint shall concern a matter regarding the action, inaction, or decision by the governing board, managing agent, or association inconsistent with applicable laws and 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 § 55-530 of the Code of Virginia. An appeal process, if applicable, shall be set out in the association governing documents or in a 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 but not limited to 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.

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

"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 Chapter 29 (§ 55-528 et seq.) of Title 55 of the Code of Virginia shall be filed with or provided to the Department of Professional and Occupational Regulation.

Part II
Association Complaint Procedure

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

In accordance with § 55-530 E of the Code of Virginia, each association shall have a written process for resolving association complaints from members and citizens. The association complaint procedure or form shall conform with the requirements set forth in § 55-530 of the Code of Virginia and this chapter, as well as the association governing documents, which shall not be in conflict with § 55-530 of the Code of Virginia or this chapter.

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

A. Associations registered with the board before [the effective date of this chapter] shall establish and adopt an association complaint procedure within 90 days of [the effective date of this chapter].

B. 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.

C. The association shall 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 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 § 55-530 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 be provided upon request.

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

4. The association shall provide written acknowledgment of receipt of the association complaint to the complainant within seven days of receipt. Such acknowledgment shall be hand delivered or mailed by registered or certified mail, return receipt requested, to the complainant at the address provided, or if consistent with established association procedure, by electronic means provided the sender retains sufficient proof of the electronic delivery.

5. The association shall have a reasonable, efficient, and timely method for identifying and requesting additional information that is necessary for the complainant to provide in order to continue processing the association complaint. The association shall 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.

6. Any specific documentation that must be provided with the association complaint shall 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 provide that reference, as well as the requested action or resolution.

7. Notice of the date, time, and location that the matter will be considered shall be hand delivered or mailed by registered or certified mail, return receipt requested, to the complainant at the address provided or, if consistent with established association procedure, delivered by electronic means, provided the sender retains sufficient proof of the electronic delivery, within a reasonable time prior to consideration as established by the association complaint procedure.

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

9. The notice of final determination shall be dated as of the date of issuance and include specific citations to applicable association governing documents, 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 also be provided.

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

18VAC48-70-60. Distribution of association complaint procedure.

A. The association complaint procedure must be readily available to all members of the association and citizens.

B. The association complaint procedure shall be distributed using the association's established reasonable, effective, and free method, appropriate to the size and nature of the association, for communication with the governing board pursuant to §§ 55-79.75:1 and 55-510.2 of the Code of Virginia.

C. The association complaint procedure shall be included as an attachment to the resale certificate or the association disclosure packet.

D. Members of the association shall be reminded by the association annually of the availability of the association complaint procedure by using the method of communication established pursuant to §§ 55-79.75:1 and 55-510.2 of the Code of Virginia.

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

A. A record of each association complaint filed with the association shall be maintained in accordance with § 55-530 E 1 of the Code of Virginia.

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

18VAC48-70-80. Failure of association to establish and utilize association complaint procedure.

Failure of an association to establish and utilize an association complaint procedure in accordance with this chapter may result in the board seeking any of the remedies available pursuant to Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia.

Part III
Final Adverse Decision

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

A complainant may file a notice of final adverse decision in accordance with § 55-530 F of the Code of Virginia concerning any final adverse decision that has been issued by an association in accordance with this chapter, and for which all avenues for appeal, if applicable, within the association have been exhausted.

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

2. The notice shall be in writing on forms provided by the Office of the Common Interest Community Ombudsman. Such forms shall request 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. Date of final adverse decision.

3. The notice shall 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 the final adverse decision, and a copy of the association complaint procedure.

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

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

In accordance with § 55-530 F 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.

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

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 provide written acknowledgment of receipt of the notice to the complainant and shall provide a copy of the written notice to the association that made the final adverse decision. The notice of adverse decision will not be reviewed until the filing fee has been received or a waiver of filing fee has been granted by the board.

In accordance with § 55-530 G of the Code of Virginia, additional information may be requested from the association that made the final adverse decision. Upon request, the association shall provide such information to the Office of the Common Interest Community Ombudsman within a reasonable time.

18VAC48-70-120. Decision from the notice of final adverse decision.

Upon review of the notice of final adverse decision in accordance with § 55-530 G of the Code of Virginia, if the director determines that the final adverse decision may be in conflict with laws or regulations governing common interest communities or interpretations thereof by the board, the director may, in his sole discretion, provide the complainant and the association with information concerning such laws or regulations governing common interest communities or interpretations thereof by the board.

The determination of whether the final adverse decision may be in conflict with laws or regulations governing common interest communities or interpretations thereof by the board shall be a matter within the sole discretion of the director. Such decision is final and not subject to further review. The determination of the director shall not be binding upon the complainant or the association that made the final adverse decision.

Part IV
Office of the Common Interest Community Ombudsman

18VAC48-70-130. Purpose, responsibilities, and limitations.

The Office of the Common Interest Community Ombudsman shall carry out those activities as enumerated in subsection C of § 55-530 of the Code of Virginia.

FORMS (18VAC48-70)

Association Complaint Form (10/09).

Request for Waiver of Filing Fee (10/09).

Notice of Final Adverse Decision (10/09).