Virginia Lawyers Weekly VA Lawyers Weekly
A challenge to inspection fees assessed by a homeowners’ association in a large development has succeeded after the Court of Appeals of Virginia found that the individual fees weren’t expressly authorized by the association’s declaration.
The appellate court was unpersuaded by the association’s argument that the fees weren’t prohibited by statute because they applied to the community as a whole.
The association “cannot escape statutory restrictions in Code § 55.1-1805 by imposing an otherwise illegal fee on two or more property owners — or on all the owners — rather than on a single owner individually,” Judge Stuart A. Raphael wrote.
The judge acknowledged the association’s argument that certain fees were implied under the declaration.
“But what the declaration does not expressly authorize — what it fails to ‘[c]learly and unmistakably communicate[],’ or to communicate with ‘with directness and clarity,’ … is the authority to use assessments to pay for the lot-compliance inspections at issue,” he pointed out. “Such authority may well be implied. But it is not express.”
Judge Vernida R. Chaney joined Raphael’s opinion in Burkholder, et al. v. Palisades Park Owners Ass’n (VLW 023-7-070).
Judge Clifford L. Athey Jr. dissented, saying the majority conflated the meaning of the terms “expressly” and “explicitly.”
“Stretching ‘expressly’ to mean ‘explicitly,’ raises the bar beyond what is required by the plain meaning of the applicable statute in this case,” he wrote.
Inspection fees
Karey Burkholder and Douglas Thompson Jr. own a home in the Palisades Park development in Arlington. The Palisades Park Owners Association enforces rules in the development.
To ensure that homeowners in the development comply with Palisades’ rules, the association would pay a third-party to conduct inspections and charge homeowners assessments to cover the cost.
The association’s board of directors found support in a legal opinion that the fees were “consistent with the express language of the Declaration.”
But Burkholder and Thompson disagreed and sued the association. They claimed the association violated the Virginia Property Owners’ Association Act by imposing assessments on owners that fund lot-compliance inspections where the association’s declaration lacked clarity and was therefore not “expressly authorized.”
Palisades never disputed that it assessed the fees but maintained that they were lawful.
The Arlington County Circuit Court agreed and awarded Palisades $67,481.68 in attorneys’ fees.
The homeowners appealed.
All or one
Raphael said this case turned on the proper interpretation of Code § 55.1-1805, which prevents associations from charging individual assessments for services unrelated to common areas without express authorization in the statute or the association’s declaration.
Palisades argued that the statute was irrelevant; it only applied to individual charges rather than assessments imposed on the whole community, which is how they framed the lot-compliance fees.
Raphael disagreed.
“Palisades cites no precedent for its interpretation, and we reject it,” he wrote. “Palisades misplaces its reliance on the singular terms ‘a lot or a lot owner’ in the sentence prohibiting assessments for services unrelated to the common area. Under Code § 1-227, ‘[a] word used in the singular includes the plural and a word used in the plural includes the singular.’”
The judge pointed to Wolfe v. Commonwealth, a 1937 Supreme Court of Virginia decision where “a defendant who stole five cows could not evade criminal responsibility simply because the statute criminalized the ‘larceny of a cow,’” adding that the same principle applies in this case.
Nor did the court’s reading undermine the statute, as Palisades alleged.
“To the contrary, our reading protects residential property owners by prohibiting assessments not expressly authorized in the declaration if the moneys are used to fund items unrelated to the common area,” the judge asserted. “Palisades’ construction, by contrast, would permit assessments for all manner of things unrelated to the common area as long as the assessment is imposed on two or more lot owners, or on all of the owners.”
Raphael said this reading would “gut the protection the statute affords to a purchaser’s normal investment expectations.”
No ‘clear-statement’
The question to be resolved here was if an assessment for lot-compliance exceptions was “expressly authorized” by Palisades’ declaration.
“We agree with the Homeowners that the phrase ‘expressly authorized’ means what it says.” Raphael wrote. “It imposes a clear-statement rule — the ‘legal drafter’ must ‘use clarity of expression.’ In other words, ‘the result sought must be unquestionably expressed in the text.’”
The judge also found that the drafters of the declaration knew how to expressly authorize specific assessments when they wanted to, pointing to a specific provision that authorized a restoration assessment.
“That express authority to impose a restoration assessment highlights the lack of similar express authority to spend assessment moneys on lot-compliance inspections,” he explained. “Article VI, § 2(b) runs on for a page and a half. But conspicuously absent is any mention of assessments to fund lot inspections to see if the homeowners are breaking any rules.”
Raphael reversed the trial court’s ruling and awarded the homeowners attorneys’ fees and costs under the statute.
‘Lot at stake’
Richmond appellate attorney Norman A. Thomas represented Burkholder and Thompson in what he described as a “David and Goliath” battle against Palisades.
“There was a lot at stake for my clients to stand up for what they thought was right, especially after the trial court imposed almost $70,000 of the association’s legal fees against them,” he told Virginia Lawyers Weekly.
Thomas described how Palisades’ inspections related only to aesthetic compliance and sometimes resulted in punitive actions against individual homeowners. Having to also pay for the inspections added insult to injury.
“Ever since Sainani v. Belmont Glen Homeowners Association was decided by the Supreme Court of Virginia in 2019, there has been much greater sensitivity to balancing the rights of property owners with homeowners’ associations,” he said. “Associations have to be very explicit about what is being charged.”
