2/3 vote OK to extend condo expansion time

A condo association could amend its condominium instruments to extend the time limit for the expansion of new units with a two-thirds vote of the owners of the existing units, the Virginia Court of Appeals has ruled, affirming summary judgment in favor of the association.

University Village established an expandable condominium in Albemarle
County for declaration in 1991. The declaration acknowledged that the percentage interest assigned to each unit would change if new units were added; it also provided that the declaration could be amended by a vote of “at least 66-2/3% of the Unit Owners.”

When talks began about a proposed expansion, counsel for Daniel Lavering, who owned a unit, sent a letter expressing the view that any expansion required unanimous consent of the unit owners, including the extension of the time limit to pursue the option to expand.

University Village disagreed, and Lavering filed a declaratory action, seeking a judgment that the association could not extend the time limit with a two-thirds vote of the unit owners.

The circuit court disagreed and granted summary judgment in favor of University Village.

Lavering appealed, and the court affirmed.

“While we agree that the expansion proposed in Phase III would increase the number of condominium units, and therefore would dilute the relative interest of each unit in the common areas, we also agree with the Association, as did the circuit court, that there is a difference between the unit owners voting to expand the condominium and the unit owners voting to extend the time limit for declarant expansion,” Judge Kevin M. Duffan wrote. “[T]he question we resolve today is that increasing the time limit to pursue the option to expand only requires two-thirds approval.”

Chief Judge Marla Graff Decker and Judge Mary B. Malveaux joined the 14-page opinion issued May 5 in Lavering v. University Village Owners Association (VLW 026-7-175).

Marla J. Diaz of Whiteford, Taylor & Preston in Richmond, who represented University Village, said the decision was important because the Court of Appeals “recognized that condominium associations have the right to make ongoing judgments about their community needs under the Condominium Act, as opposed to the very restrictive argument” made by Lavering.

“His argument promotes the perspective of the rights of an individual owner over the common elements,” Diaz said. “By intent, the condominium association is a communal ownership, and the membership agrees on the course of action, with a supermajority
vote of two-thirds. But what [Lavering] was arguing would foreclose the opportunity to have that kind of communal agreement if a single owner disagreed, which is not what the Condominium Act intended.”

John C. Altmiller of Altmiller Melnick DeMers Steele & Rosati in Tysons highlighted multiple points in the decision, including an “interesting discussion” about when declaratory relief is available.

He also noted that while Lavering’s argument conflated extension with expansion, it provided the court with an opportunity to make a distinction between the two.

“Although the issue was not before the Court, the opinion suggests that Code § 55.1-1934(E) would require unanimity if the condominium association ultimately seeks expansion,” he said. “This is consistent with the principles of due process, particularly when it comes to real estate, which is taken very seriously in the commonwealth.”

Charlottesville attorney Kyle McNew of MichieHamlett, who represented Lavering, did not respond to a request for comment on the decision.

Condominium expansion

University Village established an expandable condominium in Albemarle County by declaration made subject to the Virginia Condominium Act in 1991. As the declarant, University Village reserved the right to expand the condominium at its discretion within seven years.

Initially, the condominium included one building with 46 units, referred to as Phase I. The declaration provided that the percentage interest assigned to each unit would change if new units were added; it also stated that the declaration could be amended by a vote of at least 66.67% of the unit owners.

Within seven years of the declaration, University Village constructed a Phase II building with 48 additional units.

In 2003, 94.3% of the condominium’s unit owners approved an amendment to the declaration to expand the period in which University Village could submit Phase III.

Lavering purchased a unit in University Village in 2004.

When talk renewed about the proposed Phase III expansion, Lavering’s counsel sent a letter to the University Village
Owners Association’s board of directors that any expansion required unanimous consent of the unit owners.

Referring to the declaration and the 2003 amendment, the association manager responded that the declaration could be amended by consent of two-thirds of unit owners.

Lavering filed a declaratory action against the association, which responded with a motion for summary judgment.

The circuit court granted the motion.
Lavering moved for reconsideration and for sanctions, contending that the association had acted in bad faith by denying its two-thirds position in its answer and then taking that position in its motion for summary judgment.

Denying both motions, the circuit court awarded the association $81,223 in attorney fees.

Lavering appealed.

Justiciable controversy exists

The court first addressed whether the lawsuit was unripe because the association has not yet presented a proposal for expansion to the condominium’s unit owners, finding that a justiciable controversy did exist.

“Here, the Association has demonstrated its intent to amend the declaration to extend the period in which it can expand the condominium and explicitly stated its belief that it needs only two-thirds approval to do so,” the court wrote, taking substantial steps and expending financial expenses in the process. “As there was a justiciable controversy, the circuit court properly exercised jurisdiction to hear the declaratory judgment action.”

Turning to the issue of the number of unit owners’ approval required to extend the time limit to conduct a condominium expansion, the court explained that it required reconciling several provisions of the Virginia Condominium Act involving time limitations.

Va. Code § 55.1-1916(C)(3) provides that the declaration of an expandable condominium must contain a time limit (not to exceed 10 years) for the option to expand and that “[a]fter the expiration of any period of declarant control reserved pursuant to subsection A of [Code] § 55.1-1943, such time limit may be extended by an amendment to the declaration made pursuant to [Code] § 55.1-1934.”

Lavering argued that the phrase “such time limit” referred to the period of declarant control, while the association took the position it refers to the period in which the condominium may be expanded.

Although Lavering relied upon the rule of the last antecedent, the court noted the rule can be overcome by the appearance of contrary intention, pointing out that Va. Code § 55.1-1916(C)(3) uses the specific phrase “time limit” three times, and the first two uses indisputably refer to the expansion period.

“[W]e presume that the General Assembly carefully chose the phrase ‘such time limit’ to refer to the same period that the statute has already identified using the same phrase, ‘time limit,’” the court said.

Extension, not expansion

This interpretation was bolstered by the Condominium Act as a whole, the court added, particularly given the amendments to the statute over the years.

“Applying Lavering’s reading to the current statutes would mean that an ongoing period of declarant control may be extended up to a maximum of 15 years if strict procedures are followed, as set forth in the statute pertaining to declarant control, while an expired period of declarant control may be revived with less stringent requirements and no maximum time limit, as set forth in a statute pertaining to a separate issue,” the court wrote. “That would be an absurd result. Thus we decide, as did the circuit court, that ‘such time limit’ in Code § 55.1-1916(C)(3) refers to the expansion period, not the period of declarant control.”

Amending the condominium instruments to extend the option to expand changes to the undivided interest in the common elements does not fall under the unanimity requirement of Va. Code § 55.1-1934(E), the court added.

“[T]here is a difference between the unit owners voting to expand the condominium and the unit owners voting to extend the time limit for declarant expansion,” the court said. “The mere option to expand does not, by itself, change the undivided interest in the common elements. The change occurs when the expansion actually occurs and the plats and plans are recorded.”

Finally, the court affirmed the trial court’s ruling on the sanctions award. The trial court “carefully considered each of
Lavering’s assertions and the Association’s responses and discussed them in detail,” the court explained, finding that the ruling was not an abuse of discretion.

Lavering v. University Village Owners Association

ISSUE           Can a condominium association amend its condominium instruments to extend the time limit for the expansion of new units with a two-thirds vote of the owners of the existing units?

ANSWER      Yes (Court of Appeals of Virginia)

Attorneys  Kyle McNew, MichieHamlett, Charlottesville (appellant)
Marla J. Diaz, Whiteford, Taylor & Preston, Richmond (appellee)

• Lavering v. University Village Owners Association