2009 VAR Legal Updates


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2009 Legal Update on Changes to the Virginia Real Estate laws

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2009 VAR Legal Updates

  1. 1. Legislative Recap On July 1, most of Virginia’s new laws take effect. Here are the ones Realtors® need to know about. EACH YEAR, ON the first of July, the various laws passed by the General Assembly and signed by the governor take effect. VAR has had a hand in a number of important pieces of legislation that affect our members — and there are several other laws that, while we didn’t have a hand in them, are the kinds of things Realtors® and brokers are likely to encounter. So we asked our vice president for law & policy, John Broadway, for a breakdown on what to expect on July 1 (and in one case a little later). Without further ado, here are the important new real estate laws taking effect this summer. Out-of-state commercial licensees granted limited license exemption. Effective July 1, commercial agents licensed in good standing in other states will be able to bring their out-of-state clients into Virginia to take advantage of Virginia opportunities without being licensed in Virginia. This change reflects the realities of the commercial world where clients are typically more sophisticated, the laws and principals at work generally more universal, and legal counsel more frequently involved than is the case in the residential world. Perhaps most importantly, because of the national and international nature of commercial markets, where agents are required to work across state borders more frequently, licensure in multiple states is a real burden, and commer- cial agents often ignore state license laws that in reality are often more about turf protection than consumer protection. The new law will still require commercial agents to have a Virginia license to list property in Virginia and to represent Virginia clients here, but will permit tenant and buyer representatives licensed elsewhere to bring their clients into Virginia to see and consider our clients’ properties. In reality, this is done regularly anyway, in violation of our license laws, putting Virginia brokers at risk with every commission they pay to an out-of-state www.VaRealtoR.com
  2. 2. broker assisting a client with a Virginia deal if that broker prior to towing. That signature often had to come from the is not licensed here. property manager. Seeing that the towing is often done in the These changes were enacted unanimously by both wee hours, that meant he could be woken at 2 a.m. houses of the General Assembly that believes as we do At VAR’s request, the law will now permit a towing that dropping barriers to commercial agents from other operator to receive verbal approval to tow from an agent states to doing business here will work to the advantage designated by local ordinance — one who is available at all of our clients and our commercial companies, which times. Because the owner of the towed vehicle is likely to broadly supported this legislation. Virginia becomes the call the police when he sees his car is missing, the locality first state to enact such a broad reform. now has the authority to require towing operators notify Real estate license applicants will now undergo a the police department before the tow. (If the towing occurs background checks. This new law (requested by VAR) during normal business hours, the legislation allows the requires the Department of Professional and Occupation locality to require that the owner of the property or his Regulation to conduct mandatory criminal history back- agent provide written authorization prior to the tow.) ground checks on new applicants for real estate licensure. Attorney’s don’t (necessarily) get paid for referrals. If an (Which will probably mean an additional fee to cover attorney refers clients to a real estate licensee, he is not the cost.) And if you’re already licensed? When you go to entitled to receive any compensation from a listing firm — renew your real estate sales or brokerage license, you’ll or any offered by a common-source information company have to “affirmatively state” that you have no criminal to cooperating brokers — unless he is also licensed as a convictions that you haven’t already disclosed. real estate broker or salesperson. Misstating the sales price is a crime. Don’t try to get out of You now must disclose stormwater detention facilities. A rendering unto Caesar the things that are Caesar’s — or at new law requires that the Residential Property Disclosure least the Commonwealth’s. Under this new provision, inten- Statement be amended to add stormwater detention tionally misstating the sales price in the stated consideration facilities as one of the laundry list of items that should be provided to a circuit court clerk is a Class 1 misdemeanor included. The Virginia Real Estate Board approved the (maximum $2,500 fine and a year in lockup). And if the new disclosure statement, and released the new form on court decides you were trying to evade paying taxes? Not June 1. Realtors® will need to start using it on July 1. (And only will you have to pay the difference, the bill also allows of course VAR will make it easy to get — stay tuned.) a penalty of an additional 100 percent of that tax due on the Water and sewage company lien rules were tweaked. understatement of the consideration. Under existing law, local water and waste authorities can Vested rights place a lien on real estate (pursuant to certain conditions) expanded to include fire if a tenant is delinquent in making payments. The new damage. If a natural law provides that a lien may apply for delinquent rates or disaster or other act of charges applicable to “three or fewer months” rather than God damages a build- “three or fewer delinquent billing periods not exceeding ing, property owners thirty days each” in order to accommodate authorities could repair, rebuild, that bill on a quarterly basis. or replace it. At VAR’s You can’t sign away CRESPA rights. Residential pur- request, the new chase contracts for four or fewer dwelling units must legislation makes it clear that in the event of an accidental include a Consumer Real Estate Settlement Protection fire (such as a tenant fire), the owner still has protections Act (CRESPA) Disclosure. (CRESPA guards Virginia’s under the vested rights statute. consumers by regulating settlement services, protecting Parts of the POA Act don’t apply to auctioned proper- escrow funds, and limiting settlement fees.) ties. At VAR’s request, the Virginia Property Owners’ This year, the General Assembly added language to the Association Act was amended to exempt properties that disclosure to make clear that the provisions of CRESPA are sold at auction from certain requirements — as long as may not be changed by agreement, and that the rights a property owners’ association disclosure packet is made it conveys may not be waived. The new language also available to prospective purchasers before the auction. states specifically that a seller may not require the use of a Property managers don’t need to be woken for the tow truck. particular settlement agent as condition of a property sale. Existing law allows a local government to include in its vehi- Transfer of development rights will be more accessible. cle towing ordinance a requirement for a secondary signature VAR supported extensive changes to the law concerning Volume 16 ● Issue 3 may/june 2009 25
  3. 3. transfer of development rights (TDRs) to help make the revisions contained in the bill: process more useable for property owners and localities. Landlords must give tenants the same notice for the appli- The main goal of the changes was to establish a series cation of insecticides as they do for pesticides. Tenants are of incentives for property owners to utilize TDRs, but required to prepare their units for pesticide and insecticide key provisions include authority for a local ordinance to applications in accordance with the written instructions of provide that: their landlords, and if insects or pests are found, tenants • The owner of development rights may make application must follow written instructions from their landlords to to the locality for a real estate tax abatement for a period eliminate the insects or pests following application of up to 25 years, to compensate the owner for the fair pesticides or insecticides. market value of all or part of the development rights; The repair process is streamlined. The law now clarifies • The owner of a property may request designation by that if a tenant requests routine maintenance, the landlord the locality of the property as a “sending property” or a does not have to give notice to that tenant that the land- “receiving property”; and lord is going to perform the requested maintenance. • The receiving areas are to include urban development Tenants need to know about defaults and foreclosures. areas in the locality. Landlords must now provide tenants written notice of a mortgage default, notice of mortgage acceleration, or notice of foreclosure sale relative to the loan on the unit within five business day after the landlord receives written notice from the lender. (This does not apply to a managing agent who does not receive a written copy of the notice from the lender or in the event that a tenant provides a copy of the written notice to the landlord or Property owners need to clean graffiti. A new law allows managing agent.) localities, after giving notice, to charge an owner of unoc- No interest for security deposits. The bill establishes the cupied property for the costs to remove graffiti. Unpaid interest rate on security deposits for 2009 as 0%. charges can create a lien on the property. Landlords don’t have to clean a tenant’s mold. Landlords POA members must have access to POA records. This are no longer obligated to pay all costs for mold remedia- bill provides that salary information of the six highest tion when the mold is a result of the tenant’s failure to paid employees of a property owners’ association mak- maintain the dwelling unit. ing more than $75,000 per year shall be available for Localities must divvy the rental inspections. Existing law examination and copying by association members. The states that a locality cannot have a jurisdiction-wide rental provision also specifies that all books and records of the inspection district. This legislation clarifies that a locality association, including individual salary information for cannot have one or more rental inspection districts that all employees and payments to independent contractors, comprise the entire locality, either. are available for examination by members of the board Tenants who don’t leave will pay big. For each day a of directors. tenant remains after the termination date of his lease, the Local governments must allow alternative septic landlord has the right to charge a liquidated damage fee systems. VAR requested — and the General Assembly against the holdover tenant equal to 150 percent per day passed — legislation to clarify that local governments do of the monthly rent. (This provision does not apply to not have the authority to ban alternative septic systems. Section 8/low income tenants.) The governor proposed amending the effective date so Court jurisdiction clarified. The law clarifies that all that once regulations directing the maintenance of these people obligated on a lease can have their unlawful- systems have been adopted by the State Board of Health, detainer cases heard in general district court, rather than localities will no longer have the authority to regulate part of the case being heard in general district court and qualified alternative septic systems. The effective date of part in circuit court. this legislation is not July 1, 2009, but upon adoption of the regulations by the State Board of Health, which most Want more about the laws and how they affect you? likely will be by the end of 2009, or early in 2010. watch a video with VaR’s special counsel lem marshall for Finally, a number of significant changes were made more information about these changes at www.VARealtor. to landlord and tenant laws this year. Below are key com/2009laws. ● 26 may/june 2009 www.VaRealtoR.com