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Suit over property owners’ group nixed

A lawsuit that sought the breakup of a 2,700-member property owners’ association near Winchester has been tossed out of court.

Frederick County Circuit Judge John R. Prosser ruled in open court Tuesday that a Virginia property owners’ association is not invalidated merely because of differences in the language of various deeds of dedication. The decision interpreting the Virginia Property Owners’ Association Act is a victory for leaders of the Lake Holiday gated community in northern Frederick County.

The lawsuit sparked legislation in the most recent special session of the Virginia General Assembly. The lawyer for the plaintiffs argued that the bill introduced by Sen. Jill H. Vogel, R-Winchester, was designed to undermine his legal attack on the Lake Holiday POA.

The bill was sidetracked in a House committee in July. Accordingly, it appears that the next chapter in the challenge to the Lake Holiday organization will play out at the Supreme Court of Virginia. Plaintiffs’ attorney Wayne Travell told reporters that he planned a petition for appeal.

Vogel did not immediately return a phone call about plans for further legislation to change the Virginia POA Act.

At press time, meanwhile, a ruling appeared eminent in another lawsuit involving a Virginia property owners’ association. That case, heard by U.S. District Judge Norman K. Moon, concerned accusations of improper assessment fees and dirty dealing at a smaller development in Greene County. Moon heard evidence in the case in June and received briefs from the parties in July.
The Frederick County and Greene County disputes both involved interpretation of the state law that governs the relationship between landowners and local property owners’ associations, sometimes called home owners’ associations.

Enacted in 1989, the Virginia Property Owners’ Association Act gives qualifying community organizations the power to impose and collect assessments from land owners for maintenance of common areas and similar purposes. It requires prior notice to buyers that they are buying property subject to such assessments. The Act also imposes reporting and accounting requirements for the community associations.

It is estimated that Virginia has more than 9,000 property owners’ associations controlled by the Act.

At Lake Holiday, a few landowners objected to paying fees when they weren’t getting the same services as other owners, including water and sewer. The lawsuit filed by the disgruntled property owners asked the court to declare that the community’s property owners’ association was not a statutory POA and had no legal authority to impose or collect assessments.

Other landowners in the community argued that such a ruling would force the organization into bankruptcy.

The problem, highlighted by the lawsuit, was the varying language in the deeds to the approximately 2,700 lots at Lake Holiday. The first properties were sold in 1971, the last in 2006, and the “declaration” language in the deeds is not consistent.

Nevertheless, despite its staggered development, Lake Holiday has functioned as a single community for more than 35 years, Prosser said, according to published reports.

Granting the defendants’ demurrer after a two-hour hearing, Prosser reportedly cited decisions by fellow Frederick County Circuit Judge John B. Wetsel Jr., who in 1998 appointed a receiver to handle Lake Holiday operations. Wetsel apparently never questioned the statutory authority of the Lake Holiday Country Club, which serves as the property owners’ association at the community.

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