Common interest communities; termination of certain management contracts.
HB2750 revises Virginia law governing common interest community managers and the associations they serve, with a focus on what happens when a management contract ends or when a manager is financially troubled. The bill requires managers to transfer association funds, close related bank accounts, and return association records within a reasonable time after termination of a management-services contract, without charging the association additional cost. It also clarifies that records with administrative or fiscal value belong to the association and may be retained or disposed of only under contract terms, while electronic records may be returned electronically.
The bill also strengthens the Board’s enforcement tools when a manager may be unable to meet fiduciary duties. It expands and reorganizes the receiver and court-relief provisions, allowing the Board to seek injunctions, receivership, and other protective orders, and it details the receiver’s duties, including notifying affected associations, transferring records to successor managers, collecting receivables, recovering diverted assets, and distributing assets in a priority order that protects fiduciary funds first. In addition, it updates the Common Interest Community Management Recovery Fund, which is financed by assessments on managers and associations, to cover shortfalls in restoring fiduciary funds or paying receiver costs, and it preserves the Board’s authority to revoke licenses and pursue discipline after Fund payments. Finally, the bill confirms that management contracts with automatic renewal clauses may be terminated by either party without cause or penalty on 60 days’ written notice for both property owners’ associations and unit owners’ associations.
HB2750 amends Code of Virginia sections 54.1-2353, 54.1-2354.5, 55.1-1837, and 55.1-1940.1. Its practical effect is to give associations stronger statutory rights to recover books, records, and funds from a departing or troubled common interest community manager, while also giving the Board of Directors of the regulatory program broader authority to intervene through court action, receivership, and use of the Recovery Fund. It also standardizes the ability to terminate automatically renewing management contracts on 60 days’ notice without cause or penalty, affecting both property owners’ associations and unit owners’ associations, and it may increase compliance obligations and financial exposure for managers and associations through assessments and potential license suspension or revocation.
The bill appears to have broad support overall. It passed the House overwhelmingly and cleared the Senate with a strong majority, though not unanimously. The committee and subcommittee votes show some opposition at earlier stages, suggesting that while the bill was generally viewed as a protective and administrative update, there were concerns from a minority of legislators about some of its enforcement or financial provisions. No committee transcript was provided, so the available record indicates mostly favorable sentiment with limited dissent.
The main points of contention likely center on the bill’s expanded regulatory and financial controls over common interest community managers and associations. Potential concerns include the Board’s authority to seek ex parte relief, appoint receivers, freeze assets, and revoke licenses after Fund payments, as well as the mandatory assessments on both managers and associations to maintain the Recovery Fund. Another possible issue is the automatic termination right for management contracts with renewal clauses, which may be seen as increasing flexibility for associations but reducing contract stability for managers. The recorded no votes in subcommittee and committee stages suggest some legislators objected to one or more of these enforcement, funding, or contract-termination provisions.