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VA Laws -- Chapter 10 vs Chapter 55

Started by BH5 • 11 replies • 207 views

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BH5 (Virginia)
Posts: 84
Posted:
I am seeking your opinions on the differences between these two laws in VA. In our training, our legal team has cited laws appearing in Chapter 10 as well as Chapter 55.

Chapter 10. Virginia Nonstock Corporation Act starting at 13.1

Verse

Chapter 55 Property Owners' Association Act starting at 55.1
TimB4 (Tennessee)
Posts: 21,062
Posted:
One applies to corporations and the other to HOAs.

Since your association is likely incorporated, your board would have to comply with both.

BH5 (Virginia)
Posts: 84
Posted:
Tim,

Thank you. For years we have been told that VA Code 13.1-841 allows email voting by board members, and as long as the determination is 100%, the vote can stand without an open meeting. We have used email voting for emergencies (trees leaning, clean-up vandalism) or time-sensitive matters that can't (or shouldn't) wait for the monthly meeting. Never more than $2k expenditure. Our legal team says an update in VA in 2024 legislative session no longer allows email voting. I can't find where that is stated. Someone said it would be in Chapter 55, but I found 2022 training from legal that cited email voting was allowed per Chapter 10 13.1-841. That's the reason for my question.

All updates to Chapter 55 here https://legacylis.virginia.gov/cgi-bin/legp604.exe?241+ful+CHAP0055

and this is still in Chapter 10

§ 13.1-841. Corporate action without meeting.
A. 1. Corporate action required or permitted by this chapter to be taken at a meeting of the members may be taken without a meeting and without prior notice if the corporate action is taken by all members entitled to vote on the corporate action, in which case no corporate action by the board of directors shall be required.
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By BH5 on 12/11/2024 1:20 PM
I am seeking your opinions on the differences between these two laws in VA. In our training, our legal team has cited laws appearing in Chapter 10 as well as Chapter 55.

Chapter 10. Virginia Nonstock Corporation Act starting at 13.1

Verse

Chapter 55 Property Owners' Association Act starting at 55.1
Prior thread on this topic: https://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/376192/Default.aspx

I see nothing that changes the opinions from this earlier thread.

Be aware that both chapters apply to your HOA, with the caveat that when the two chapters have a genuine conflict, the more apposite chapter applies.

But I see no conflict between these two statute sections. Hence actions without a meeting via email as you described are allowed.

As the earlier thread advised, you should ask your "legal team" for a citation supporting their claim.
TimB4 (Tennessee)
Posts: 21,062
Posted:
BH,

What you cited is for an action without a meeting for the membership.

I think you intended to cite § 13.1-865 which is an action without meeting for the board.

When you asked the question earlier, I suggested you ask the team to identify the exact section of law they were referring to. I found nothing preventing email as an action without meeting for the Board.
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By ElleN on 12/11/2024 2:01 PM
Prior thread on this topic: https://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/376192/Default.aspx

I see nothing that changes the opinions from this earlier thread.

Be aware that both chapters apply to your HOA, with the caveat that when the two chapters have a genuine conflict, the more apposite chapter applies.

But I see no conflict between these two statute sections. Hence actions without a meeting via email as you described are allowed.

As the earlier thread advised, you should ask your "legal team" for a citation supporting their claim.
Strike the above.

I now agree with your HOA's legal team. See 55.1-1816 at https://law.lis.virginia.gov/vacodepopularnames/property-owners-association-act/

On this topic IMO the Nonstock Corporation Act and the POA Act directly conflict. Consequently the more apposite statute controls. On this topic the POA Act is the more apposite statute.

Feel free to ask further questions on how to accomplish what you accomplished via email votes in the past.

Reading 55.1-1816 with care will be essential to having a meaningful discussion on this IMO.
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By BH5 on 12/11/2024 1:20 PM

Chapter 10. Virginia Nonstock Corporation Act starting at 13.1

Verse

Chapter 55 Property Owners' Association Act starting at 55.1
The citation above should be:

Title 13.1, Chapter 10, Virginia Nonstock Corporation Act

Title 55.1, Chapter 18, Property Owners' Association Act
TimB4 (Tennessee)
Posts: 21,062
Posted:
What I'm finding is the old argument of the non-stock corporation act (NSCA) allowing for action without a meeting and the Property Owners Association Act (POAA) requiring open meetings.

This article from 2021 helps explain that.

Now in VA § 55.1-1816 one little item was added at the bottom of that section [emphasis adde]:

E. The requirements of this section govern the conduct of meetings of the board of directors without regard to whether the property owners' association is incorporated or unincorporated but shall not be interpreted to supersede corporate authorities otherwise established by law or the governing documents.

Here is the bill:

VA House Bill 723 2023 session.

I don't have time to read through the bill right now.
I suspect, this is the issue your attorneys are talking about.
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By TimB4 on 12/11/2024 2:26 PM

Now in VA § 55.1-1816 one little item was added [ElleN edit: in 2023 effective in 2024, I think] at the bottom of that section [emphasis adde]:

E. The requirements of this section govern the conduct of meetings of the board of directors without regard to whether the property owners' association is incorporated or unincorporated but shall not be interpreted to supersede corporate authorities otherwise established by law or the governing documents.[bolded emphasis added by ElleN]
A few observations:

1.
From the law firm site https://www.whitefordlaw.com/news-events/2024-virginia-legislative-updates-for-common-interest-communities:

The addition of this language is an attempt by the Virginia Legislature to reign in incorporated Property Owners’ Associations’ reliance on certain provisions in the Virginia Nonstock Corporation Act which, at times, provide loopholes to the more stringent meeting requirements in the Virginia Property Owners’ Association Act.

2.
I think this is also relevant to the discussion:

§ 55.1-1807. Statement of lot owner rights.
Every lot owner who is a member in good standing of a property owners' association shall have the following rights:
.
.
.
3. The right to have notice of any meeting of the board of directors, to make a record of any such meeting by audio or visual means, and to participate in any such meeting in accordance with the provisions of subsection G of § 55.1-1815 and § 55.1-1816;

3.
In summary I think BH5's HOA legal team got it right: The board cannot lawfully vote by email.

4.
Anyone having trouble interpreting the newly added section § 55.1-1816 E.: You are not alone. I trust the whitefordlawfirm's take as given above. Also in view of the detail that the POA Act has re meetings and the fact that the Nonstock Corporation Act actually says a Board need not provide notice unless the Bylaws or Articles say otherwise, any other interpretation would not make sense.
TimB4 (Tennessee)
Posts: 21,062
Posted:
BH,

I think if you only use the action without meeting for emergencies you will probably be ok.

Although the intent is to have open meetings and not allow boards to bypass that requirement by using email, the law specifically said that it does not supersede the corporate act. Look at it as some attorneys laying down the intent of the law for those abusing it. I say some because a well known firm in the northern VA area did not even address the issue in their legislative update.

It does not sound like your board is abusing AWM options. Therefore, I wouldn't worry about it as I don't see your members complaining about it. Just make sure to include copies of the emails with the emergency action as an attachment to you next board meeting minutes and only use it for real emergencies. If the issue can wait a few days for you to call an emergency meeting of the board, then it's not (in my mind) a "real emergency."

Tim
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By TimB4 on 12/12/2024 6:37 AM

Although the intent is to have open meetings and not allow boards to bypass that requirement by using email, the law specifically said that it does not supersede the corporate act.
This was what I thought at first, even though I saw problems with this interpretation (like the Nonstock Corporation Act actually permitting //regular// board meetings without notice, under certain conditions). No way could this be the meaning of the new 2023-24 section of the POA statute. Then I read the whitefordlaw.com discussion. Whitefordlaw homed in on the "otherwise," and perhaps also looked up the actual legislative history of the new 2023-2024 section of the POA statute. Whitefordlaw's interpretation says to me the usual: Anytime a conflict arises between the Nonstock Corporation Act and the POA Act, the POA Act controls.

ElleN (Idaho)
Posts: 1,338
Posted:
Here is the background on HB723:

January 9, 2024
HB723 proposes an amendment to the Nonstock Corporation Act (//not// the POA Act) as follows:

Delete 13.1-866 Notice of Board of Directors' Meetings, sections A and B in their entirety. Replace A and B with: "All meetings of the board of directors, including any subcommittee or other committee of the board of directors, where the business of the association is discussed or transacted shall be open to all members of record. Notice of the time, date, and place of each meeting of the board of directors or of any subcommittee or other committee of the board of directors shall be published where it is reasonably calculated to be available to a majority of
the lot owners."

See:
https://legacylis.virginia.gov/cgi-bin/legp604.exe?241+ful+HB723+pdf

and

https://www.chamberrva.com/wp-content/uploads/2024/01/Business_1.16.24.htm

January 19, 2024
A parliamentarian weighs in with several objections, in a two page letter to the House Committee Chair. One of the parliamentarian's suggestions is this: "If the intent of the legislation is to provide clarity on which of the two aforementioned Acts is controlling for HOAs subject to both Acts, we recommend that, instead of amending the Virginia Nonstock Corporation Act, clarity be added to the Property Owners’ Association Act."

See:

https://mcusercontent.com/a480aefdd5754252c532a7442/files/7e8d6e07-4724-8183-15f7-37b20e167763/VSAP_Opposition_to_HB_723_2024_.pdf

https://lastminutemeetings.net/donald-garrett-testifies-on-parliamentary-procedure-to-the-virginia-general-assembly/

January 25, 2024
In apparent response to the parliamentarian's letter, HB 723 is radically changed. Now it proposes to amend the POA Act (not the Nonstock Corporation Act), adding a section E to 55.1-1816 as follows: "To the extent the provisions of this section are inconsistent with provisions governing meetings of the board of directors for an association's type of entity, the provisions of this section shall control."

See https://legiscan.com/VA/text/HB723/id/2904872

February 27, 2024
HB 723 is again changed. Now the new proposed Section E reads: "The requirements of this section govern the conduct of meetings of the board of directors without regard to whether the property owners' association is incorporated or unincorporated but shall not be interpreted to supersede corporate authorities otherwise established by law or the governing documents."

See https://legiscan.com/VA/text/HB723/id/2941792

This appears to be what the final version (passed in mid-March, 2024) said as well.

ElleN's Conclusion
-- The Virginia legislature took the parliamentarian's advice a little too much to heart and sought to clarify that the POA Act's requirements for meetings do not apply to those associations or corporations to which the POA Act does not apply.

-- Per 55.1-1816 and 55.1-1807's rigorous requirements, actions taken without a meeting by email are not allowed unless maybe every single owner is looped into the email discussion and email vote. This is because of what Section 55.1-1816 (B) says about emergencies:

Notice, reasonable under the circumstances, of special or emergency meetings shall be given contemporaneously with the notice provided to members of the association's board of directors or any subcommittee or other committee of the board of directors conducting the meeting.

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