2006 Code of Virginia § 55-79.74 - Control of condominium by declarant

55-79.74. Control of condominium by declarant.

A. The condominium instruments may authorize the declarant, or a managingagent or some other person or persons selected or to be selected by thedeclarant, to appoint and remove some or all of the officers of the unitowners' association and/or its executive organ, or to exercise powers andresponsibilities otherwise assigned by the condominium instruments and bythis chapter to the unit owners' association, the officers, or the executiveorgan. The declarant or the managing agent or such other person or personsselected by the declarant to so appoint and remove officers and/or theexecutive organ or to exercise such powers and responsibilities otherwiseassigned to the unit owners' association, the officers, or the executiveorgan shall be subject to liability as fiduciaries of the unit owners fortheir action or omissions during the period of declarant control as specifiedin the condominium instruments or if not so specified, within such period asdefined in this section. But no amendment to the condominium instrumentsshall increase the scope of such authorization if there is any unit ownerother than the declarant, and no such authorization shall be valid after thetime limit set by the condominium instruments or after units to whichthree-fourths of the undivided interests in the common elements appertainhave been conveyed, whichever occurs first. For the purposes of the precedingsentence only, the calculation of the fraction of undivided interest shall bebased upon the total undivided interests assigned or to be assigned to allunits registered with the Real Estate Board pursuant to subsection B of 55-79.92 hereof and described pursuant to subdivision (4) of subsection (a),subdivision (2) of subsection (b), or subdivision (8) of subsection (c), of 55-79.54. The time limit initially set by the condominium instruments shallnot exceed five years in the case of an expandable condominium, three yearsin the case of a condominium (other than an expandable condominium)containing any convertible land, or two years in the case of any othercondominium. Such time period shall commence upon settlement of the firstunit to be sold in any portion of the condominium.

B. If entered into any time prior to the expiration of the period ofdeclarant control contemplated by subsection A hereof, no contract or leaseentered into with the declarant or any entity controlled by the declarant,management contract, employment contract or lease of recreational or parkingareas or facilities, which is directly or indirectly made by or on behalf ofthe unit owners' association, its executive organ, or the unit owners as agroup, shall be entered into for a period in excess of two years. Any suchcontract or agreement entered into on or after July 1, 1978, may beterminated without penalty by the unit owners' association or its executiveorgan upon not less than ninety days' written notice to the other party givennot later than sixty days after the expiration of the period of declarantcontrol contemplated by subsection A hereof. Any such contract or agreementmay be renewed for periods not in excess of two years; however, at the end ofany two-year period the unit owners' association or its executive organ mayterminate any further renewals or extensions thereof. The provisions of thissubsection shall not apply to any lease or leases which are referred to in 55-79.48 or which are subject to subsection (e) of 55-79.54.

C. If entered into at any time prior to the expiration of the period ofdeclarant control contemplated by subsection A, any contract, lease oragreement, other than those subject to the provisions of subsection B, may beentered into by or on behalf of the unit owners' association, its executiveorgan, or the unit owners as a group, if such contract, lease or agreement isbona fide and is commercially reasonable to the unit owners' association atthe time entered into under the circumstances.

D. This section does not apply to any contract, incidental to the dispositionof a condominium unit, to provide to a unit owner for the duration of suchunit owner's life, or for any term in excess of one year, nursing services,medical services, other health-related services, board and lodging and careas necessary, or any combination of such services. The rule of property lawknown as the rule restricting unreasonable restraints on alienation shall notbe applied to defeat any provision of the condominium instruments requiringthat the unit owners be parties to such contracts.

E. If the unit owners' association is not in existence or does not haveofficers at the time of the creation of the condominium, the declarant shall,until there is such an association with such officers, have the power and theresponsibility to act in all instances where this chapter requires action bythe unit owners' association, its executive organ, or any officer or officers.

F. Thirty days prior to the expiration of the period of declarant control,the declarant shall notify the governing body of the city, county or town inwhich the condominium is located of the forthcoming termination of declarantcontrol. Prior to the expiration of the thirty-day period, the localgoverning body or an agency designated by the local governing body shalladvise the principal elected officer of the condominium unit owners'association of any outstanding violations of applicable building codes, localordinances or other deficiencies of record.

G. Within forty-five days from the expiration of the period of declarantcontrol contemplated by subsection A, the declarant shall deliver to thepresident of the unit owners' association or his designated agent (i) allassociation books and records held by or controlled by the declarantincluding, without limitation, the following items: minute books and allrules, regulations and amendments thereto which may have been promulgated;(ii) a statement of receipts and expenditures from the date of the recordingof the condominium instruments to the end of the regular accounting periodimmediately succeeding the first election of the board of directors by theunit owners not to exceed sixty days from the date of the election, suchstatement being prepared in an accurate and complete manner, utilizing theaccrual method of accounting; (iii) a copy of the latest available approvedplans and specifications for all improvements in the project or as-builtplans if available; (iv) all association insurance policies which arecurrently in force; (v) written unexpired warranties of the contractors,subcontractors, suppliers, and manufacturers, if any; (vi) any contracts inwhich the association is a contracting party, if any; and (vii) a list ofmanufacturers of paints, roofing materials and other similar materials ifspecified for use on the condominium property.

In the event that the unit owners' association is managed by a managementcompany in which the declarant, or its principals, have no pecuniary interestor management role, then such management company shall have theresponsibility to provide the documents and information as required byclauses (i), (ii), (iv), and (vi) of this subsection.

H. This section shall be strictly construed to protect the rights of the unitowners.

(1974, c. 416; 1975, c. 415; 1978, c. 332; 1980, c. 738; 1984, c. 601; 1985,c. 83; 1996, c. 977.)