55-530.1 - Common Interest Community Management Recovery Fund.
§ 55-530.1. Common Interest Community Management Recovery Fund.
A. There is hereby created the Common Interest Community Management RecoveryFund (the Fund) to be used in the discretion of the Board to protect theinterests of associations.
B. Each common interest community manager, at the time of initial applicationfor licensure, and each association filing its first annual report after theeffective date hereof shall be assessed $25, which shall be specificallyassigned to the Fund. Initial payments may be incorporated in any applicationfee payment or annual filing fee and transferred to the Fund by the Directorwithin 30 days.
All assessments, except initial assessments, for the Fund shall be depositedwithin three business days after their receipt by the Director, in one ormore federally insured banks, savings and loan associations, or savings bankslocated in the Commonwealth. Funds deposited in banks, savings institutions,or savings banks, to the extent in excess of insurance afforded by theFederal Deposit Insurance Corporation or other federal insurance agency,shall be secured under the Security for Public Deposits Act (§ 2.2-4400 etseq.). The deposit of these funds in federally insured banks, savings andloan associations, or savings banks located in the Commonwealth shall not beconsidered investment of such funds for purposes of this section. Fundsmaintained by the Director may be invested in securities that are legalinvestments for fiduciaries under the provisions of § 26-40.01.
Interest earned on the deposits constituting the Fund shall be used foradministering the Fund. The remainder of this interest, at the discretion ofthe Board, may be transferred to the Common Interest Community ManagementInformation Fund or accrue to the Fund.
C. On and after July 1, 2011, the minimum balance of the Fund shall be$150,000. Whenever the Director determines that the principal balance of theFund is or will be less than such minimum principal balance, the Directorshall immediately inform the Board. At the same time, the Director mayrecommend that the Board transfer a fixed amount from the Common InterestCommunity Management Information Fund to the Fund to bring the principalbalance of the Fund to the amount required by this subsection. Such transfershall be considered by the Board within 30 days of the notification of theDirector.
D. If any such transfer of funds is insufficient to bring the principalbalance of the Fund to the minimum amount required by this section, or if atransfer to the fund has not occurred, the Board shall assess eachassociation and each common interest community manager within 30 days ofnotification by the Director, a sum sufficient to bring the principal balanceof the Fund to the required minimum amount. The amount of such assessmentshall be allocated among the associations and common interest communitymanagers in proportion to the each payor's most recently paid annualassessment, or if an association or common interest community manager has notpaid an annual assessment previously, in proportion to the average annualassessment most recently paid by associations or common interest communitymanagers respectively. The Board may order an assessment at any time inaddition to any required assessment. Assessments made pursuant to thissubsection may be issued by the Board (i) after a determination made by it or(ii) at the time of license renewal.
Notice to common interest community managers and the governing boards ofassociations of these assessments shall be by first-class mail, and paymentof such assessments shall be made by first-class mail addressed to theDirector within 45 days after the mailing of such notice.
E. If any common interest community manager fails to remit the requiredpayment within 45 days of the mailing, the Director shall notify the commoninterest community manager by first-class mail at the latest address ofrecord filed with the Board. If no payment has been received by the Directorwithin 30 days after mailing the second notice, the license shall beautomatically suspended. The license shall be restored only upon the actualreceipt by the Director of the delinquent assessment.
F. If any association fails to remit the required payment within 45 days ofthe mailing, the Director shall notify the association by first-class mail atthe latest address of record filed with the Board. If no payment has beenreceived by the Director within 30 days after mailing the second notice, itshall be deemed a knowing and willful violation of this section by thegoverning board of the association.
G. At the close of each fiscal year, whenever the balance of the fund exceeds$5 million, the amount in excess of $5 million shall be transferred to theVirginia Housing Partnership Revolving Fund, § 36-137. Except for payments ofcosts as set forth in this chapter and transfers pursuant to this subsection,there shall be no transfers out of the fund, including transfers to thegeneral fund, regardless of the balance of the fund.
H. A claimant may seek recovery from the fund subject to the followingconditions:
1. A claimant may file a verified claim in writing to the Director for arecovery from the Fund.
2. Upon proper application to the Director, in those cases in which there arenot sufficient funds to pay an award of reasonable fees, costs, and expensesto the receiver or to restore all funds that were or ought to have been heldin a fiduciary capacity by the subject common interest community manager, theDirector shall report to the Board the amount of any shortfall to the extentthat there are not sufficient funds (i) to pay any award of fees, costs, andexpenses pursuant to subsection G of § 54.1-2353 by the court appointing thereceiver; or (ii) to restore all funds that were or ought to have been heldin a fiduciary capacity by the subject common interest community manager, ascertified by the court appointing the receiver.
3. If the Board finds there has been compliance with the required conditions,the Board shall issue a directive ordering payment of the amount of suchshortfall to the claimant from the fund; provided that in no event shall suchpayment exceed the balance in the fund. When the fund balance is notsufficient to pay the aggregate amount of such shortfall, the Board shalldirect payment shall be applied first in satisfaction of any award ofreasonable fees, costs, and expenses to the receiver and second to restorethe funds that were or ought to have been held in a fiduciary capacity by thesubject common interest community manager. If the Board has reason to believethat there may be additional claims against the fund, the Board may withholdany payment(s) from the fund for a period of not more than one year. Aftersuch one-year period, if the aggregate of claims received exceeds the fundbalance, the fund balance shall be prorated by the Board among the claimantsand paid in the above payment order from the fund in proportion to theamounts of claims remaining unpaid.
4. The Director shall, subject to the limitations set forth in thissubsection, pay to the claimant from the fund such amount as shall bedirected by the Board upon the execution and delivery to the Director by suchclaimant of an assignment to the Board of the claimant's rights on its behalfand on behalf of the associations receiving distributions from the fundagainst the common interest community manager to the extent that such rightswere satisfied from the fund.
5. The claimant shall be notified in writing of the findings of the Board.The Board's findings shall be considered a case decision as defined in §2.2-4001, and judicial review of these findings shall be in accordance with §2.2-4025 of the Administrative Process Act (§ 2.2-4000 et seq.).
6. Notwithstanding any other provision of law, the Board shall have the rightto appeal a decision of any court that is contrary to any distributionrecommended or authorized by it.
7. Upon payment by the Director to a claimant from the fund as provided inthis subsection, the Board shall immediately revoke the license of the commoninterest community manager whose actions resulted in payment from the fund.The common interest community manager whose license was so revoked shall notbe eligible to apply for a license as a common interest community manageruntil he has repaid in full the amount paid from the fund on his account,plus interest at the judgment rate of interest from the date of payment fromthe fund.
8. Nothing contained in this subsection shall limit the authority of theBoard to take disciplinary action against any common interest communitymanager for any violation of statute or regulation, nor shall the repaymentin full by a common interest community manager of the amount paid from thefund on such common interest community manager's account nullify or modifythe effect of any disciplinary proceeding against such common interestcommunity manager for any such violation.
(2008, cc. 851, 871; 2009, c. 557.)