Present: Hassell, C.J., Lacy, Keenan, Kinser, Lemons, and
Agee, JJ., and Stephenson, S.J.
DOGWOOD VALLEY CITIZENS
ASSOCIATION, INC., ET AL.
v. Record No. 031053
OPINION BY CHIEF JUSTICE LEROY R. HASSELL, SR.
January 16, 2004
WILLIAM A. WINKELMAN
FROM THE CIRCUIT COURT OF GREENE COUNTY
Daniel R. Bouton, Judge
I.
The sole issue that we consider in this appeal is whether
a non-stock Virginia corporation is a property owners'
association within the intendment of the Property Owners'
Association Act, Code §§ 55-508 through –516.2.
II.
William A. Winkelman filed his bill of complaint against
the Dogwood Valley Citizens Association, Inc. ("DVCA") and
others. He alleged that DVCA improperly conducted a non-
judicial sale of two lots that he owned. He asserted, among
other things, that DVCA is not a property owners' association
within the intendment of the Virginia Property Owners'
Association Act because DVCA's recorded declarations do not
contain an express duty that required it to maintain the roads
or other common areas in the Dogwood Valley subdivision.
Alternatively, Winkelman argued that if the Act were
applicable, the Act only permitted DVCA to sell a unit on
which DVCA has a recorded lien as opposed to the vacant lots
that Winkelman owned.
At the conclusion of a bench trial, the circuit court
held that DVCA is a property owners' association within the
intendment of the Property Owners' Association Act. However,
the court held that Code § 55-516(I) of the Act applied only
to a "unit" and, therefore, this statute did not confer
authority upon DVCA to sell Winkelman's vacant lots. The
court entered a decree that voided the deeds that conveyed
Winkelman's lots to the purchasers. DVCA appeals from the
court's final decree, and Winkelman assigns cross-error.
III.
The circuit court considered the following evidence that
is relevant for our resolution of this appeal. Winkelman is
the record owner of two lots in the Dogwood Valley
subdivision. The subdivision consists of approximately 320
lots that were divided during several phases. Declarations
affecting the lots were recorded among the land records in
Greene County. The declarations were imposed by the
developers, Kermit R. Gallihugh, Barbara A. Gallihugh, Bradley
K. Haynes, Betty G. Haynes, and B.K. Haynes Corporation. The
developers transferred the roads and other common areas to
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DVCA by a deed dated December 5, 1978, which is recorded among
the land records in Greene County.
DVCA is a non-stock corporation. According to its
articles of incorporation, DVCA was created to provide for the
maintenance of the roads and common facilities of the Dogwood
Valley subdivision. These articles and DVCA's bylaws
purportedly authorized DVCA to impose fees and special
assessments on the property owners in the subdivision pursuant
to the applicable restrictive covenants.
The December 1978 deed that transferred the roads and
common areas from the developers to DVCA contains the
following paragraphs:
"WHEREAS, in the aforesaid Deeds of Dedication
and Protective Covenants, the Grantor has reserved
the right to use, keep and maintain all of the roads
and common facilities in the aforesaid subdivision;
and
"WHEREAS, the aforesaid Deeds of Dedication and
Protective Covenants provide that the rights, duties
and responsibilities as are created therein may be
delegated by the Grantor to a committee of lot
owners approved by the Grantor; and
. . . .
"WHEREAS, the property owners of Dogwood Valley
have united and formed a corporation referred to
herein as the Grantee, whose purpose is to see that
the roads, public facilities and other common areas
of Dogwood Valley Subdivision are properly
maintained; and
"WHEREAS, it is the desire of the Grantor
herein, B. K. Haynes Corporation, now to convey to
the Grantee, Dogwood Valley Citizens Association,
Inc., all of the rights, duties and responsibilities
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which were created or may have been created by the
aforesaid Deeds of Dedication and Protective
Covenants; and
"WHEREAS, it is the desire and intent of the
Grantee to receive from the Grantor and accepts
herein by the recordation of this deed all of the
rights, duties and obligations which the Grantor has
pursuant to the aforesaid Deeds of Dedication and
statement of Protective Covenants.
. . . .
"The Grantor hereby further QUITCLAIMS,
ASSIGNS, RELEASES and REMITS unto the Grantee,
Dogwood Valley Citizens Association, Inc. any and
all rights which it may have, both legal and
equitable in all of the roads within the aforesaid
subdivision, together with any other common areas or
public areas not specifically set forth in this
deed."
Certain restrictive covenants that affect the subdivision
are contained in deeds of dedication, recorded from 1968
through 1973. These covenants confer upon the developers and
their assignees the power to assess an annual fee "for the
use, upkeep, and maintenance of the roads . . . and . . .
other common facilities," and the covenants impose various
obligations and restrictions on the developers and lot owners.
Furthermore, the covenants applicable to parts of the
subdivision, recorded among the land records in 1972 and 1973,
authorize an increase in the maintenance fee based upon
increased maintenance costs.
In 1997, DVCA adopted a special assessment of $35 per lot
for all lots in the subdivision. Payment of the special
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assessment was due February 1, 1998. DVCA notified all
property owners in the subdivision, including Winkelman, of
the amount of the assessment and the due date. Winkelman
failed to pay the assessment timely. DVCA informed Winkelman
that a memorandum of lien would be filed against his lots
unless he promptly paid the assessment. Winkelman failed to
do so. DVCA published a notice of the sale of Winkelman's
lots in a newspaper of general circulation and notified him of
the sale by certified mail pursuant to the provisions of Code
§ 55-516(I). DVCA conducted a non-judicial sale of
Winkelman's lots at a public auction. Gary E. and Karen H.
Lowe purchased one of Winkelman's lots, and Jason E. Tinder
purchased the other lot.
IV.
Winkelman, relying upon the Property Owners' Association
Act and this Court's decision in Anderson v. Lake Arrowhead
Civic Association, Inc., 253 Va. 264, 483 S.E.2d 209 (1997),
argues that DVCA is not a property owners' association within
the intendment of the Property Owners' Association Act because
DVCA does not have a duty, set forth in a document recorded
among the land records in Greene County, that requires DVCA to
maintain the roads or common areas. Therefore, Winkelman
argues that DVCA lacked the statutory authority to conduct a
non-judicial sale of his lots because such authority can only
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be exercised by a property owners' association. Responding,
DVCA contends that the circuit court correctly concluded that
DVCA is a property owners' association and that DVCA's duties
to maintain the roads and common areas are contained in the
declarations of the recorded documents. We disagree with
DVCA.
The Property Owners' Association Act is applicable "to
developments subject to a declaration . . . initially recorded
after January 1, 1959, associations incorporated or otherwise
organized after such date, and all subdivisions created under
the former Subdivided Land Sales Act." Code § 55-508(A). The
Act defines "property owners' association" as "an incorporated
or unincorporated entity upon which responsibilities are
imposed and to which authority is granted in the declaration."
Code § 55-509. The Act defines "declaration" as
"any instrument, however denominated, recorded among
the land records of the county or city in which the
development or any part thereof is located, that
either (i) imposes on the association maintenance or
operational responsibilities for the common area or
(ii) creates the authority in the association to
impose on lots, or on the owners or occupants of
such lots, or on any other entity any mandatory
payment of money in connection with the provision of
maintenance and/or services for the benefit of some
or all of the lots, the owners or occupants of the
lots, or the common area."
Id.
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We discussed the application of the Property Owners'
Association Act in Anderson v. Lake Arrowhead Civic
Association, supra. In Anderson, we summarized the following
facts. H. Ryland Heflin and his wife, Lucille W. Heflin
(collectively, Heflin), developed the Lake Arrowhead
subdivision in Stafford County. The plats included the
reservation of easements for the individual lots over roads
and to the other common areas of the subdivision. Each
recorded plat was subject to identical restrictive covenants
that were recorded by deeds of dedication among the land
records of Stafford County. When Heflin conveyed his interest
in an individual lot to a purchaser, the deed referenced the
easements contained in the plat of the section in which the
lot was located and the covenants associated with that plat.
253 Va. at 267, 483 S.E.2d at 210.
Covenant 12 of the easement granted to Heflin the power
to assign "all of the rights and powers, title, easements and
estates reserved" to him, provided that the assignee would
have the same "obligations and duties with respect to the land
area concerned." Covenant 13 of the easement required each
purchaser of a lot to pay Heflin or his assignee $20 each year
for the first lot owned and $10 per year for each additional
lot owned "to be used for general maintenance." Covenant 13
states that the "maintenance fee shall be a lien on the real
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estate." These covenants did not expressly require that
Heflin, or his assignee, actually maintain the common areas of
the subdivision. Id.
Subsequently, Lake Arrowhead Civic Association, Inc., a
Virginia non-stock corporation, was incorporated and its
articles provided that the association's purpose was to
"further and promote the community welfare of the property
owners in the Lake Arrowhead Subdivision . . . and to handle
and supervise any funds received for community betterment."
The articles were subsequently amended to require that "[e]ach
owner of any lot by acceptance of a deed therefore, whether or
not it shall be expressed in any such deed or other
conveyance, . . . [shall] covenant and agree to pay [the
association]: 1) annual assessments or fees and, 2) special
assessments for capital expenditures." 253 Va. at 267-68, 483
S.E.2d at 211. Later, Heflin conveyed to the association
various parcels of land consisting primarily of roads, lakes,
beaches, and park areas within the subdivision. The language
in these deeds did not impose any duty upon the association to
maintain the common areas. 253 Va. at 268, 483 S.E.2d at 211.
We applied Code §§ 55-508 and –509, and we held that
"[r]eading these two definitions together, it is
clear that in order to qualify under the [Property
Owners' Association Act] an association must possess
both the power to collect a fixed assessment or to
make variable assessments and a corresponding duty
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to maintain the common area. In addition, these
conditions must be expressly stated in a recorded
instrument in the land records of the jurisdiction
where some portion of the development is located."
253 Va. at 271-72, 483 S.E.2d at 213. We pointed out in
Anderson that the language of the deed that conveyed the
common areas from Heflin to the association failed to
expressly require the association to maintain the common
areas. Id.
Applying the plain language of Code § 55-509, as well as
our decision in Anderson v. Lake Arrowhead Civic Association,
we hold that DVCA is not a property owners' association within
the meaning of the Property Owners' Association Act. DVCA has
failed to identify any document, recorded among the land
records of the jurisdiction where some property of the
development is located, that expressly requires DVCA to
maintain the common areas or the roads. This duty must be
expressly stated in the recorded documents and may not be
inferred or implied.
It is true, as DVCA observes, that Paragraph 3 of the
subdivision's deed of dedication references an annual lot
assessment not to exceed $15 for "the use, upkeep and
maintenance of the roads . . . and . . . other common
facilities." That declaration also provides that "[t]he right
and responsibilities as created by this paragraph may be
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delegated by the grantors to a Committee of lot owners within
said subdivision . . . ." Additionally, other paragraphs in
the declaration and the statements of protective covenants
refer to maintenance fees. And, we note that one covenant
specifically states:
"The following shall be an additional covenant
'Each lot owner shall be responsible for damages to
subdivision roads and other common facilities by his
agents. It is the intent of this covenant to limit
the liability of the road maintenance fund for the
cost of repair of roads and other common facilities,
when the damage to the roads and common facilities
was caused by the act or acts of an individual lot
owner or his agent.' "
DVCA's reliance on these provisions, however, is
misplaced. DVCA is unable to identify any language in any
recorded instrument that expressly requires DVCA to maintain
the roads or common areas. DVCA's failure to do so is fatal
to its assertion that DVCA is a property owners' association
within the meaning of the Property Owners' Association Act.
In view of this holding, we do not consider the litigants'
remaining arguments.
V.
Accordingly, we hold that the circuit court erred when it
concluded in its decree that DVCA is a property owners'
association within the meaning of Code § 55-508, et seq. We
will reverse that portion of the circuit court's decree. We
will vacate the remaining portions of the circuit court's
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decree that were based on the Virginia Property Owners'
Association Act. We will affirm those portions of the decree
that voided the deeds that purported to transfer Lots 1 and 2
from Winkelman to the Lowes and Mr. Tinder. We will also
affirm those portions of the decree that relate to the
recordation of the circuit court's order and the payment of
real estate taxes on the lots.
Affirmed in part,
reversed in part,
and final judgment.
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