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Posted at 11:16 PM ET, 12/13/2012

Reston’s Shadowood condominiums make new Va. case law, can’t impose fees on rule violators


The Shadowood condominium complex, on South Lakes Drive in Reston, has been ordered to stop charging fees for rules violations because its original master deed doesn't allow it. The court ruling has implications for condo and homeowner associations across Virginia. (Elizabeth Razzi - The Washington Post)

UPDATE, Monday, 9 a.m.: In Saturday’s condo board elections, Shadowood’s owners defeated both the incumbent secretary and treasurer, replacing them with two new officers. The next election, for board president Olivia, is in March.

ORIGINAL POST: In Reston, there is a condominium complex called Shadowood that has written itself into Virginia history. For years, the Shadowood Condominium Association imposed fees for things like calling the management office or having the wrong color blinds. It towed tenants’ cars for unpaid fees — on the day before Thanksgiving. It turned off the heat or air conditioning to apartments of owners who were in arrears or in violation of its many rules.

Last year, a Fairfax County judge permanently enjoined Shadowood from doing any of that stuff. The association appealed to the state Supreme Court, using its own members/victims’ money to pay its lawyers. This summer they lost there too, enshrining Shadowood in Virginia law under the concept that you can’t make up rules and impose fees if they are not in the development’s original master deed. That ruling has earth-shaking consequences for thousands of condo associations across the state, real estate lawyers say.

So many of the owners of the 450 condos in Shadowood, at the intersection of South Lakes and Soapstone drives, are interested in changing their association leadership. But the officers who run Shadowood, in particular longtime board president Brian Olivia, are still in charge. An election is scheduled for two of the five officers on Saturday, but with an interesting set of rules for who may run, and it will be interesting to see if the vote changes anything.

Olivia is the target of a lot of ire, but he defends his positions calmly and in detail. He, and his lawyers, believed that state law allowed condo associations to impose fees in order to keep people from dumping trash or paying late, but that the Virginia courts reached a new, different view. Now, Olivia says, he has no way to enforce the rules in Shadowood, late fees are not being charged, and “it’s the Wild West around here.”

“This guy thinks this is his plantation,” said condo owner Mario Olivero. “We are just there to provide money.” Owners pay between $287 and $324 a month for maintenance, which provides Shadowood about $1.5 million in basic income. Olivero said his car was once towed, before dawn, on the day that his license plate registration expired. “I don’t want to know how many hundreds of thousands of dollars they’ve paid in legal bills.”

And owners don’t know such things, some said, because Olivia rebuffs requests from owners to see the association’s financial records. Shadowood did, however, provide a recent audit of its books to a state agency which oversees these associations, and it said there was no documentation for a $2.1 million contracting job, and that Olivia had been paid $75,000 for “consulting services.”


Gerard Moseley's apartment in Shadowood was severely damaged by a long water leak from a burst pipe above his condo. But Shadowood does not want to use its insurance policy to repair his apartment, and it remains mostly unlivable. (Gerard Moseley)
Olivia said the financial records are available at monthly condo board meetings, which are sparsely attended, and that state law allows him to withhold information from those involved in lawsuits against the board. He said the $75,000 was out in the open and paid him for legitimate services in the overhaul of the complex’s 40-year-old heating and air conditioning system.

Words such as “intimidation” and “fear” cropped up frequently in conversations with numerous owners on Wednesday. Longtime owner Daniel Chambers, who sold his unit in June after 30 years, said “the fear felt by Shadowood owners is best exemplified by the Shadowood envelope in their mailbox. Nothing good ever came in a Shadowood envelope...the next thought was ‘How much is the Board going to get out of me this time? 'For years owner fines were a dependable flow of supplemental revenue.”

Shadowood’s first buildings opened in 1974, and the complex built up gradually until 1979. As with all condo developments, there is a master deed that dictates how the place will be run.

Shadowood’s master deed said in 1974 that the Shadowood Condominium Association shall assess a monthly fee for maintenance only, and “no common expenses or other sums shall be assessed” for any other reasons. Changing that deed requires not only 100 percent agreement among the owners but also among those who hold the mortgages, which makes change virtually impossible.

For many years, Fairfax County has been one of the largest condo owners in Shadowood, having bought 16 units back in 1975 to rent to low-income folks. But when their tenants began having problems with fines and fees, the amounts quickly added up. In one month of 2010, Fairfax County was told it had rung up more than $10,000 in fees, for having incomplete forms on file, making improper calls to the management office and having invalid parking stickers. A Fairfax housing official tried to attend a hearing to challenge, brought a court reporter with her, and was ejected, court records show.

The county said a number of its tenants’ cars were towed on Thanksgiving morning one year despite discussions about pending obligations. Olivia said Fairfax had been late paying its bills, had been given a grace period granted to no one else, and still wouldn’t pay on time. He said utility bills needed to be paid for the entire complex, and all owners needed to pay their share. He said “parking privileges were suspended” and the vehicles towed on the day before Thanksgiving, not Thanksgiving morning.


Gerard Moseley's condo today, two years after the water leak into his unit from a burst pipe in the building's attic. He says he lives in about 300 square feet of the unit's 1,000 square feet. (Gerard Moseley)
The Fairfax County Redevelopment and Housing Authority sued Shadowood in September 2010. In May 2011, Fairfax Circuit Court Judge Randy I. Bellows sided with Fairfax. “The assessments” levied by Shadowood “are far more consistent with a punitive fine than with the type of charges necessary for the operation of the Shadowood property,” Bellows wrote. “Defendants did not have the authority ...to levy the contested sums.”

Olivia and his lawyers pointed to a Virginia law, which said such associations shall have the power to “suspend a unit owner’s right to use facilities and services, including utility services” for nonpayment, and to ”assess charges against any unit owner” for any violation of condo rules. But the law adds a clause saying the associations may do so “to the extent the condominium instruments or rules” allow. Bellows found that Shadowood’s 1974 master deed didn’t allow it.

Shadowood appealed to the Virginia Supreme Court, which upheld Bellows in July of this year. Though it was an unpublished opinion, “it’s a game-changer” for perhaps 10,000 condo and homeowner associations across Virginia, according to Pia Trigiani, an Alexandria lawyer with extensive expertise in community association law, and recent president of the Virginia Bar Association.

“Every association needs to evaluate what their governing documents grant them the authority to do,” Trigiani said. “And to the extent that association has in place a rigorous rule enforcement program, they’re going to need to think of how this case impacts them....It is a lawyer feast day. They are making it impossible for these volunteer associations to operate without a lawyer.”

Which brings us back to Shadowood. Olivia felt like he and his board were merely trying to enforce rules to keep the place neat and orderly. Now, “we don’t have an effective means of enforcing our rules. We have to expect people are following the rules. They’re not.” He said Shadowood now couldn’t even charge a late fee or interest for late monthly maintenance payments.

Other owners felt Olivia was too rigid in maintaining discipline, though he noted there were due process hearings for every violation and the condo board showed compassion where appropriate.

Some haven’t felt the compassion.

Susan Zhou said Olivia was “very rude” in her hearing, where she was assessed $200 for failing to switch her automatic monthly payment to a new collector. “They do everything in their power to make it difficult for everyone else,” Zhou said. “A very very strange place.”

“It’s just turned out to be the worst two years of my entire life,” said owner Gerard Moseley, whose apartment was virtually destroyed by a burst pipe in a common attic area above his unit in 2010. He said Shadowood refused to submit his claim to its insurance company, and he now lives in about 300 of the 1000 square feet of his condo.

Olivia said Moseley’s insurance company was responsible for repairing the damage to his unit, not the other 449 owners paying for the property’s liability insurance. The burst pipe was not caused by Shadowood, and so it should not have to pay for Moseley’s repairs.

Olivia, who noted he and the other directors are unpaid, sent over a two-page list of the condo board’s accomplishments in the last three years, including electric heat pumps in all 450 units and extensive exterior improvements.

But the court case and the years of financial penalties have generated a lot of resentment. So now comes Saturday’s election for two new board members, and a set of rules sent to possible candidates last month, including: “have no past, pending, probable or current litigation” against Shadowood and “have no more than three Shadowood governing document violations” in the past year.

This raised some eyebrows among the disgruntled owners. But Olivia said they were only voluntary guidelines, suggested by the association’s lawyer, and that several of the candidates already lined up to run are involved in lawsuits but are still on the ballot.

Jim Peters, an owner who wants new management, said Shadowood’s financial records were still being “concealed,” which he theorized was connected to the “extraordinary legal embarrassment and the court striking down our fines and late fee income. Shadowood’s owners should not have to vote from a position of ignorance.”

Peters added, “I’m afraid that so many owners will show up Saturday morning, hopeful for a new direction and brighter future, that we won’t all fit inside the clubhouse.”

By  |  11:16 PM ET, 12/13/2012

Categories:  Reston, Courts | Tags:  Shadowood condominiums, Reston, Va., condo associations

 
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