By RVAR Counsel David Bullington

The 2009 regular session of the Virginia General Assembly adjourned at the end of February.  In contrast to last year’s session, which included a significant overhaul of the Property Owner’s Association Act, this session was relatively quiet on the real estate front, with budget concerns occupying a central role.  The following bills are among those enacted this year.

HB 1856 added stormwater detention facilities to the expanding list of topics contained in the Residential Property Disclosure Statement required by the Virginia Residential Property Disclosure Act. (This legislation is awaiting the Governor’s signature.)  In addition to existing “disclaimer” categories (historic districts, resource protection areas, dam inundation zones, etc.), the Disclosure Form will now include the additional “disclosure” that “The owner makes no representations with respect to the presence of any stormwater detention facilities located on the property and purchasers are advised to exercise whatever due diligence they deem necessary to determine the presence of any stormwater detention facilities on the property . . . .”

The Real Estate Board should release a revised Disclosure Form for use after July 1.  While many jurisdictions now require for subdivision approval that stormwater detention facilities be located on a separate dedicated lot, in the past these were often located on residential lots as easements.  The presence of a stormwater facility on the homeowner’s lot could be a valid title objection raising potential liability and hazard insurance concerns for the buyer.

HB 2568 amended the Consumer Real Estate Settlement Protection Act (“CRESPA”) by modifying the required consumer disclosure in sales contracts advising buyers that they have the right to choose their settlement agent.  In addition to some technical changes to the disclosure language, new following language is added: “Variation by agreement: the provisions of [CRESPA] may not be varied by agreement, and rights conferred by this chapter may not be waived.  The seller may not require the use of particular settlement agent as a condition of the sale of the property.”

The practical effect of this as to sellers should be limited, as sellers typically offer closing cost credits or other incentives if a particular settlement agent is used, but do not “condition” the sale on the use of the settlement agent.  However, particularly large incentives could potentially be questioned, as HUD has done under an analogous RESPA provision prohibiting the seller from requiring the use of a particular title insurance provider.  Potentially troubling is the ambiguity created by omitting lenders from the scope of the prohibition. 

SB 1031 created a licensure exemption which allows real estate brokers who are licensed in good standing in another state to assist a prospective purchaser or tenant in a commercial real estate transaction in Virginia and to be compensated by a Virginia real estate broker.   This provision applies to the sale of a residential building containing 5 or more units, but not to the sale of other residential dwellings. 

HB 1785 added auction sales where the disclosure packet is made available as part of the auction package to the list of transactions exempt from the contract and POA disclosure packet requirements of the Property Owner’s Association Act.   Auction sales now join foreclosure sales, gifts, and court ordered sales on the list of transactions exempt from these disclosure requirements.

Among legislation introduced but not passed this year was a bill to provide a state income tax credit of up to $2,500.00 for first time home buyers.