SB 1489 Flops Before Even Reaching the Theatre

SB 1489 is dead. It’s hard to say which was a bigger flop: SB 1489 or its 2008 special session look-alike, SB 6016. Both of these bills were nearly identical. The 2008 version stayed alive for only 4 days but did get through the Senate before it failed. The 2009 version, SB 1489, was introduced on January 22nd and stricken from the docket of pending bills by Vogel herself on February 4th – before it ever even came to a vote in a committee.

We’ve previously outlined why SB 1489 (like its predecessor SB 6016) was a bad bill. Had it become law, it would have allowed the deed to an owner’s property to be changed in unforeseen and undesirable ways without that owner’s consent. The amendment provisions in the deed itself would be ignored. The prospect that “in whole or in part, any provision of a declaration” could be changed would have manufactured uncertainty for tens of thousands of property owners in associations in every corner of the state. That uncertainty would have destroyed property values across Virginia, all in an effort to meddle in a lawsuit involving Lake Holiday, the Bemis Case. That case is now before the Virginia Supreme Court.

That SB 1489, like SB 6016, was nothing more than an attempt to tip the outcome of an active court case is beyond dispute. Shortly after SB 6016 died in the Virginia Housing Commission on 6/26/08, Bob Diamond and Todd Sinkins went back to work to try to change the law to tip an active court case in favor of their clients. Diamond represents Miller & Smith in the Bemis Case, and Sinkins’ firm, Rees Broome, was Lake Holiday’s initial counsel in the case before withdrawing.

The changes Diamond and Sinkins came up with are outlined in a July 1, 2008 memo to “Interested Parties.” This memo proposes even more far-reaching code changes than Vogel included in SB 1489. This proposal and Vogel’s bills share a central theme: to permit re-writing property deeds without the consent of owners Diamond’s description of honoring the terms outlined in a deed to amend it: “impractical.” We can apply Diamond’s reasoning thusly: If a small property owner has rights granted in a deed and Miller & Smith, one of the largest developers in the state, doesn’t like that, well, that’s simply “impractical” and the law needs to be changed. In his testimony to the Virginia Housing Commission, Sinkins characterized re-writing owners’ deeds over their objection as a “minor” change.

Diamond and Sinkins offer up this contradictory message acknowledging the impact of their proposal:

Although these changes may have an impact on the Lake Holiday project, we do not think that they can affect the outcome of the current litigation.

Perhaps they claim to believe that their proposed changes can’t affect the outcome because they know that an attempt to retroactively change vested property rights is unconstitutional and won’t pass careful scrutiny. It’s about time that Diamond and Sinkins learned the Code of Virginia is not their personal rule book to deliver the whims of their clients.

In late December, 2008 the Lake Holiday board met to consider the changes Vogel would later introduce in the Virginia Senate. Despite a dissent from 1 board member, the Lake Holiday board approved pushing the legislation to solve their “problem.”

Any claim that Vogel’s effort is anything but an effort to tip the outcome of an active court case doesn’t pass the laugh test.

Now that SB 1489 is dead, it’s important to reflect on the future. That future rests squarely with the Virginia Supreme Court. Backed by hundreds of years of Virginia property law and countless decisions from the state’s highest court (including 3 on point cases, the most recent of which was decided in January 2008), the Bemis plaintiffs take the position that their property rights and obligations are to be found – and can only be found – in a properly recorded deed in the chain of title to their individual properties. The Bemis plaintiffs are fully prepared to honor those deed obligations.

Lake Holiday has a history of collecting fees and dues far above those authorized by the applicable deeds. Its officers and lawyers have known about the unauthorized collection for some time. That creates a sticky and serious legal problem. To solve that problem, Lake Holiday would like to unilaterally change those deed obligations. That’s why Vogel, following the direction of Diamond and Lake Holiday, tried to change Virginia law to permit re-writing property deeds.

Fortunately, they failed a second time.

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Jill Holtzman Vogel and SB 1489: The Sequel To A Flop

Most sequels are flops. That’s why good actors usually stay clear of them.

In June 2008, Sen. Jill Holtzman Vogel (R-27), supported by Sen. Richard Saslaw (D-35) and Del. Beverly Sherwood (R-29), introduced SB 6016, a bill that would have allowed re-writing property owners’ deeds without their consent. For very good reasons, that bill failed to become law.

At the 2009 session of the Virginia legislature that began on Wednesday, January 14th, Vogel returned with her sequel: SB 1489. As first introduced by Vogel, SB 1489 differs from SB 6016 by only 5 words. It’s noteworthy that while Saslaw and Sherwood publicly attached their names to last year’s SB 6016, Vogel alone is championing this year’s SB 1489.

SB 1489 is a bad bill. It’s a naked attempt by Vogel to interfere in active litigation, a point made clear by the headline posted on Vogel’s own website: “Lake Holiday suit spawns legislation….” (Like most of the images on our site, click on the image itself to get a better view.) It’s also unconstitutional on both state and federal grounds, because it attempts to retroactively change vested property rights.

The prospect that a property deed can be rewritten over the objection of owners introduces a degree of uncertainty for any buyer contemplating a purchase in a community affected by Vogel’s bill. Who would ever buy a property in such a community, knowing that the deed governing that property could be re-written? Vogel’s bill allows “in whole or in part, any provision of a declaration” to be changed. Current upheaval in the financial markets has made clear one thing: uncertainty destroys value. No buyer would touch any property in a community affected by Vogel’s bill because of the risk that the property deed could be changed in unforeseen and undesirable ways. The irony: if Vogel’s bill passes, it will destroy the property values of tens of thousands of Virginians, including those at Lake Holiday. Vogel may not devote a lot of thought to the impact on the property owners she destroys as she contemplates her move to a $5.5 million mansion. When a buyer spends that kind of money, changing “any provision” of the property deed isn’t tolerated.

It’s no surprise that Vogel’s bill will have significant unintended consequences on tens of thousands of Virginians, consequences that Vogel lacks the expertise to properly evaluate. By her own admission, she’s not an expert on property law. She also has a record of distorting the facts in a desperate attempt to make her case. For example, the articles on Vogel’s own website refer to her claiming there are “more than 9,100 property owners associations across Virginia….” According to Virginia’s own Department of Professional and Occupational Regulation, there are only 3148. One doesn’t command very much knowledge in the field of Virginia property associations when one doesn’t even know how many of them actually exist. If Vogel had a basis to claim there are more than 9100 associations that would be impacted by her proposed legislation, that is all the more reason why her changes should be carefully studied rather than hastily enacted into law.

Vogel’s own website refers to her observing that:

similar problems regarding the language in the act are likely to raise issues with each of the other 9,111 property owners’ associations throughout the state.

In the entire history of Virginia’s POA Act since it was first enacted in 1989, there have been only 3 Virginia Supreme Court cases that challenged whether the Act applied to a homeowners’ association, and 2 of those cases involved the same community. Vogel’s notion that the state is full of “similar problems” is a distortion that isn’t supported by almost 20 years of legislative and judicial history.

The most blatant of Vogel’s distortions – one she made to her own colleagues in the Senate – is her false claim that plaintiffs support her effort:

I explained that some of the plaintiffs [in the lawsuit against Lake Holiday Country Club Inc.] were overall good with it.

To be absolutely clear, the plaintiffs in the case are opposed to both of Vogel’s bills and are strongly against her effort to permit retroactively re-writing property deeds. In Vogel’s words, plaintiffs are not “overall good with it” as she falsely claimed. Through their counsel, plaintiffs in the case unambiguously communicated this strong opposition to Vogel herself. Following the original publication of Vogel’s statement, plaintiffs’ counsel demanded to Vogel that she publicly retract this obvious lie, but to date Vogel has not done so. Instead, she re-published the lie on her website.

Along with Vogel’s bad facts and distortions, in its present form SB 1489 contains an emergency clause. Since other associations aren’t storming to Richmond to fix a non-existent problem, the emergency to which Vogel refers must be that the plaintiffs in the case have filed their brief with the Virginia Supreme Court.

Curiously, Vogel’s web site includes 3 articles describing her efforts to introduce 2008’s SB 6016, but there’s no mention of that bill’s ultimate fate. SB 6016 failed to become law, a failure that took 4 days to come about.

At the June 26, 2008 meeting of Virginia’s Housing Commission, where SB 6016 met its fate, the only members of the public to speak on that bill were representatives and lawyers for the parties in the Lake Holiday case – the very case Vogel claims her bills don’t target.

One of the lawyers who argued in favor of SB 6016 at that meeting was Bob Diamond, an attorney from Reed Smith that represents Miller & Smith in the Lake Holiday lawsuit. Diamond is a member of the Presidents Club of the Community Associations Institute. Diamond has played an important role in pushing for the legislation Vogel has introduced. One wonders if Diamond is using his position to claim to have identified a non-existent problem and propose a fix solely to advance the interest of his client. His client is a party in the very lawsuit Vogel’s legislation targets.

If the history of sequels is any guide, the future doesn’t bode well for Jill Vogel and her SB 1489. As Entertainment Weekly observed on the subject of sequels:

…[S]ome are so ill-conceived, so cynically calculated, and so aggressively inept that they need to be called out and held accountable in the public square.

Every property owner in Virginia needs to work hard to see that Vogel’s sequel suffers a defeat more swift and resounding than her failed original.

To track the outcome of SB 1489, visit Virginia’s LIS System. To see the reactions of other Virginians, check out Richmond Sunlight.

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Jill Holtzman Vogel’s VA POA Act Amendment Is Tabled

Sen. Jill Holtzman Vogel’s (R-27) emergency effort to amend Virginia’s Property Owners’ Association Act has been tabled for the special session still going on in Richmond. Her bill, SB6016 (our link is to a PDF redlined version of her bill provided to us by her office), Virginia Property Owners Association Act; reformation of declarations, was originally introduced in the Senate on Monday 6/23, where it was quickly referred to the Committee on General Laws and Technology. At a vote of that committee on Tuesday, the bill was reported out, or sent to the full senate. On Wednesday 6/25, the first vote on the measure in the full senate failed, but after a recess, a second attempt narrowly approved the measure by a single vote.

Following approval in the Senate, SB 6016 made its way to the House of Delegates, where it ended up in the Committee on General Laws. The next stop: the Housing Commission. And that’s where it stopped. Both we and others raised a number of concerns about the proposed legislation, perhaps the biggest of which was a serious question of constitutionality at the state and federal levels. The Housing Commission unanimously decided to table the bill for the remainder of this special session.

According to the Winchester Star, “Vogel repeatedly has stated that her bill is not related to an ongoing lawsuit against Lake Holiday Country Club Inc.” She continues to maintain this position. Bob Diamond, an attorney from Reed Smith representing Miller & Smith, and an attorney from Rees Broome, who happens to represent LHCC, were among the very few attendees commenting to the commission. Given their Tyson’s Corner offices are about 2 hours from Richmond, it’s an odd coincidence that attorneys for 2 defendants in a lawsuit happen to be about the only ones showing up to champion a bill that its chief senate patron said is “not related” to that lawsuit.

Start to nothing in 4 days. The legislative process is pretty quick in a special session.

We’ll discuss this further in due course.

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