VAR Brokers Digest

Last Saturday (day 60 of 60), unable to agree on a state budget and how to fix a "null and void" transportation tax plan, the General Assembly missed its deadline for adjourning its 2008 session.

Due to the budget impasse, the General Assembly session has been extended for several days.

House and Senate budget negotiators reached an agreement late Monday night on their main differences in the budget, which should allow the General Assembly to end its extended session by Thursday.

The negotiators tentatively agreed to scale back Governor Kaine's preschool initiative, to give state employees and teachers pay raises and to limit tuition increases at public colleges and universities.

The two sides also agreed to increase funding for programs to help the mentally ill and ordered a new round of budget cuts for state agencies and local governments.

A vote this week on the budget will bring an end to a contentious 2008 General Assembly session, one which saw political posturing and partisan wrangling nearly at an all-time high.

While the regular session should conclude this week, most insiders expect Governor Kaine to call the legislature back into session later in the spring to address the transportation dilemma in which we now find ourselves.

While legislators have at least one major issue to contend with, VAR was successful in seeing 9 of our 10 bills pass the House and Senate while also focusing on issues such as:

transportation funding,
impact fees versus proffers, and
mortgage reform.

And then there was HB 334, the catnabbing legislation (as in the felonious taking of felines, not as in snoozing), referenced in an earlier edition of Capitol Connections. Unfortunately, that bill expended all nine lives in a committee that must have been influenced by the dog lobby.

Neither VAR nor its lobbyists took a position on this key legislation.

(Editor's note: Feline-friendly REALTORS® unhappy that we took no position, contact R. Scott Brunner, CEO)

VAR legislative agenda victories: Another HUGE year

VAR was successful in seeing 9 of our 10 introduced measures pass the House and Senate. They now await approval from Governor Kaine.

(Click on each bill to see the actual text.)

HB 221, providing civil immunity relief for landlords and property managers for mold claims.

HB 1098, clarifying that the definition of "settlement" does not apply to the contractual obligations between buyer and seller.

HB 720, an omnibus bill that makes changes in the landlord/tenant law to address various issues including:

service of notices;
use of electronic records by landlords;
rent with reservation notices; and
application fees.

HB 1114, amends the Code of Virginia to conform LLC rules to those governing corporations, thereby allowing persons without broker licenses to become investors in real estate LLC's.

HB 516, VAR introduced legislation that will:

Set up a licensing board (modeled on the Virginia Real Estate Board) for POA managers;
Allow investigators to enforce the law and regulations (similar to the VREB);
Discontinue excessive fees being charged to buyers and sellers;
Implement a disclosure packet fee structure;
Reform the Property Owners' Association Act and Condominium Act to help ensure that everyone involved in these transactions understands and has confidence in all aspects of the process; and
Provide for the licensure and regulation of professional association managers.

HB 445, which clarifies that localities cannot continue to impose fees upon landlords who have taken legal action to address overcrowding zoning violations.

HB 1397, amending the Virginia statute that requires listing and leasing agents to disclose material adverse facts about a property. An error in amendments made in a prior year mandated that these disclosures be in bold lettering or all capital letters and in a separate box. Our amendment to the statute eliminates the requirement that the disclosures be made in this manner, while clarifying that the disclosure MUST be in writing.

HB 1078, protecting property owners with vested rights from localities seeking to alter past zoning application decisions.

SB 158, addressing the concerns of several local associations that have reported seeing a higher frequency of Automated Value Models (AVM) used in place of appraisals, without adequate disclosure. An AVM is an electronic method of determining the value of property, based on an online search of local government tax records and sales comparables. AVMs are not appraisals. VAR's legislation will define AVMs or require some form of disclosure.

Property Owners Associations to see major reforms

As noted above, VAR was successful in getting HB 516 passed. While those who do not deal with Property Owners' Associations, Homeowners' Associations or Condominium Associations may not be aware of the problem, those of you who do certainly will.

In what can only be described as the most sweeping reform of the past several years, VAR worked with the legislature for the last 12 months to craft legislation that will simplify dealings with POA's, HOA's and CA's; will give you a place to direct your clients if they have complaints; will hold POA, HOA and CA managers to the same regulatory standards that you adhere to; and finally will put to bed that recurring question: how much they can charge for a disclosure packet.

VAR will initiate a major educational campaign in the coming months to bring you and your clients up-to-speed on the ramifications of HB 516, but to give you a taste, click here to download the talking points VAR used for HB 516.

The long and winding road to how we pay for long and winding roads

Lawmakers will need to come back to Richmond later this spring to find a way to raise money for transportation, which became a priority all over again after the Virginia Supreme Court ruling on February 29 that giving unelected regional transportation authorities in Hampton Roads and Northern Virginia the power to tax is contrary to the Commonwealth's constitution.

Last Sunday, Governor Kaine invited about a dozen Republicans and Democrats from the House and Senate to discuss the transportation issue.

Senate Democrats want a statewide tax increase to go toward maintaining roads, but House Republicans oppose it because they want to focus on salvaging the regional panels by allowing local governments to enact the tax and fee increases.

House Republicans from Hampton Roads have announced their support for a sales tax increase to fund projects in their region. While Senate leaders and Governor Kaine were non-committal, this latest movement shows that there is interest for a broad-based tax increase to offset the costs of building and improving roads in Hampton Roads. If approved, the sales tax increase would nullify the need for a grantor tax increase, something Hampton Roads REALTORS® like.

Northern Virginians have yet to coalesce around a specific plan.

While the specifics of each regional plan (with the possibility of a statewide plan) will be flushed out in the coming days and weeks, it is clear to everyone involved, Republican or Democrat, Senator or Delegate, that something needs to be done.

Proffer reform on hold until 2009

SB 768, introduced at the request of the Home Builders Association of Virginia was carried over until the 2009 session, as the leadership in the House of Delegates did not think the proposal was ready for enactment this year.

In its original form, SB 768 contained an increase in the grantor tax. VAR was able to remove this provision and since that time, has been actively engaged with developers and local governments in negotiating other provisions of the bill.

In a rather unprecedented move, Speaker of the House William J. Howell (R-Stafford Co.) offered to write a letter to all localities that currently have the authority to raise cash proffers and request that they hold off doing so in order to give all parties time to hammer out a deal that could be passed in the 2009 General Assembly session.

Several years ago, VAR dropped our unequivocal opposition to impact fees, if the implementation of impact fees could be done through cash proffer reform, the same reform that is offered through SB 768.

VAR lobbyists will continue our negotiations throughout the spring and summer and hope to build consensus for 2009.

Real estate industry faces tough mortgage reform questions: REALTORS® help provide needed relief

Largely in response to mounting pressure from the media and constituents, numerous measures were introduced in the course of the 2008 session to regulate the mortgage industry. They included:

assigning fiduciary responsibility to mortgage brokers;
prohibiting sub-prime products;
requiring the escrow of insurance and tax payments; and
prohibiting pre-payment penalties;

Several of these measures dealing specifically with the mortgage industry and the sub-prime fallout were recommended for study by the Virginia Housing Commission (VHC), slated to begin in May.

VAR has long been closely involved in the proceedings of the VHC, and will recommend REALTORS® with a lending background for appointment to the group.

While the VHC will study the noted issues, REALTORS® led the way in providing relief for the most egregious of cases. VAR actively helped draft two bills that passed the House and Senate and await Governor Kaine's signature:

HB 408: VAR facilitated negotiations between consumer protection organizations, real estate investors and lenders to craft a bill that prohibits the bait and switch tactics most often seen in foreclosure rescue scams. This legislation, considered by some as a possible vehicle to be used nationally, passed the House and Senate unanimously.
SB 797: VAR was asked by the Governor to assist the Virginia Bankers Association and the mortgage industry in drafting this measure, which was introduced at his request. The bill provides relief for those homeowners facing sub-prime foreclosure by granting an additional 30 days should they respond to the call from their lender. Under SB 797, the lender must provide notice to the homeowner of the foreclosure, the actual amount of what is owed, as well as a list of HUD-certified counselors. Homeowners who want to stay in their homes may be able to do so under this bill.

Another bill that now awaiting approval from the Governor is HB 1487. The most important aspect of HB 1487 is that it grants authority to the State Corporation Commission to actively police and enforce RESPA violations. Previously, the SCC did not have the authority to do so - pursuit of those violations had been left to the federal government.

Do you know a Virginia legislator or member of Congress?

Are you on a first-name basis with a legislator or Congressman? If so, please contact Blake Hegeman (bhegeman@varealtor.com) to join our list of Key Contacts or become a Federal Political Coordinator (FPC) team member. As a friend of an elected official, you are VAR and NAR's best resources when we are trying to communicate our key messages.