POA can continue to collect assessments

By James Heffernan -- Daily Staff Writer

WINCHESTER — Lake Holiday Country Club Inc. qualifies as a property owners association under Virginia law, Frederick County Circuit Court Judge John R. Prosser ruled Tuesday in dismissing a lawsuit brought by a small group of lot owners within the gated lakefront community.

Despite its staggered development, Lake Holiday has functioned as a single community for more than 35 years, Prosser said.

The plaintiffs had claimed that the varying language in Lake Holiday's deeds of dedication gives LHCC no authority to impose annual assessments on lots in certain sections, and only limited authority in others, under the Virginia Property Owners Association Act, enacted in 1989.

The act gives qualifying community associations the power to collect assessments from land owners for maintenance of common areas and similar purposes. It requires prior notice to buyers that they are purchasing property subject to such assessments.

Robert T. Mitchell Jr., who represents Friends of Lake Holiday, one of the groups of defendants, said there has never been a ruling on the constitutionality of the POA act. Community associations need a mechanism to maintain their common areas, he said, or else residents "will come knocking on the doors of the board of directors."

The plaintiffs "want to drive on [Lake Holiday's] roads, they want use of the lake ... but they don't want to pay assessments," Mitchell said.

When one examines the deeds of dedication at Lake Holiday, the requirement to join LHCC and abide by its rules is clear, said fellow defense attorney Mark Stivers, who represents the Alliance to Save Lake Holiday.

"The sections are part of a whole," he said, adding that the deeds not only state that LHCC has the power to collect assessments, dues and fees, but also the ability to enforce nonjudicial liens and foreclosures on the lots for unpaid taxes.

But the plaintiffs' attorney, Wayne Travell of McLean, argued that Lake Holiday, with 2,700 lots and only about 850 occupied homes, constitutes a "piece-meal development."

It's not unusual for a residential community to develop over a period of time, Travell said, but at some point the developer normally transfers ownership to a community association.

"That never happened at Lake Holiday," he said. As recently as 1993, there was still no plan for its development, he said.

Frederick County Attorney Roderick Williams countered that the county has always looked at Lake Holiday as a single development with a statutory property owners association, going back to the original rezoning request for the acreage in 1970.

"Without a functioning POA, the roads, the lake, the dam that holds the lake back, would be left unattended," he said.

In reaching his decision, Prosser referenced a series of prior rulings on Lake Holiday by his colleague on the bench, Judge John E. Wetsel Jr., who he said viewed LHCC as a statutory POA, and in 1998 ordered that the court appoint a receiver to take over the community's operations after years of fiscal mismanagement by its board of directors.

"Common sense," Prosser said, would dictate that following the court's intervention, all lot owners at Lake Holiday were subject to the same rules and regulations regarding assessments.

"The court put its stamp of approval on the collection of assessments, and it was the obligation of the lot owners to pay those assessments," he said.

Travell argued that his clients weren't bound by the rulings, and he urged Prosser to "get back to basics" by focusing on the deeds and Virginia case law, including three cases involving POAs that reached the Virginia Supreme Court.

Travell said afterward he was "disappointed" by the ruling, and is planning an appeal to the state's highest court.

Wayne Poyer, president of LHCC's board of directors, said he was pleased with the outcome, which he said will allow the community "to continue to grow openly, honestly and fairly for all of its members, including the plaintiffs."

* Contact James Heffernan at jheffernan@nvdaily.com