If condo unit owners have voted to terminate their condominium for redevelopment, can 51% of them petition to create a Community Development Authority over the entire site?

Subject

Whether 51% of the unit owners in a condominium that has approved a termination agreement (but not yet recorded it) may petition for the creation of a Community Development Authority covering the condominium property.

Plain-English summary

Virginia's Community Development Authority statute (§ 15.2-5153) lets owners of at least 51% of the land area or 51% of the assessed value of a tract petition the locality to create a CDA. CDAs are special-purpose financing vehicles that fund infrastructure to support development or redevelopment. The question Delegate Wiley brought to the AG involved a condominium in which the unit owners had voted to terminate the condominium and sell the property for redevelopment, but had not yet recorded the termination agreement.

The wrinkle was whether unit owners count as "landowners" of the underlying property. AG Miyares concluded yes, in this specific scenario. Section 55.1-1937 (the condominium termination statute) provides that the termination agreement becomes effective only upon recordation. Until recording, the unit owners still hold title to their individual units and to their shares of the common elements. After recording, title shifts (to the unit owners' association if there is going to be a sale, or to the unit owners as tenants in common if not).

Because the termination agreement had not been recorded yet, the unit owners still owned the land. So 51% of them, holding 51% of the land area or 51% of the assessed value, could petition for a CDA. The petition has to satisfy the contiguity rule: if the condominium property is one contiguous tract, the 51% threshold is measured across the whole. If the property is made up of non-contiguous tracts, the petitioners must hold 51% in each non-contiguous tract.

The AG made two background assumptions: that the termination agreement had not been recorded, and that nothing in the termination agreement itself restricted the unit owners' ability to petition for a CDA. If the termination agreement is later recorded before the petition is filed, the ownership shifts, and the analysis changes (the unit owners' association or the unit owners as tenants in common would have to petition, depending on whether a sale is planned).

What this means for you

Condominium boards and unit owners

The opinion holds that while a termination agreement is approved but not yet recorded, the unit owners still hold title and so 51% of them (measured by land area or assessed value, not headcount) may petition to create a CDA over the condominium property. The opinion attaches no special procedure to that petition beyond the § 15.2-5153 ownership threshold and rests on two stated assumptions: that the termination agreement was unrecorded and that nothing in it restricted the unit owners' ability to petition.

Attorneys advising a condo association

The opinion turns on the recordation timing in § 55.1-1937: title shifts on recordation, not on the vote, so the pre-recordation window is when the unit owners qualify as the petitioning landowners. It expressly assumed the termination agreement contained no provision affecting the right to petition, and it applied the § 15.2-5153 contiguity rule (51% in each non-contiguous tract). It did not opine on what a termination agreement that restricts petitioning would do, or on how contiguity is judged for a given parcel layout.

Developers buying out a condominium

The opinion holds that the petition depends only on the right ownership share held at the time of filing, so the consenting 51% of unit owners can be the petitioners during the pre-recordation window. It does not address how a developer participates in or inherits a petition; it speaks only to who may file given the ownership posture described.

County attorneys reviewing a CDA petition

The opinion supplies the rule for the pre-recordation case: the unit owners are the landowners and may petition if they meet the § 15.2-5153 threshold. After recordation, it holds that title shifts under § 55.1-1937, either to the unit owners' association (if a sale is anticipated) or to the unit owners as tenants in common (if not). It did not address the scenario where the agreement is recorded but a sale has not closed.

Common questions

Q: Does each unit owner count as one landowner, or is ownership measured by land area or assessed value?
A: The threshold is set by land area or assessed value, not by headcount. Fifty-one percent of the unit owners who together hold at least 51% of the land area (or 51% of the assessed value) are sufficient. Both prongs are alternatives, so meeting either suffices.

Q: What happens if the termination agreement is recorded before the CDA petition is filed?
A: The ownership of the property changes. The opinion explains that under § 55.1-1937, once the agreement is recorded, title vests in the unit owners' association if a sale or other disposition is anticipated, or in the unit owners as tenants in common if not. The petition would then have to come from the new owner.

Q: What if the condominium is on two parcels separated by a road?
A: Probably non-contiguous. Section 15.2-5153 requires 51% in each non-contiguous tract, so the petitioning unit owners would need to hold 51% in each parcel. Whether the road interruption is enough to make the parcels non-contiguous is a fact-specific question; a slim physical separation (a 20-foot road) may be evaluated differently from a wide one (a state highway).

Q: Does this opinion mean any condo owner faction can petition for a CDA without board approval?
A: It does not address that. The AG assumed nothing in the termination agreement restricted the unit owners' petitioning rights, but it did not address the question of what happens if 51% of the unit owners try to petition over the objection of the rest. As a practical matter, a CDA petition needs to fit within the development plan, and a faction that pushes an inconsistent CDA petition would face both procedural and political resistance from the locality.

Q: Can the petition include land outside the condominium?
A: The opinion specifically described a petition covering only the condominium property and no land outside it. A petition that includes additional land would have to satisfy the 51% threshold for that additional land too, signed by the additional landowners.

Q: What happens to the CDA petition if the buyer backs out of the redevelopment deal?
A: The petition does not depend on a particular buyer. If the unit owners filed the petition before recordation, the CDA could be created based on the unit owners' application, regardless of whether the buyer follows through. In practice, however, the CDA's bond financing and infrastructure plans usually depend on the developer, so a failed sale typically pauses the CDA work.

Background and statutory framework

The condominium termination statute, § 55.1-1937, sets out the process by which condominiums can be wound up and sold for redevelopment. The opinion notes that the requesting scenario had satisfied subsections (B) and (C), which govern the termination vote and the termination agreement. The key vesting rule the opinion relies on is that the agreement becomes effective only upon recordation: until then the unit owners hold title; after recordation, title vests in the unit owners' association if a sale is anticipated or in the unit owners as tenants in common if not.

The critical detail for CDA purposes is that vesting rule. The AG's analysis turns on it. While the termination agreement is approved but unrecorded, the unit owners are still the landowners, and the CDA petition requirement in § 15.2-5153 fits naturally.

A community development authority is a special-purpose financing vehicle that funds infrastructure to support development or redevelopment, with the cost borne by assessments levied on the property within the CDA district. Condominium redevelopment projects can use CDAs because the new infrastructure costs are large.

This opinion is a narrow technical reading of how the two statutes interact, but its practical significance is that condominium redevelopment in Virginia can take advantage of CDA financing without the developer needing to be in title before the petition is filed.

Citations and references

Statutes:

• Va. Code Ann. § 15.2-5153 (CDA petition requirements)
• Va. Code Ann. § 55.1-1937 (condominium termination)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2022/22-018-Wiley-issued.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA

Office of the Attorney General

Jason S. Miyares
Attorney General
202 North Ninth Street
Richmond, Virginia 23219
804-786-2071
Fax 804-786-1991
July 26, 2022
Virginia Relay Services
800-828-1120
7-1-1

The Honorable William D. Wiley
Member, Virginia House of Delegates
Post Office Box 2034
Winchester, Virginia 22604

Dear Delegate Wiley:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

ISSUE PRESENTED

You set out a certain scenario in which you ask whether fifty-one percent (51%) of the unit owners in a condominium unit owners' association may petition for the creation of a community development authority.

BACKGROUND

You relate that unit owners of a residential condominium have approved an agreement that provides for the termination of the condominium and the sale and redevelopment of the condominium property. Specifically, you relate that "the condominium has satisfied the requirements of §§ 55.1-1937(B) and (C)" in that the requisite number of unit owners have agreed to terminate the condominium and have "entered into a termination agreement authorizing the [executive board of the unit owners' association] to implement the termination and redevelopment of the condominium on their behalf."

You ask whether, in these circumstances, fifty-one percent (51%) of all the unit owners may petition for the creation of a community development authority ("CDA") that would include all of the land on which the condominium is located (the "Entire Condominium Property"), and no land outside the condominium.

I assume, for purposes of this opinion, that the termination agreement has not yet been recorded, such that the unit owners still hold title to their individual units and their share of the common elements. Importantly, Virginia Code § 55.1-1937 provides that a termination agreement becomes effective upon proper recordation. Following proper recordation, if there is to be a sale or other disposition of any of the condominium property, title to the property vests in the unit owners' association. If there is not to be a sale or other disposition of the condominium property, title to all of the property in the condominium vests in the unit owners as tenants in common.

Additionally, I assume there is no provision of the termination agreement that impacts the ability of unit owners to petition for a CDA.

APPLICABLE LAW AND DISCUSSION

Section 15.2-5153 of the Code of Virginia sets forth the requirements for individuals seeking to submit a petition for the creation of a CDA. The statute provides, in relevant part, that

[t]he owner or owners of at least 51 percent of the land area or assessed value of land in any tract or tracts of land in any locality or localities may petition the locality or localities in which the tract or tracts are located for the creation of a community development authority [. . . .] Any petition for the creation of a community development authority in multiple tracts which are not contiguous shall be signed by the owner or owners of at least 51 percent of the land area or assessed value of land in each such non-contiguous tract.

Based on the plain language of the statute, if the Entire Condominium Property is a contiguous tract or tracts of land, 51% of the unit owners may petition for the creation of a CDA provided they own "at least 51 percent of the land area or assessed value of land" of the Entire Condominium Property. If the Entire Condominium Property is made up of non-contiguous tracts of land, then 51% of the unit owners may petition for the creation of a CDA provided they are the owners of "at least 51 percent of the land area or assessed value of land in each such non-contiguous tract."

There is nothing in the language of the statute that would bar a petition based on the sole fact that unit owners have approved an agreement for termination of the condominium as described.

CONCLUSION

Accordingly, in the scenario you describe, it is my opinion that: if the Entire Condominium Property is a contiguous tract or tracts of land, 51% of the unit owners may petition for the creation of a CDA provided they own "at least 51 percent of the land area or assessed value of land" of the Entire Condominium Property. If the Entire Condominium Property is made up of non-contiguous tracts of land, then 51% of the unit owners may petition for the creation of a CDA provided they are the owners of "at least 51 percent of the land area or assessed value of land in each such non-contiguous tract."

With kindest regards, I am,

Very truly yours,

Jason S. Miyares
Attorney General