A new state law may affect homeowners who live in neighborhoods governed by homeowners associations, condominium associations, cooperative associations and like entities.

The law, which passed during this year's General Assembly session and went into effect July 1, states that all management associations that provide services to a common interest community must now meet certain statewide regulatory standards and must obtain a license to do business by Jan. 1, 2009.

In addition, property owners' associations and condominium associations must also obtain a "fidelity bond" or an "employee dishonesty insurance policy" ranging from a minimum of $10,000 to $1 million.

Attorney Bill Marr, a founding member of the Herndon Community Association Coalition, said the law came about as a result of an unsolved case in which an estimated $2.2 million from hundreds of Northern Virginia condominium and homeowners associations was discovered missing in late 2007.

"The legislation that got passed looks a lot different than what was introduced, though," Marr said at a meeting of the community association coalition last Wednesday. "And what is ironic is that, if the same set of circumstances were to happen today, the company would not fall under the new law."

According to Marr, HOA managers and boards will now be regulated by the Department of Professional and Occupational Regulation, "along with beauticians, Realtors and wrestlers, but HOA managers and boards will be the only entities under DPOR who are not paid or occupational," he said.

The new law requires that associations pay an annual assessment of 0.02 percent of their annual gross assessment income, up to $1,000, in addition to the already existing annual requirement and fee.

Betsy Johns, vice president and controller of property management company National Realty Partners, said associations' budgets will likely have to go up to cover the costs of licensing and education, as well as paying for the fidelity bond.

"This will have to be paid for by the entities being regulated through the collection of fees," she said.

According to Johns, the new regulations will result in additional costs to associations, which must invariably pass them down to the homeowners.

"HOA management fees and dues may increase due to the requirements of this new law," said Herndon Councilman and HCAC President Charlie Waddell.

But homeowners will get something for their money should this happen. The new law also establishes a "Common Interest Community Board," made up of 11 members appointed by the governor, who will appoint a statewide ombudsman – a property rights attorney assisting homeowners in understanding and exercising their rights in resolving issues with their associations.

In addition, HOAs and other property management companies will be required to disclose all post-closing fees and approved minutes of board or association meetings for the preceding six calendar months under the law's provisions.