COVID-19’s rapid spread has halted economic activity around the world. Millions of workers have been laid off or placed on unpaid leave, and several industries are bracing for long-term financial effects.

Community association boards are seeking guidance on collecting assessments during the pandemic and addressing delinquent homeowners who may be experiencing unemployment or lost wages. Attorneys say associations should continue to collect. Failing to do so may impair an association’s ability to pays its bills, provide essential services, acquire financing for continued operations, and may impact the ability of a potential purchaser to obtain a mortgage.

Expenses such as cleaning services also may increase because of the outbreak, says Laurie Poole, an attorney with Adams Stirling in California and a fellow in CAI’s College of Community Association Lawyers (CCAL).

“At this time, we would recommend (associations) waive late fees and interest but not dial back on collecting assessments,” says Poole.  Boards can still file liens, but she notes that they should hold off on foreclosures and postpone special assessments unless they are for an emergency repair.

Similarly, boards should be flexible in their collections policy and work out a payment plan with homeowners, says Brendan Bunn, a partner at the law firm of Chadwick Washington Moriarty Elmore & Bunn in Oakton, Va.,  and a CCAL fellow.

Due to the evolving nature of the pandemic, it’s difficult to predict the long-term financial impact to community associations. “If it’s a bigger problem long term, (boards) may have to look at budgeting for more bad debt than usual,” Bunn recommends.

An association also could look to state laws and its governing documents to see if money can be borrowed from reserves, says Adrian J. Adams, founder and managing partner at Adams Stirling. For instance, California law allows association boards to borrow money from reserves to meet short-term cashflow issues, as long as the amount is repaid to the reserves fund within a year, notes Adams.

>>Read more about the importance of paying assessments and the CAI Board of Trustees’ statement calling for a moratorium on foreclosures.

This information is subject to change. It is published with the understanding that Community Associations Institute (CAI) and Ungated are not engaged in rendering legal, accounting, medical, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.​

Kiara Candelaria

Kiara Candelaria

Kiara is associate editor for CAI’s print and digital publications. Before joining CAI, she worked for a trade media magazine focusing on the oil refining sector. Kiara also worked as an internal communications intern at the Library of Congress in 2015 and was a student journalist while attending college in Puerto Rico, where she was born and raised. She graduated with a bachelor’s degree in information and journalism from the University of Puerto Rico, Rio Piedras Campus, in 2014 and earned a master’s degree in communication from George Mason University in Fairfax, Va., in 2020. Kiara currently resides in Arlington, Va., and enjoys watching movies and television shows, playing videogames, and spoiling her cat Kyoshi.

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