HOMEOWNER HOA LAW
Waive Assessments Because of the Coronavirus? By Adrian Adams, Esq. will pay the delinquent amounts. For others, foreclosure actions might move forward to the point of sale and then stop if amounts owed will be paid.
WAIVE ALL ASSESSMENTS? Waiving assessments altogether is compassionate but also problematic. As noted above, boards have a duty to keep the association operational and pay its bills. It can't be done if no one pays their assessments. What about waiving assessments for delinquent members only? This presents a different problem. Do you waive for delinquent accounts that have nothing to do with the coronavirus? That would not be prudent. Forgiving assessments for those laid off because of the coronavirus is easier to defend but still a problem.
T
he coronavirus pandemic is throwing tens of thousands of homeowners out of work. Many of them live in community associations and have stopped paying their assessments. Should boards waive late fees and interest? Should they waive assessments for a month, three months, longer? Should they waive for some members but not others?
BALANCING BOARD DUTIES Boards have a fiduciary duty to keep their associations operational. That means paying utility bills, paying for insurance, maintaining the property, responding to emergencies, maintaining security, paying vendors, etc. At the same time, boards need to balance these obligations against the fact that increasing numbers of members cannot pay their assessments because of the pandemic. 16
Quorum April, 2020
LATE FEES & INTEREST
WAIVE SOME ASSESSMENTS?
Members have been laid off through no fault of their own. Accordingly, boards should immediately suspend late fees and interest on all delinquent accounts related to the coronavirus. Older delinquencies having nothing to do with the pandemic can be treated differently. With those accounts, boards can choose to continue late fees, interest and foreclosures.
How do boards decide which ones are pandemic related? How long do they waive assessments? What if there is a rolling waive of layoffs for months to come because of the virus? At what point do boards stop waiving assessments? Also, waiving them creates a budget shortfall that increases the financial burden on everyone else. The best solution is to work out payment plans with members laid off from work.
FORECLOSURES
PAYMENT PLANS
While liens can be recorded against new delinquencies, no foreclosure actions should be initiated against them. With older delinquencies, it may be appropriate to move forward with foreclosure actions, up to and including selling units. This would be the case for delinquencies that predate the coronavirus where there is no chance the person
Fortunately, most (hopefully all) layoffs will be temporary. The coronavirus will soon peak, stay-at-home orders will be lifted, businesses will restart, and workers rehired. In addition, last night's approval by the Senate of a $2 trillion stimulus package includes cash payments to individuals hurt by the epidemic. Boards should work out payment
