Millions of homeowners are facing or will face short- and long-term economic impacts from the COVID-19 pandemic. Many have already been furloughed or laid off. Paying the bills, including community association assessments, will get that much harder for the homeowners experiencing financial hardship.
At the same time, community association boards have an important responsibility to collect assessments, which fund essential services such as trash pickup, stormwater management, street and sidewalk maintenance and lighting, and recreational facilities.
It is critical that every homeowner pays their assessments in a timely manner, yet the COVID-19 pandemic has created extraordinary circumstances for a growing number of homeowners. Those who are unable to pay assessments on time due to COVID-19 should contact the association in writing as soon as possible.
Boards and managers should turn to their association’s governing documents and their assessment collections policy, if they have one, for procedures on working with these owners—including the possibility of establishing deferral and repayment plans.
For a board to consider a postponement of monthly assessments and repayment plan with a homeowner, the owner should submit a written statement that describes their financial hardship, such as whether they’ve lost their job or had a reduction in wages, and show documents to support their claim, says Julie Howard, co-founder and managing partner with NowackHoward in Atlanta and a fellow in CAI’s College of Community Association Lawyers (CCAL).
If a deferral and repayment plan is an option for the owner and the community, a formal written agreement should outline the details. This may include the affirmation about the financial hardship, the length of the deferral, if late fees and interest are being waived, and the additional amount the owner will pay to satisfy the deferred assessment payments once he or she resumes paying regular monthly assessments.
“Depending on state law, you may need to reaffirm that the association will be filing a lien to protect this debt, and definitely include the right of the association to proceed with collection if the owner breaches the agreement,” notes Howard.
She stresses that boards should become familiar with their state’s statute of limitations for collecting past due assessments and consider incurring the expense of having a template of the agreement drafted by their attorney “that can be used with each of the association’s delinquent owners in this circumstance.”
Once the terms of the repayment plan have been negotiated, it should be signed by the homeowner and the board of directors, documented in writing, and approved by the board.