COVID-19 & Collections of Dues/Assessments: Guidance for HOAs

FLB Law      Apr. 3, 2020

Banner about COVID-19The ongoing COVID-19 (Coronavirus) Pandemic continues to affect every aspect of the economy. The sudden reduction in workers’ hours and revenues throughout the economic system has left many people feeling a financial pinch. The impact of that flows through the system to potentially create further economic problems in the short-, medium- and even long-term. As a result, collection of assessments and dues by Homeowners’ Associations and Condominiums (HOAs) will likely be affected.

The attorneys at FLB are here to help at this difficult time. First, Associations need to closely manage their finances. A homeowner’s obligation to pay assessments and dues continues; but, expect that payments on assessments and dues may be uneven. Associations should also realize that the law continues to offer special protections to Associations in the form of an automatic lien against units with unpaid assessments and dues. This lien gives Associations a four-year statute of limitations before requiring a lawsuit be filed, offering some protection in both the short- and long-term.

Keeping this statute in mind, it is likely in the best interest of Associations to work with unit owners on unpaid assessments and dues in these unprecedented times. The Association may adopt a policy on new delinquencies, including the waiver of late fees, payment forbearance or installment payment plans. The Association may also be proactive and send notice to all homeowners and request they contact its offices directly for alternate payment plans. Further, the Association may want to look at their budget and flag any discretionary expenses or unused budget allocations. To the extent your governing documents permit, you may shift budget allocations for snow removal to cover the ongoing expenses of the Association that may be adversely affected by assessment shortfalls. When unit owners are out of work or otherwise heavily impacted by the global pandemic, suing immediately may not be the best first option. As the saying goes, you “can’t get blood from a stone.” Also, Associations may want to consider whether they want to “be the bad guy” when they could be working with people who have fallen on hard times.

In these difficult times, when non-payments and slow payments are likely to increase, it is important to have a comprehensive collections strategy balanced with the wisdom to assist our neighbors who need help. FLB’s Planned Communities & Condominiums Group can help you create that strategy and ensure your rights are protected.

If you have any questions regarding how the COVID-19 pandemic impacts your Association, please contact us using the form below, or give us a call at 610-797-9000. We wish you well during these extraordinary times.

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