By Chandler W. Travis, Esq.
Individuals and businesses across America are beginning to resume more normal activities after a year of COVID-19 closures and restrictions. Community associations, like other businesses, felt the impact by this first in our lifetime pandemic. Associations had to close their amenities, transition from in-person board and members meetings to virtual meetings, determine whether their liability insurance would cover a COVID-19 claim, and effectively communicate with frustrated owners who seemed to notice their neighbors’ violation(s) more often.
After a year like 2020, associations will never be the same but associations, board directors and community managers became better. Better equipped to utilize technology to conduct virtual meetings. Better understanding of what their liability insurance covers. Better communication skills to explain to owners why the association must take a certain action.
As to the enforcement of violations, some associations suspended issuing violation letters for specific type of violations, such as failure to paint the exterior of the residence, knowing that owners may be experiencing financial distress or difficulties in hiring contractors due to the pandemic. Now, associations should, if they have not already, resume their violation process. In the initial violation letter, an association may consider notifying owners that it had suspended such enforcement actions due to the pandemic.
Owner’s payment of assessments to associations has not been
impacted by the pandemic likely due to extraordinary steps taken by the Federal government to address the financial impacts of COVID-19. Specifically, the Federal government swiftly enacted a moratorium for foreclosures of federally backed mortgages by Fannie Mae, Freddie Mac, and others. A homeowner could request a forbearance, which allowed the owner to pause or reduce his/her monthly mortgage payment.
This action coupled with the direct stimulus payments from the Federal government to many individuals, allowed owners residing in associations to continue paying their accruing assessments. Thus, to date, associations have not seen the large spike in delinquencies as occurred in the Great Recession of 2008. However, with the mortgage forbearance ending soon and no further federal stimulus payments coming, associations should follow their adopted collection policies if delinquencies rise later this year.
Associations will also face rising costs for many items related to supply chain and labor issues caused by the pandemic. Vendors for associations, such as roofers, general contractors, and pool maintenance companies, will pass along the increased cost for lumber, steel and chlorine tablets to associations. Additionally, wages may be increasing for many companies as they must pay the more to attract and keep quality employees. Thus, associations will need to account for rising costs in their 2021 budgets.
Additionally, associations are reopening amenities, such as pools, clubhouses and gyms, with the increasing numbers of individuals who are vaccinated. And finally, the in-person board meeting may be a thing of the past for some associations, considering the benefits of virtual meetings.
So to answer my question of “What’s Next?”, board of directors and community managers, who adapted and came up with creative solutions to address the multiple issues arising from COVID-19, will continue to be flexible and efficient in applying what they learned to new challenges ahead.