HOAleader.com - Tip of the Week - April 24, 2020
Published: Fri, 04/24/20
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COVID-19: Advice on the Challenging Financial Questions Condo/HOA Boards are Facing
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In this tip, we offer suggestions on the questions many condo and HOA boards are asking when it comes to financial issues they’re facing due to the pandemic: Can they waive dues for suddenly unemployed homeowners? Use reserves to help such homeowners? Take measures to ease collections?
Our experts recommend that, above all else, you check your state law and be sure to know how your governing documents apply to this question. But generally, they’re advising their boards to continue to collect dues and then deal with challenges as they arise.
“Before the Minnesota stay-at-home order took place, courts suspended all evictions except those for criminal activity or health and safety issues, such as a tenant who’s a danger to the community,” explains Phaedra J. Howard, a partner specializing in community association law at Hellmuth & Johnson PLLC in Edina, Minn. “So even for regular nonpayment of rent or a breach of a lease, there can be no evictions now.
“I recently talked to a co-op board that was getting ready to start a collection action on owners already not paying,” she adds. “The regular procedure is to provide notice of a delinquency and follow other steps, then ultimately to evict. Now we can’t evict.
“And as soon as owners started hearing there could be no evictions, they started saying: ‘We don’t have pay dues, right?’” notes Howard. “We’re telling them they still have to pay. There are people who can pay and should. Not everybody’s been impacted financially by COVID-19, and those who haven’t shouldn’t get a break.
“I’m advising my clients to deal with collections on a case by case,” she says. “If someone is legitimately past due because of this COVID-19 situation, work with them to get them on a reasonable payment plan. And what’s reasonable today is different from what was reasonable three months ago.”
The issue isn’t straightforward in California, either. “The assessment issue is a dicey one,” admits Andrea L. O’Toole, a Walnut Creek-based principal at Berding Weil, a law firm that does only community association law throughout the state. “We’re getting a lot of questions asking: Do we postpone collection of dues? Waive them? Lower them? I think it’s premature to be talking about many of those issues. It’s still too early to say because we don’t know when this is going to end.
“My advice is to continue to collect assessments,” she notes. “Until you start seeing your aging reports get further and further into the red, maintain the status quo. If you have people facing a financial hardship immediately, tell them to talk to the board by phone to see if there’s something that can be done, such as a temporary reprieve or an alternative payment plan.”
Even if you’re not seeing a problem with delinquencies, planning for the possibility that it might happen. “Within the first week of this COVID-19 situation—when we sent our staff home in the middle of March—I began preparing our managers by telling them that we have to start the dialogue with our boards now,” recalls Brad van Rooyen, founder and senior member of Tampa, Fla.-based HomeRiver Group and its national specialist for community association management and the president of Home Encounter.
“In 2008, boards and associations were caught like deer in the headlights,” he recalls. “Some have only just emerged from that mess and are getting their financials back where they need to be. If we take our foot off the pedal now, associations will be feeling the financial effects of this crisis for another 10 years.
“That’s why our message has been: Regardless of how hard this is, don’t relax on collecting dues,” says van Rooyen.
Read more about collections, including whether you should stop foreclosures, in our new article:
https://www.hoaleader.com/members/4102.cfm
Best regards,
Matt Humphrey
President
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Special Report
Condo and HOA Financials: How to Report, Manage, and Protect Your Association's Money
This report will help you more effectively oversee the finances underpinning all of your operations. We've sought the advice of legal and management experts nationwide to compile this comprehensive report on the best practices for handling financial reporting and management at your association.
You'll get critical information, including:
* Why there's such a disconnect among some board members when it comes financial matters
* Major financial reports you should be generating and tips for better understanding them
* The difference between cash and accrual accounting and why one might work better for you than the other
* 7 ways to prevent and spot potential fraud
* How to determine whether you need a bookkeeper, accountant, CPA, or auditor
* Other financial advisors your association might need to consult
* Two sample revenue and expense statements, along with a summary of how to read and understand them
* And much more!
Get your copy now:
https://www.hoaleader.com/public/Condo-HOA-Financials-How-Report-Manage-Protect-Your-Associations-Money.cfm
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Recent articles posted at HOAleader.com:
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COVID-19 and Your HOA: A Free Update for HOA and Condo Boards on How to Navigate and Prepare for Operational Challenges in Your Community from the Coronavirus
Watch this information-filled webinar, which includes the latest updates and expert speakers from 4 states.
Click here for the webinar recording:
https://www.hoaleader.com/products/covid-19-update-and-prepare-april-23.cfm
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HOA Board President Has Clients in the Community: Disclose or Not?
An HOAleader.com reader asks, "I live in Georgia in a statutory owners' association made up of 17 lots. I'm a board member. A new president was just voted in. This person is a financial consultant/broker with clients in the association. Shouldn't he disclose the names of association members who are his clients? Otherwise, how does the board ensure he recuses himself from voting or acting on association matters that directly affect his clients?"
Click here to read full article:
https://www.hoaleader.com/members/HOA-Board-President-Has-Clients-in-Community-Disclose-or-Not.cfm
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COVID-19: What Condo/HOA Boards Should Know About Virtual Meetings
It's only a little bit of an overstatement to say that the COVID-19 pandemic has forced the whole world to shift to online meetings. Your board is likely no different. Here, our experts explain what you should know now that your abrupt adoption of virtual meetings is underway, along with general dos and don'ts.
Click here to read full article:
https://www.hoaleader.com/members/COVID19-What-CondoHOA-Boards-Should-Know-About-Virtual-Meetings.cfm
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What This HOA Board Could Have Done Instead of Foreclosing
A Colorado homeowner apparently made a dumb choice--there's no question, if the reports are true. He allegedly refused to pay $110 in dues to protest a $100 fee imposed by his HOA for a garbage can violation. The HOA filed a lien, then foreclosed on the owner's home, according to MSN Money.
Click here to read full article:
https://www.hoaleader.com/members/What-This-HOA-Board-Could-Have-Done-Instead-Foreclosing.cfm
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Do Condo/HOA Governing Documents Typically Cover Lighting?
An HOAleader.com reader asks, "We're looking for an example of a lighting covenant that covers safety and light pollution that protects all and is objective and enforceable." Our question is: Do governing documents typically get into that level of detail? If so, what should a lighting covenant say?
Click here to read full article:
https://www.hoaleader.com/members/Do-Condo-HOA-Governing-Documents-Typically-Cover-Lighting.cfm
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