Dealing with Delinquent Assessments During the COVID-19 Pandemic

By Adrian Adams
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Now that we are crisis mode, how do we handle owners who are losing their jobs/income? Don’t really want to see people losing their homes due to this crisis. What if the HOA can’t pay its bills?

The crisis will end at some point (hopefully soon) and businesses will restart. A California attorney recommends boards place a lien on delinquent properties to protect the association’s interests, but suspend all foreclosure activity. Once people return to work, you can work out payment plans with delinquent owners.

Permanent Job Loss

The more difficult scenario will be those persons who permanently lose their jobs. They will be looking for new jobs once the economy reengages. How long do you wait for them to find work? What if they can’t? When you get to that point, you will need to discuss options with legal counsel and decide how best to proceed.

Drop in HOA Revenue

If delinquencies impact cashflow, associations still need to pay their bills. If boards need to, they can borrow from reserves. In states like California, without a vote of the membership, boards are allowed to borrow from reserves to meet short-term cashflow problems.

In California, monies borrowed from the reserves must be repaid to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the association, temporarily delay the repayment.

For more information about COVID-19 and your community, visit www.caionline.org/Coronavirus

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Adrian Adams

Adrian J. Adams, is managing partner at ADAMS | STIRLING PLC in Los Angeles, Calif.