Part III: Assessment Collection Considerations During COVID-19
COVID-19 has affected community associations in various ways, and new obstacles during these times are presenting themselves daily. Community associations will have to deal with many of these developments in stride and are expected to pioneer their communities during the state-wide shutdown. Due to this pandemic and both local/state government stay at home orders and social distancing directives, residents are either (a) working from home; or (b) not working at all, leaving many with no other option than to stay within the community association. This leaves a heightened responsibility on community association boards to ensure the community is functioning to the best of its ability and making decisions with the health, safety, and welfare of its residents in mind. COVID-19 has left community association boards with a plethora of unanswered questions.
This four part blog series is designed to assist community association board members and managers with navigating through this COVID-19 emergency situation. Part I in this blog series addressed the Florida Department of Business and Professional Regulation’s (DBPR) Order that the community association statutory emergency powers are in effect during the COVID-19 Crisis. Part II in this blog series addresses a community association’s ability to conduct meetings during COVID-19. Part III in this blog series addresses a community association’s ability to collect assessments during COVID-19.
Assessments provide the funds necessary for the community association to fund its annual budget. As of the posting of this article, there has been no state or local mandate prohibiting the collection of assessments during the COVID-19 state of emergency. The process for collecting unpaid assessments from owners who have fallen behind is through filing a claim of lien and subsequent lien foreclosure. See generally Fla. Stat. §§ 718.116, 718.121, and 720.3085. However, Governor DeSantis’s Executive Order 20-94 effectively halted all “mortgage foreclosures” in Florida for 45 days. It also halted all residential evictions “solely as it relates to non-payment of rent,” in Florida for 45 days.
Many judicial circuits have extended this order locally to preclude the filing of any residential foreclosure actions during this time, which would include foreclosure actions by community associations for unpaid assessments. If an association has already sent all required statutory notices and recorded its claim of lien against a delinquent property, the association most likely needs to wait to file a lien foreclosure complaint until after the Governor’s Executive Order and/or local judicial circuit rules have been lifted.
An unfortunate consequence of the circumstances presented is that many owners within a community association may be out of work, or have a lessened stream of income, causing them to be unable to make timely payments on their assessments. Associations cannot waive assessments for suffering owners because the assessments are part of the association’s annual budget and are owed by all owners within the association. Associations, however, may choose to implement certain temporary board resolutions to assist owners struggling financially during this time.
For example, associations can waive the levying of interest and late fees, and suspend the implementation of formal collection action during the state of emergency for owners unable to make timely payments. Associations could also work with owners to create deferred payment plans, where the owners pay a prorated sum during this declared state of emergency and then once the COVID-19 pandemic ends, the owners can pay back the deferred amount in addition to their monthly assessments at that time.
For associations wanting to implement such measures, a board resolution must be drafted that provides for clearly articulated parameters for this temporary relief. The board resolution should be drafted by the association’s legal counsel. Once drafted, the board resolution will need to be voted on and passed by the board of directors at a properly noticed board meeting. If an association decides to go this route, the temporary relief provided for in the board resolution must apply equally and uniformly amongst all members. An association should seek advice from competent legal counsel concerning assessment collection issues during this COVID-19 declared state of emergency.