Guiding Your HOA Through COVID-19

Recommendations for Governing with Lenience During a Pandemic

Although some industries have been effectively shut down during the COVID-19 pandemic, the governance of HOAs has not been halted, and HOAs are still reliant on the receipt of assessments in order to pay the HOA’s ongoing bills. Unfortunately, Owners may have been financially impacted or may have lost their jobs due to the pandemic.  As such, HOA Boards may be receiving requests for leniency from those Owners who have been financially impacted.

 Entities Advising for Leniency

-       Community Associations Institute (“CAI”): has encouraged the waiver of late fees and penalties on Owners who face financial hardships, has released a moratorium on foreclosures until June 1, 2020, and has advocated for the relaxation of collection policies.

-       Colorado Attorney General: has encouraged creditors to be more lenient when collecting debts.

-       Colorado Department of Regulatory Agencies (“DORA”): has encouraged HOA Boards to consider a moratorium on collection activities, fees, and foreclosures.

Leniency Options

The Board does have options to provide some leniency during this time:

  • Enact a Policy.  Boards can enact a policy addressing when and how the Board will provide leniency during these times, whether providing leniency for all Owners or on a case-to-case basis.

  • Request Financial Hardship Evidence: Boards could require that Owners provide evidence of pandemic-related financial hardship (e.g., paystubs documenting reduced hours or documentation from the Owner’s work that shows that the Owner has been furloughed, laid off, or let go), which can be used as the basis of who would receive leniency. 

  • Waiving Soft Costs:  Boards have full discretion to waive or not apply “soft costs,” such as late fees, interest, and covenant enforcement fines.  HOA Boards do NOT have the authority to waive assessments. 

  • Put Collection Actions on Hold:  Boards can choose to put collections actions & foreclosures on hold until the economy becomes more stable.

If a Board decides to provide leniency on a “case-by-case” basis, the Board should have specific factors they rely on to determine whether Owners shall receive leniency or not, so as to avoid liability or accusations of providing leniency on a discriminatory or biased basis.  

Interested in Enacting a Pandemic Policy?  Contact us at: info@westernlawgroup.com | (720) 542-8724  

THIS IS NOT LEGAL ADVICE. FOR INFORMATIONAL PURPOSES ONLY.

Gabriel Stefu