As a homeowner association (HOA) manager, you may find many of your clients going into crisis mode due to COVID-19 and its effects on life. Part of your job is helping your clients maintain a sense of normalcy. While taking care to respect local “shelter in place” laws and other regulations, try to keep the association running as smoothly as possible.
Despite your best efforts, you may wonder if your associations should stop sending out violation letters or fines. If your clients are weighing this issue, here is some helpful information you can offer as guidance. Hopefully, you can help your associations create and execute an effective strategy for getting through the COVID-19 pandemic with as few losses as possible.
Why Violation Letters and Fines Are Important
As a governing organization for the community, associations offer many services to create a desirable neighborhood for homeowners.
Homeowners who live in an association agree to abide by various rules, including noise restrictions and exterior decor regulations, to ensure a certain quality of life not guaranteed in non-association neighborhoods. It’s the association’s job to enforce these rules.
Ideally, all association homeowners and their families understand the rules and follow them completely. In reality, however, residents often violate community rules. Sometimes, violations occur out of ignorance — for example, a homeowner may not realize that their flashy holiday lights violate a guideline about wintertime decoration. In other cases, violations occur when residents disrespect the community.
Whatever the cause, the association has specific protocols for handling people who break the rules. Violation letters and fines are two of the most direct, effective ways to discourage residents from further intransigence. The association can also use these methods if residents fail to pay monthly fees.
A warning letter is usually the first step following a rule violation; however, if the behavior continues, the association can issue fines against the resident. If these fines go unpaid, the association can take further action, including revoking privileges or, in extreme cases, issuing a property lien.
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How COVID-19 Affects Association Residents
Due to COVID-19, unemployment rates have reached historic highs in the majority of states. People have lost their jobs or have seen their work hours dramatically reduced. Even as the country slowly reopens and workers return to their places of business, individuals and families may struggle to recoup the personal debts and losses incurred while they couldn’t work.
While many banks are offering special mortgage assistance, a significant number of people will still experience financial hardship — some may even lose their homes. Because of this, associations may choose to place a temporary hold on fines. In some cases, they may also give fine-owing residents a grace period until the pandemic ends.
After all, failing to collect a few fines won’t hurt the association’s finances as badly as multiple unexpected foreclosures. If your client’s association can hold out, it may be in everyone’s best interest to suspend penalty collection during COVID-19; nevertheless, there’s no reason to stop sending out violation letters.
The Best Answer May Lie in the Details
It is natural for associations navigating the coronavirus pandemic to desire clear, straightforward answers. Nonetheless, in determining whether to stop sending out violation letters or fines during COVID-19, the best solution may lie in the details. Rather than utilizing broad guidelines for all residents, take it on a case-by-case basis.
In other words, look at the circumstances surrounding the violation. Does someone owe a fee for a one-time quiet-hour violation, or are they a frequent violator with a history of poor behavior? Can you talk to the resident and find out more about their current work status? For example, many organizations are choosing to offer leniency to essential healthcare workers.
It’s also important to consider how violations may relate to the current coronavirus safety guidelines. If your client’s association is in a city with partial “shelter in place” laws or other regulations, residents who break these statutes should be issued fines to discourage other potential violators.
The key is to approach the situation with professional discretion while remaining fair and objective. Associations rely on income from residents, which includes fines. Given the economic uncertainty of the months ahead, you should discourage clients from making hasty decisions that may harm their finances in the long-term.
It’s all about finding a delicate balance that benefits both the association and the community residents.
Remember to Refer to the Association’s Governing Documents
Lastly, don’t forget about the association’s Covenants, Conditions, and Restrictions (CC&Rs), bylaws, and other governing legal documents. These documents outline the association’s emergency protocols, such as how the association can exert special powers during a crisis.
While the association’s governing documents may not include provisions specific to a pandemic, they will provide valuable information that can help your clients make decisions. Board members can cite these documents when the association issues any procedural changes based on the emergency.
At CINC Systems, we hope all associations will be able to weather the storm of COVID-19 without too much financial hardship — for the association and its members. To find out how our association management software can reduce business costs and help you save money for your clients, try a free demo.