What You Need to Know: Community Associations Operations and COVID-19
As Boards and management companies continue to deal with COVID-19’s immediate impact, it is difficult to focus on other operational issues.
But, as we all adjust to the “new normal” for the time being, the business of the Association still needs attention. Below are a list of some of the common operational questions and general answers. If you would like more detail, please contact one of the community associations attorneys at Lerch, Early & Brewer or your community’s attorney:
1) How do we hold Board Meetings?
Answer: The CDC has recommended against gatherings of more than 10 people. In Maryland, Governor Larry Hogan has gone a step further to prohibit gatherings of more than 10 people.
With certain limited exceptions, community association board meetings must be open to the membership, and provide an opportunity to the members to make comments during the “open forum” portion of the meeting. Boards can arrange meetings by a telephone conference call-in line or through video conferencing. All members should be provided with the call-in, log-in information and additional instructions. Then:
- To facilitate order, the members should be asked to submit their comments or questions in advance of the Board meeting, or, if they wish to make comments at the meeting, to submit their names ahead of time to be placed on the commenters list.
- At the beginning of the meeting, the Chair should remind the members a) this is a Board meeting, b) everyone should mute their phone, c) the Board will be conducting business, and d) those members who submitted their names to be placed on the commenters list will be called on during open forum.
- If comments are permitted ad hoc on the call, the Chair should remind each commenter to start by identifying him or herself.
2) What if we cannot hold our annual meeting?
Answer: If it is impractical to hold the annual meeting, even for the limited purposes of counting the votes, in most situations, the annual meeting can be delayed. The current directors will continue to serve during this holdover period. Most community association bylaws provide something similar to, “the Directors shall hold office until their successors have been elected and hold their first meeting.”
During this holdover period, we recommend the Board refrain, if possible, from making any decisions that could be considered controversial by the membership. If your bylaws require the annual meeting to be held on a certain date, you should contact your legal counsel to advise how best to proceed.
3) How do we limit interaction with the on-site staff?
Answer: All members should be encouraged to communicate with staff by email or phone. If you have a front desk that is being staffed, to encourage social distancing we recommend placing a sign and/or tape on the floor to indicate how far back the resident, contractor, or visitor needs to stand to communicate with the front desk.
4) How do we address tot lots and playgrounds?
Answer: As it is likely impractical for tot lots and playgrounds to be sufficiently disinfected to meet CDC recommendations, we recommend closing the tot lots and playgrounds.
Some communities have tried taping off the tot lots and playgrounds, but the wind or others have caused the tape to become dislodged. If you choose to close tot lots and playgrounds, we recommend sending a notice out to the membership, by email if you can, and posting on your website that the tot lots and playgrounds have been closed due to COVID-19 concerns. If the tot lot or playground is fenced with an access gate, you should lock the gate. Signs should be placed at the tot lot and playground that states, “AREA CLOSED DUE TO COVID-19” or “AREA CLOSED - NOT DISENFECTED FOR COVID-19.” If you choose to keep your tot lots or playgrounds open, a sign should be placed at the tot lot or playground that the tot lot or playground has not been disinfected for COVID-19.
We appreciate that this is a conservative approach from a liability perspective and such a sign may cause alarm, but we believe it is important to notify all caregivers that tot lots and playgrounds have not been disinfected for COVID-19. We also feel that this is an opportunity for the communities to further the goal of social distancing.
5) What happens if we cannot adopt the annual budget?
Answer: Many communities operate on a June-May fiscal year. This means for many, budget season is here. Depending on how far along you are with the budget preparation, it may be still possible to adopt the budget timely, and you should do so if possible. However, if this is not possible, most community association governing documents contemplate a delay in the adoption of the budget.
If delay occurs, the previous fiscal year budget (2019-2020) will remain in place until the new fiscal year budget (2020-2021) is adopted. Once the new fiscal year budget is adopted, any increase in assessments will be prorated over the remaining months of the fiscal year, e.g., if the new budget is adopted to commence on August 1st instead of June 1st, the increase will be prorated over 10 months instead of 12 months. It is important to communicate to the membership what course of action the Board intends to take, and the impact on the members, especially if new coupons are not going to be printed for the June 1 payment.
6) What should be done about pool season?
Answer: It is important to communicate with your pool companies to work out a plan and ensure that they will be prepared to move forward with pool opening requirements and staffing if and when the pools can open.
7) Should we waive all assessments for April and May to be compassionate?
Answer: We applaud Boards for their desire to assist those members in need. The Board however has a responsibility to the Association as a whole to do what it believes is in the best interest of the Association. We do not recommend waiving assessments. An Association’s budget is based on anticipated expenses of the year and many of these expenses will still come due. Such a blanket waiver would reduce the needed income to meet expenses and will likely result in a significant budget shortfall.
To address a shortfall, the Association will need to raise assessments significantly the next year. For similar reasons, we also discourage allowing for deferred payment of assessments (for example, deferring payment of April and May’s assessments to June or July). It is unclear how long the economic effects of the pandemic will last and owners may get too far behind to catch up on their assessments.
As alternatives, a Board may wish to consider:
- Waiving late fees and encouraging owners to communicate to the Board if they have a hardship due directly to COVID-19 to see if a payment plan can be worked out.
- Simply encouraging owners to communicate with management if they are unable to make regular payments because of COVID-19 and see if a payment plan can be worked out.
Any adjustment in the assessment payment requirements must be clearly stated in writing and communicated to the membership.
8) Should landscaping work continue on the common areas?
Answer: In Maryland, landscapers are exempt from Hogan’s closure order. As the spring growing is upon us, please confirm with your landscaper that they will continue to perform services and what protocols they will follow to comply with social distancing requirements and otherwise avoid the spread of the virus.
9) Should we continue to move forward with covenant enforcement?
Answer: The Board may wish to be selective about what enforcement it takes, knowing that remedying certain maintenance related issues may be impractical. But, to the extent that there are behavioral violations or architectural violations, those should continue to be addressed.
10) What about Architectural Applications?
Answer: Many HOA declarations give a specified deadline to approve or reject an architectural change application or the application will be deemed approved. To the extent that architectural change applications are received, they should continue to be processed timely to avoid a “deemed approved” result from failing to respond.
11) How do we limit use of communal mail boxes?
Answer: In addition to encouraging social distancing and following CDC guidance, you may encourage your members to take advantage of USPS’s notification service, where they can receive daily notifications of grayscale images of the exterior, address side of letter-sized mail pieces scheduled to arrive. For more information about this service, visit https://informeddelivery.usps.com/box/pages/intro/start.action.