The coronavirus pandemic has hit every household to some extent. In some cases, that means more residents are spending more time at home as work, school, and other activities remain virtual. Unfortunately, the economic disruption has also hit home, with many families struggling to make ends meet. This may impact their ability to maintain homes and pay HOA dues. HOA covenants and policies were set up for good economic times, and may not work in this chaotic COVID period.
What should property managers and board members do to remain sensitive to financial challenges, yet maintain consistent adherence to the rules? With proper communication and consistent application, you can still enforce the rules while showing compassion and even bringing the community closer together.
Offer financial flexibility and payment plans
Since the beginning of the pandemic, progressive property managers and boards have been planning for lower collections. You’ve proactively scrutinized HOA operating expenses and cut budgets to run as streamlined as possible. In order to keep paying bills, you still need income, but there are ways to show flexibility and leniency toward those currently facing financial hardship.
The two keys to success here are communication and consistency. Review applicable rules and guidelines, or contact your attorney to create a reasonable policy. Although there may be a hardship clause buried in the covenants, it’s best to communicate it so everyone knows about available options.
Remind residents that, while prompt fee payment is still expected, there may be some flexibility available to those who (confidentially) come forward. Your communication will most likely generate requests, so think about consistent application of those options as you review each situation. Be sure to document each homeowner’s request, resolution, and rationale in case the information requires review in the future.
Rather than delaying payments, consider accepting some money immediately, with consistent payments over a period of time. This will improve the chances of collecting the full balance, rather than simply delaying a lump sum payment to a later date. Consider forgoing late fees, penalties, and interest on unpaid balances is another way to support the financial needs of your residents. The loss of these fees and interest, while still often part of the budget, will have a much smaller financial impact than core dues payments.
As mentioned above, collection policy leniencies should be equally available to all residents. For those who don’t come forward and don’t pay their bills, collections policies, including fines, interest, and even liens, should also be consistently applied. It’s best to consult with your attorney before setting new policy, or making any changes to existing processes.
Apply some flexibility while maintaining community standards
Almost all HOAs have architectural standards, with the property manager or a committee responsible for enforcement. Standards enforcement is also a place where you can proactively communicate opportunities for flexibility, and then show some leniency when needed. While we can still pull weeds or move our garbage cans inside, a furloughed homeowner might not be able to paint her house right now. High risk residents may have valid concerns about allowing contractors on their property for fear of coronavirus infection. Some families may have more vehicles in the driveway and street.
When sending violation notices, consider incorporating a hardship policy where impacted residents can come forward to request flexibility in addressing violations, or additional time to complete major repairs. Consider communicating this as an emergency rule or temporary waiver, with specific start and end dates as well as mention of the types of leniency offered, so residents know what’s covered and how to request leniency.
Some rules likely should not be relaxed, like removing trash or junk from yards, unapproved home improvements, or anything that could affect the health or safety of other neighbors. In these cases, HOAs should maintain enforcement, including appropriate notices and fines.
This is a time for compassion, but you’re still running a business
As property managers and HOA board members, we want to show compassion to those suffering due to health or financial challenges, but we also need to maintain operation of our HOAs as businesses and remain fiscally responsible. Dues payment changes, emergency rules, or adjustments to violations should be reviewed with your attorney before being approved and communicated to members, and then proactively communicated to residents so they understand options available if needed. Kindness and compassion start at home, or in this case at the HOA.
As always, please contact me if you need help managing the financial health of your communities.