As we continue to move through the unchartered territory of the coronavirus, we will try to keep you up to date on the various questions sent our way. Here are a few more:
- What is the fiduciary duty of the Board when it comes to the general welfare of the residents and keeping them healthy?
First the Board owes a fiduciary duty to the association and not the individual members of the association.
Second, this duty includes, among other things, the duty of the board to act in good faith, prudently, and in the best interests of the association. So when evaluating options, you should be making informed decisions according to the interests of the corporation.
As far as the scope of this duty, it does not mean you have a duty to be a virus specialist, health expert, nurse, epidemiologist, etc., or take on additional roles you might be tempted to take on in the pursuit of advancing the welfare of the residents. Your duty requires you to exercise prudence in your role as a board member. You should not be looking to assume additional roles, as this invites liability. If you take on an additional role, then you own that role and all that comes with it.
Third, look to your Articles of Incorporation for the general purposes of the association. A good number of them identify as a purpose something along the lines of “To promote, foster, and advance the general welfare of the residents.” If that is one of your association’s purposes, then it must adhere to such purpose.
That being said, the Board’s specific powers within which to carry out the association’s purposes are identified in the governing documents and/or Colorado law. The Board should not exceed any such powers. And, if it is unsure of its scope of powers it should consult with the association’s legal counsel.
For example, while you may think it is in the general welfare of the residents to live in a virus-free environment, most likely you do not have the power to enter into everyone’s homes to clean and disinfect everything. Then again, you most certainly do have the power to clean and disinfect the general common areas.
Ultimately it is up to the board to act in the best interest of the association when responding to COVID-19, as long as it is acting within the scope of the association’s governing documents.
As far as a duty to keep residents healthy during this pandemic, see our prior blog. But the general message that should be conveyed to residents is this: You have the responsibility to keep yourself healthy.
- What responsibility does the Board have when it comes to closing common area amenities?
As with the last question, look to your governing documents for authority and limitations with respect to common areas. Most likely the Board has general authority to regulate the common areas, including the closure of recreational facilities and other common area amenities. This does not mean you are required to close down the common area amenities, as it is up to the Board to make an informed decision on whether this is the right course of action for its particular community.
For example, since 55+ communities are high-risk communities, and given the government’s recommendation for those over 55 (or with underlying health issues) to avoid crowds, it would be reasonable for boards to close any facilities that encourage crowds or close proximities for the duration of the pandemic. For a different community that has a lesser risk, low level of clubhouse use or little traffic, it might make more sense to temporarily close the facility while the association performs extensive cleaning, disinfecting, or wiping down of the areas, then re-open the areas with clear protocols for use during the pandemic.
Also, when exercising prudence the Board can rely on experts and others to inform its decision. For example, you may look to governmental and CDC mandates and guidelines in determining whether to close down facilities, or local government decisions to close recreational facilities or restaurants when determining whether to close your common area amenities.
- Can an association request that any residents impacted by the virus notify management? What responsibility does the association have on their end once notified?
We do not recommend this course of action because it implies that the board or management will then be monitoring positive cases and/or making sure people are complying with quarantine orders. This is not your role.
If, on the other hand, the association does have knowledge that someone has been exposed to and/or contracted the coronavirus, it may want to send a general communication to the community that if anyone has tested positive or is showing symptoms of the coronavirus, to self-quarantine. Then direct them to helpful resources such as the latest guidance and updates issued by the Centers for Disease Control and Prevention.
This is somewhat similar to the recommended course of action when an association discovers there is a registered sex offender in the community. We wouldn’t recommend identifying who is a registered sex offender and providing the list to the residents, or monitoring the whereabouts and activities of the sex offender. Instead, we would recommend directing your members to the resources available online.
Again, it is important that residents understand that they have a duty to keep themselves safe and healthy. So provide your members with resources so they can take steps to keep themselves healthy.
That being said, if the Board decides to move forward with a request to self-report, any self-reporting should include an affirmative written statement from that individual stating that the Board and/or management company can disseminate this information to the membership, and that the Association has no control or responsibility if that information is further disseminated by those in the community.
- Can we decide not to levy assessments and/or suspend collection activity during the pandemic?
We recognize that many are in the unfortunate situation of having very little to no money coming in to pay bills, mortgages and, last but not least, HOA assessments.
While it might be tempting to cease the levying of assessments for a period of time to help people catch up, your governing documents most likely do not allow for it. Most documents state that the association shall levy assessments on a monthly, quarterly or other basis.
And, even if your documents expressly allow you to suspend the levying of assessments, keep in mind that your decisions must be made in the best interests of the association, not in the interests of owners who may be in a financially difficult situation due to COVID-19. Assessments are the lifeblood of the association; it needs them to function appropriately.
Keep in mind that whatever action you take with respect to assessments today, in reaction to the virus, may have a severe impact on the association four months from now. So you need to make a reasoned decision and look not only at today’s financial circumstances in light of COVID-19, but tomorrow’s financial health.
With respect to the collection of delinquent assessments, on the other hand, it is reasonable to waive late fees or interest, or allow for longer payment plans to assist homeowners in catching up. But generally, the association has a duty to collect. And if you are considering anything other than a waiver of late fees/interest or extending the period of delinquency before you send it over to collections, consult with the association’s counsel first.
Stay tuned for more guidance! And if you have any questions on the above, please contact any of the Altitude Community Law attorneys at 303-432-9999.
Also, keep in mind that what we say today, may change tomorrow, as additional mandates and guidelines come from our government and the CDC. It is important to note that this post should not be considered legal advice but, rather, guidance to help you maneuver COVID-19. Ultimately if you have questions about your specific association, you should seek advice from your association’s legal counsel.