By: Kiki Dillie
For those of us that were involved with associations in the late 2000s and early 2010s, collections were difficult. The economy was in a recession and people were unemployed or underemployed. Homeowners often owed more on their homes than they were worth and mortgage companies were foreclosing at an alarming rate. Collections were difficult because there just wasn’t enough money to go around and everyone understood that.
The great recession lasted a long time, but COVID-19 hit the economy very quickly and collecting is now difficult for new and different reasons. We are working from home or not working at all. There is the promise of the world returning to normal soon, but the information and rules are changing daily and no one can tell for certain when that normal might return or how normal it will look. Will people have the same amount of disposable income in June as they did in January? No one knows, but for many of us, probably not. The COVID-19 pandemic hit quickly and there are so many unknowns that making decisions seems impossible.
Despite all the uncertainties, associations cannot afford to delay collections of assessments. Associations base their budgets, including the payment of bills, on the assumption that homeowners will pay their assessments. It is unlikely that an association’s bills will be reduced as a result of COVID-19. In fact, some associations are paying higher amounts for contractors to clean common areas more frequently than they did before COVID-19. Therefore, it is imperative to an association’s economic well-being that homeowners pay their assessments when due.
On the other hand, many homeowners currently have no income or less income than normal. In these cases, associations can make some temporary concessions to help homeowners during this difficult time. Some associations are stopping late fees and interest from accruing on balances for several months. Some associations are allowing longer payment plans than they otherwise would, to make the monthly payments a little smaller during this time.
Additionally, the stay at home order has resulted in the temporary pausing of some types of collection efforts. While Colorado has not ordered all collections to stop, courts are closed to the public, except for some emergency cases that do not include collections. Many court appearances are being rescheduled, sometimes multiple times because the courts’ reopening dates are continually changing.
Some courts have stopped allowing garnishments for a short time, others are allowing garnishments. Some courts do not require appearances in person, but are having appearances by video or phone, and are carrying on business as usual. At this time, what we legally can and cannot do in a particular situation is being determined on a daily basis by the courts. At some point within the next few months, the courts will reopen and the cases currently on hold will resume immediately.
During this time of uncertainty, boards are caught in a tug of war between their obligations to collect assessments for the good of their communities and their desire to be ethical and good neighbors. Associations are, after all, non-profits that exist to provide services to the homeowners and maintain property values. However, if homeowners don’t pay their assessments, associations will be unable to uphold these obligations and property values will decrease.
None of us know what tomorrow will bring. As of now, boards need to do what is best for their associations as a whole. We encourage boards to collaborate with their homeowners and reach collection solutions that work for both parties.
If you have questions about collections during the pandemic, either before they are sent to attorneys or after, please contact us at 303.432.9999.