Answers to Legal Questions During a Pandemic
Adjusting to life during the Coronavirus pandemic has been a challenge, but thousands of community managers, volunteer board members, and business partners continue their dedication to serving communities throughout California. The following are questions that we continue to receive from our clients and our recommendations for dealing with these ongoing issues. Please note, this is the best advice available to us as of the time this article was written, but things change daily. Please check with one of our attorneys or your own independent legal counsel before implementing any new policies or procedures.
“What is the best option for handling annual membership meetings and regular board meetings while the social distancing orders are in place?”
As you will recall, our original recommendation was to postpone all non-essential board meetings and membership meetings. Corporations Code 7510 allows the board to suspend the annual membership meeting for up to 60 days after the date designated in the governing documents, or to within 15 months of the association’s last annual meeting. As we are now entering the third month of lockdowns due to the COVID-19 pandemic, and it’s clear that social distancing is going to be the new normal for the foreseeable future, it’s time to reconsider that strategy if you haven’t already.
We recommend holding virtual meetings, as authorized by Civil Code 4090(b). The problem inherent with this approach is that the statute requires that the notice of the teleconference meeting must identify at least one physical location that members of the association may attend and observe the meeting. Thus, an association cannot concurrently comply with both the Civil Code and the “stay home” order. A reasonable compromise is to hold teleconference meetings without designating a physical location for members to attend. Instead, we recommend that the association should do everything it is capable of doing to provide the members with the ability to “attend” the meeting remotely. This may include a teleconference call in number and/or a video conference link on the notice of the meeting so the members may attend by phone or video conference services such as Zoom. Other than not designating a physical location, these meetings should fully comply with all other requirements of the Open Meeting Act, including providing a member forum.
To add a layer of protection, we recommend that boards formally adopt a resolution temporarily suspending all in-person meetings and adopt a policy on teleconference and video conference meetings. Our office prepares these resolutions and policies for our clients for a low flat-fee. Please feel free to contact us for more information.
“We have many homeowners who are out of work and the board wants to help alleviate the hardship. What are our options?”
The board of directors has a legal obligation to collect regular and special assessments sufficient to perform its obligations. Likewise, the members of your communities have a legal obligation to pay those assessments. COVID-19 has not changed the fact that assessments are the only revenue source for the association or the fact that the association has ongoing duties and obligations imposed by law and their governing documents. As unfortunate as it sounds, homeowner associations simply are not in the business of providing financial assistance to their members.
Boards should therefore continue to accurately account for the money owed and take all steps necessary to collect delinquent assessment debt. Specifically, this means sending pre-lien letters to delinquent homeowners at the earliest date allowed pursuant to the Association’s collection policy, and subsequently recording a lien to secure the debt, even though enforcement of that lien through foreclosure may currently be stayed. With that said, boards may want to give additional consideration to approving payment plans and perhaps agree to longer repayment periods than normal. Additionally, soft costs, such as interest and late fees, which do not affect an association’s budget, can be forgiven if the member is making good faith efforts to become current.
With delinquencies on the rise we can also expect to see an increase in bankruptcy filings in the near future. Now would be an ideal time for boards to review their collection policy and standards for payment plans to ensure they are compliant and in the best interest of the association. Our office would be happy to review and revise these documents as needed. Please contact us for more information.