Money Matters: Maintaining Your Clients’ Financial Health During — and After — the Coronavirus
The cororonavirus crisis has shaken the foundations of the economy, and savvy community association boards are already thinking about the implications for their financial footing going forward. In particular, many boards can expect to deal with owners struggling to pay their assessments.
While compassion certainly is warranted, boards may find their hands more tied than they realize. After all, they owe their fiduciary duty to the association itself, not to owners who might find themselves in dire financial circumstances.
Governing documents generally state that the association “shall” levy assessments, meaning boards usually don’t have the option to suspend assessments altogether. Even if they do, boards must understand that such well-intentioned approaches generally are ill advised.
“What people aren’t comprehending is that these vital services have to continue, and you still have the utilities, the ongoing maintenance,” says Katie Anderson, CEO of Aperion Management Group, LLC, which manages around 65 associations in Central Oregon. “You’re not abating any costs enough to say we’re going to stop assessments.”
Sandra Gottlieb, a founding partner of California homeowner association law firm SwedelsonGottlieb, seconds that sentiment. “The one thing we learned from the Great Recession in 2008 is that costs are constant. They don’t go anywhere.”
Boards do have some discretion in addressing assessment delinquencies, though. “The advice we’re giving is that, as a nonprofit corporation, you still have a fiduciary duty to operate,” says Kevin Hirzel, managing member of Hirzel Law, PLC, a Michigan-based firm that works with community associations, “but there are steps you can take to be more sensitive.”
To explore some of those steps, read our new article, Dealing with the Financial Fallout of a Public Health Emergency.