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  California's Leader in Community Association Law March 18, 2020
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COVID-19 QUESTIONS

Delinquent Assessments. Now that we are crisis mode, how do we handle owners who are losing their jobs/income? Don't really want to see people losing their homes due to this crisis. What if the HOA can't pay its bills? What are your thoughts on how to best handle this situation? -Sandy A.

RESPONSE: The crisis will end at some point (hopefully soon) and businesses will restart. I recommend boards place a lien on delinquent properties to protect the association’s interests, but suspend all foreclosure activity. Once people return to work, you can work out payment plans with delinquent owners.

Permanent Job Loss. The more difficult scenario will be those persons who permanently lose their jobs. They will be looking for new jobs once the economy reengages. How long do you wait for them to find work? What if they can't? When you get to that point, you will need to discuss options with legal counsel and decide how best to proceed.

Drop in HOA Revenue. If delinquencies impact cashflow, associations still need to pay their bills. If boards need to, they can borrow from reserves. Without a vote of the membership, boards are allowed to borrow from reserves to meet short-term cashflow problems. (Civ. Code §5515(a).) Monies borrowed from the reserves must be repaid to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the association, temporarily delay the repayment. (Civ. Code §5515(d).) 


Postpone Annual Meeting? Our HOA is in the midst of an election. Our annual meeting is at the end of March (31st). The election results are to be tallied then and new board members announced. Our recent board meeting was canceled because of the COVID-19 Virus. What do you recommend we do in order to complete the election? -Cleona W.

RESPONSE: Two days ago, Federal health officials limited the size of all gatherings to 10 people. Yesterday, Orange County's Health Officer prohibited all public and private gatherings of any number of people, including at places of work. These orders highlight the importance of avoiding public gatherings.To protect your membership from the spread of the coronavirus, you have two options.


Option 1. Suspend the Annual Meeting. Suspend your annual meeting until the coronavirus crisis passes. At that point, reschedule the meeting, have the inspector of elections bring in the ballots, open them in front of the membership and tabulate the results. At that point, new directors are seated. Until then, existing directors remain in place. 

Option 2. Suspend Attendance but Count the Ballots. Your second option is to suspend membership attendance at the annual meeting but have the inspector open ballots and tabulate results. To protect the inspector, the counting could be done at the inspector's office. That way, the inspector avoids traveling to and working in an area that may already be contaminated. The downside is that members cannot observe the counting of ballots. Even thous this is contrary to the requirements of the Davis-Stirling Act (Civ. Code §5120(a)), I believe it is acceptable under the circumstances.

The option you choose is a business decision for the board to make in consultation with legal counsel. Once a decision is made, make sure you communicate it to the membership.

Rules Enforcement. Should we suspend parking rules? College kids are coming home, so there are lots of extra cars in the community. -Bob W.

RESPONSE: Earlier this week, Los Angeles indefinitely suspended parking tickets for street-sweeping violations. It would make sense for boards to suspend enforcement of rules that are somehow impacted by the coronavirus. Parking seems to be one of those rules. Boards need to be smart about how they handle this unprecedented crisis. They should not be heavy-handed and make the situation worse.

Kudos #1. Great effort Adrian during unprecedented times. Thank you. -Mike P.
 
Kudos #2. Just a quick note to you (and your team) to express my sincere thanks for all you are doing, through your newsletter updates, to keep our industry on the leading edge of this scary situation. Your comments, advice and humor are very helpful and informative. -DS
 

Teleconference Meeting. One of our associations has no onsite office and is a good distance from our management office. Every meeting place in town is closed down due to coronavirus. We have time-sensitive business to conduct but it is not executive session material, so we need an open meeting. Without a physical location to meet, could we hold an open meeting via teleconference or web ONLY? -Kevin K.

RESPONSE: Yes, you can hold it via teleconference or web only--even if members object.

Online Platforms. Adrian, many of the online meeting platforms (zoom, skype, go to meeting etc.) have free versions that can easily handle a small board meeting, even allowing members to watch or listen, and contribute verbally or in a chat feature. This is FAR superior to a conference call. Some special rules may be needed as far as recognition, voting procedure etc. -James S.

Swimming Pool. If an association has a pool for the HOA community, what is your advice as to whether it should remain open? -Larry H.

RESPONSE: Close it.

Closed Gym. Thanks 4 all your hard work. Seems insane to close those things that keep us healthy? {i.e. our gym} People have been incredibly diligent in following protocol--the machines have never been cleaner. Many of our health depends on using this gym daily. I understand what is going on around us. Felt this needed to be said. -Bonnie J.

RESPONSE: Right now, stopping the spread of the virus is paramount. Let's hope it soon passes.

Gym/Spa/Pool. We are in the City of Los Angeles. The HOA maintains a gym and pool and spa. The pool is currently not heated and nobody uses it. However the spa is heated. Should the spa be turned off and the gym closed to the community? -Barry G.

RESPONSE: Yes. Some knucklehead will use the gym, catch the virus and sue the association. It seems unlikely they could win, but you would still have to defend the suit and it's unpredictable what juries will do.


 
Boards can contact us for friendly, professional advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS|STIRLING PLC
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