In challenging times like these, with people losing their jobs and more economic hardships expanding all around, we can almost certainly expect to see a rise in delinquent assessments in our HOAs and condo associations.
For those of us who were around during the 2008 economic crash, we all saw a huge spike in delinquencies. We also saw a lot of financial hardships, loan modifications and forbearance. Hopefully this isn’t as severe or as prolonged but we can always prepare ourselves for the possibility of high delinquency rates.
What can your association do?
At the end of the day, your community is a small government and has expenses and needs in order to function. These expenses cannot be avoided. Our first step is to plan for the worst and hope for the best.
First, anticipating a high number of filings for financial hardship will help you stay ahead of the curve. One thing you can implement is a strict policy on what qualifies for financial hardship. Speak with an attorney as to what you can legally require tenants and owners to prove. One of the unfortunate things we saw in 2008 was a large number of people filing for financial hardship who did not technically qualify. For this reason, it is justified to have a questionnaire or process to identify those in your community who actually suffer from financial hardship.
Another option you have is to place a lien on a home. This can only happen after due notice has been given (30 days for condos and 45 for HOAs). Foreclosures and evictions have been placed on hold by the government through April, and we will wait and see if this is extended. But a lien can still be placed on delinquent assessments.
Finally, look at everything on a case-by-case basis. Judging a financial hardship should be an objective process, but practicing compassionate leniency is more subjective. One thing you don’t want is word getting out that fees or interest are being waived across the board. We all know how news spreads in our communities. So, measure each case on its own merits and use the financial hardship gage to decide how to best handle each individual situation.
It’s tough in times like these to have to play the role of a debt collector, but, again, your association must pay the bills, just like everyone else. We know these are challenging and stressful times. If you need advice on what to do with your community’s delinquent assessments you can contact us today.