By Marc Markel, Greg Godkin and Clint Brown
The world is going through uncertain times while dealing with the Coronavirus (COVID-19) pandemic. No one is immune from the fallout of COVID-19, including our community associations. While many legal offices are closed across Texas, our law firm has been able to work remotely with little to no reduction in services. We continue to assist in any way we can during these uncertain times. As always you can reach us through any of our office phone numbers or you can reach our attorneys directly. Our attorney directory is online at rmwbh.com/attorneys should you need us.
Over the last few weeks, we have received a multitude of phone calls and emails from clients asking how their community association and condominium association should be reacting due to new regulations passed by the local, state and federal governments. Many of these questions are unique to the individual associations, yet we have developed some general guidelines that can be applied to most associations for collections, deed restriction enforcement, court actions and insurance.
As the COVID-19 pandemic has developed over the last several weeks, many of our community association clients have asked whether they should continue their collections process. The short answer is yes.
As you know, associations are considered nonprofit corporations bound by Chapter 22 of the Texas Business Organizations Code. The association relies on the payment of assessments for the various duties and obligations it must perform to serve its owners and residents. When assessments are not paid or collection action is not consistently instituted, the association’s available funds decrease which, in turn, either forces the association to draw from its reserve, which creates its own set of issues, or it begins reducing services it is obligated to provide. This can then create a domino effect where services continue to deteriorate, and more owners refuse to pay due to the lack of services received for the funds paid. In order to avoid a situation like this from occurring, the association should continue with consistent collection practices. Specifically, associations should:
- Continue with all collections processes, except for foreclosures in April and May. Your attorney will also be aware of any other Court restrictions or exceptions for the county where the association is located.
- Consider reasonable hardship exceptions for residents who are unable to make their payments as a result of financial or other hardships relating to COVID-19. When an owner contacts either management or our law firm requesting assistance, one of the first questions to ask is how the owner is affected by COVID-19. Some ways to assist affected owners includes:
- Limited abatement of late fees and interest,
- Limited abatement of assessment payments,
- Extended payment plans,
- Deferred payment plans, and
- Payment plans with lower initial payments for a short period to allow the resident to recover once the COVID-19 orders expire or lessen in severity.
Deed Restriction Enforcement
Deed restriction enforcement is a necessity to ensure the standards of the community are met. Should an association be sending deed restriction violation notices during the COVID-19 pandemic? Again, the association should be flexible in their policies at this time and take a few things into consideration including the following:
- Depending on the emergency order in place for your community, standard manager deed restriction inspections for the community may not be considered an “essential service” and thus not allowed.
- But, if an ACC violation becomes known and is sufficiently severe, a manager inspection may become necessary.
- Additionally, you may be able to rely on other residents in the community for reporting of violations. Keep in mind that “a picture speaks a thousand words.”
- All hearings should be postponed or held virtually. These include:
- If an owner must have a meeting, the meeting should be held virtually. To read more about how meetings should be conducted during the COVID-19 pandemic, please read our Coronavirus and Our Communities: POA Preparedness blog post.
Along with many of our cities and counties taking action to prevent the spread of the COVID-19, so to have our courts across the state.
- No court in Texas is conducting a jury trial.
- Some courts are having hearings on a case-by-case basis. The status of hearings with the individual courts in your county are known to your attorneys.
- Courts are continuing to process Temporary Restraining Orders on an emergency basis.
- We are advising during this time to not press the courts for hearings that are not truly an emergency.
- Statewide deadlines set by the court or rules of procedure are extended because of COVID-19.
- Many litigation services can still be provided through:
- Written discovery
- Virtual mediations
- Virtual depositions
As the COVID-19 pandemic continues to progress, associations should be reviewing their various insurance policies. We have spoken with many of our professional insurance providers, who have informed us that lawsuits related to the COVID-19 are not covered by the association’s policies. If an association has questions on its policy, please reach out to the association’s counsel or insurance agent.
The developments from the COVID-19 pandemic continue to evolve daily. RMWBH will continue to share updates on the emergency changes to the laws and what they mean for our community association clients. We are also ready to assist our clients in setting up, operating and attending any virtual meeting. Please contact us if we can help with technology.
We know this is a stressful time for many of you. Please stay safe and be kind to each other. We are thinking about all of you during this time, and if there is anything we can do please do not hesitate to reach out.