Community Associations and COVID-19
Community Associations and COVID-19
In the past several weeks I have spoken to many Clients with questions on how their Condominium or Homeowners Association may or must respond to COVID-19 and the myriad of Federal, State, and local orders. My intention is that this writing will briefly address some of those common questions. For the purpose of this writing I have based the information on the current orders in place for Broward County, Florida. If you have specific questions based on your County or your Association Declaration please do not hesitate to contact me.
How does a Florida State of Emergency effect how my Association operates?
The Division of Business and Professional Regulation (“DBPR”) has issued a statement for all Condominiums, Homeowners Associations, and Cooperatives governed by Florida Statute Chapter 718, 719, and 720. It provides that while Florida Statute was drafted with the intent that the State of Emergency be reserved for physical damage to properties, such as with a hurricane, the current State of Emergency has the same application. Therefore, the Association may operate with emergency powers under Florida Statute and your Declaration.
What emergency powers does my Association have?
Florida Statute provides that an Association may cancel or reschedule Board meetings as needed. When a meeting does occur, it may be in an unconventional place. The Association may determine that a portion of the Association is unavailable for entry/use. The Association may be able to levy assessments or borrow money without a membership vote. In general, the Association may take such action as is “reasonably necessary to protect the health, safety, and welfare of the Association,” owners, and guests. Your Declaration may provide greater or fewer emergency powers.
How does my Association conduct a Board meeting?
As of the date of this writing, the Federal government has issued guidelines which require social distancing of at least 6 feet between individuals and bans gatherings of more than 10 people. This makes in person Board meetings virtually impossible. Fortunately, Florida Statute has been modernized in recent years to incorporate technology. Until such time as the social distancing and gathering restrictions are lifted, I recommend that all Associations conduct their regular Board meetings via phone conference or video conference. If owner participation is needed, I would encourage you to have a separate line for owners to submit questions/comments without interrupting the meeting. If a separate line is not possible then you may instruct owners to submit questions/ comments via writing prior to the meeting or via the video service you are using. To a large extent, the technology that the Board is comfortable with using will dictate the process. Again, your Declaration may have some additional items that require consideration.
How does my Association conduct an Annual or Membership meeting?
Right now, I recommend you postpone any membership meeting so that you can acquire and test the necessary technology to conduct a meeting that will involve substantial meaningful participation from owners, including voting. Keep in mind that any proxies you have received are good for up to 90 days from the date of the originally scheduled meeting. The Board, management, and attorney should work together to ensure compliance with the Association’s Declaration in rescheduling and conducting the meeting.
Can the Association close a portion of the Association property? And should you?
Yes, under the Florida Statute emergency powers you can close a portion of the common elements. If any portion of the common elements is used in a manner which violates social distancing or gathering guidelines then you should close it, this would likely include pools, spas, and gyms. The Association may also close party rooms or gathering spaces to the extent they may be used for gatherings of more than 10 people. If your Association has an onsite management office and your manager is going to continue to report to work in person, I recommend you limit the office to only necessary occupants and visitors. Keep in mind you cannot prevent access to the condominium units or homes, so common hallways, foyers, elevators, stairways, and the like must remain open.
Are the Association employees essential and therefore able to continue to report to work?
Here I will use Broward County as an example. The Broward County order is substantially similar if not identical to many County orders across the State. Please ensure you are complying with your County and/or City orders in this regard. Under the Broward County order, Association managers and personnel that provide maintenance, cleaning, and garbage services are essential and should continue to report to work. If your Association has fewer than 5 employees and they can complete their jobs while maintaining the appropriate social distancing then they should also continue to report to work. Excerpts of the Broward order are included at the end of this memo for your reference. As a best practice note, if you have employees who can perform their functions remotely, I would encourage you to have them to do so.
What happens if someone in the community tests positive to COVID-19?
This is a difficult question that raises several legal issues. The Association should not be actively inquiring about the medical status of residents or guests. However, if the Association acquires actual knowledge that someone has tested positive for COVID-19 it is my opinion that you have a duty to notify all owners and residents. However, you must keep the address and identify of the individual confidential. The Association should also ensure it is taking all appropriate precautions to comply with social distancing, limited gatherings, and if possible, increase cleaning of common areas.
How does the Federal Stimulus affect Associations?
The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) has been signed into law. The 800 pages of text allocate over $2 trillion in federal money to bolster the economy during this difficult time. Under CARES, Associations may be eligible to apply for a loan to cover payroll costs. If the funds from the loan are used to in compliance with the Stimulus then the loan, including interest may be forgiven.
Can the Association continue to collect assessments? And should you?
Yes, on both accounts. Without assessment income Associations are unable to provide basic services to the owners and residents. The 2008 financial crisis is all too fresh in many of our minds. I recommend that Associations continue to aggressively pursue collection of assessments. A strong collection strategy that begins when an account first becomes delinquent will reduce the amount of bad debt in the long term. It will also help owners who become delinquent to structure their income and debt so that they can make payments or other arrangements to resolve it quickly. Please note that Congress is currently debating a bill which would be a complete stop on collection for a proposed 120 days after the State of Emergency is lifted. Ensuring assessments are collected now will help insulate the Association from any future pause in collection.
Are short-term rentals permitted?
No. As of March 28, 2020 and continuing for at least 14 days, Governor DeSantis issued an executive order banning short-term rentals. A short-term rental is any rental which is less than 30 days. The ban applies to new bookings as well as any occupant whose rental period began after March 28, 2020. I would expect this order to be extended until at least April 30, 2020. Enforcement of this ban is being handled by DBPR.
How does the Association timely complete its financial reporting?
DBPR has issued a statement that the deadline to comply with financial reporting has been suspended and tolled. A new deadline has not yet been established.
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