Now that it has become clear that the Paycheck Protection Program is not available to these community associations and there aren’t a lot of other programs out there right now, boards need to focus on making sure common charges and rent are paid and that collections are pursued. 

With the local governments putting holds on foreclosures, summary proceedings and other lawsuits during the pandemic, community associations are at a slight disadvantage in trying to collect common charges or rent.   While court proceedings are stalled for the time being, predicate notices under a coops’, condo’s or HOAs’ governing documents should be satisfied and boards should be vigilant with their collections.  

There are tactics that associations can take to collect without a formal court proceeding being started.  For example, condos in New York can ask tenants of non-paying owners to pay their rent directly to the condo rather than to the owner who is in arrears.  If done correctly, it can be a very effective way of collecting without a lawsuit.

Economic Impact Payments by the IRS under the CARE Act should be arriving shortly in owners’ and tenants’ bank accounts.  The government just opened up a portal for people who do not qualify to file tax returns, to apply for their stimulus money.  Click here.  That stimulus money will be used however recipients want to use it.  Paying common charges or rent should certainly be a top priority. 

Perhaps this is a good time before the stimulus money is spent, to remind apartment owners of the importance of paying common charges or rent.  If collections in an association are not an issue, perhaps a letter to owners commending them on their continued payments and how those payments have allowed the association to continue weathering the pandemic.  Sometimes people forget, and have to be reminded, how important their payments are to the community.  This reminder may help assure their continued payments in coming months which may be difficult for them.

Now that we are in the second week of April, boards should examine collections and take collection action sooner than later.  As May comes, if the economy is not restarted, collections may fall off even more so and it is  important for association to remain vigilant in collecting arrears.  A reminder to owners about the importance of continued payments during these hard times may persuade them to use their stimulus receipts on their common charges or rent, instead of for some non-essential purpose.