WAIVING OF FEES….
Published April 1, 2020
We still don't know what the full impact of the virus will be;
however, based on what has occurred in other countries, we haven't
even gotten close to peaking. If that is the case, many individuals
will be without jobs, business income, and pay for a significant
amount of time. As such, we can only imagine that it will impact
certain associations financially.
In times like these, it is crucial to face the facts but also
exercises compassion. However, we have no choice but to face (with
sensitivity and tact) this situation as a fact of dealing with
community associations. The following are some simple points to
Community associations are a non-profit corporation.
The Board of Directors has a fiduciary obligation to carry out
the requirements in the community's governing documents.
The governing documents establish the assessments as a legal
requirement for compliance and fiscal reasons
The operating budget is designed with very specific required
allocations towards essential community services.
The assessments or, more commonly, the "fees" that every owner
is charged pays for these services.
The association has no other source of funds to pay for its
bills to operate the community unless they have a robust
operating account or decide to use reserves (consult an
The Board of Directors does not have the authority to forgive or
suspend the collection of assessments.
Any significant lack of payment of the assessments will lead to
an operating deficit, which leads to other extraordinary
circumstances such as special assessments, service
While large businesses, credit card companies, and mortgage
companies can forgo profit, which is not a structural component of
any community association, and they can also get federal assistance
in the form of bailouts or influx of cheap federal cash.
Associations don't have this option or sway with our politicians.
The Board does have the authority to waive late fees and interest
where appropriate, and it may also consider accommodations requested
as a result of documented hardships, but that's it.
This is not a time to panic, but more time to start strategizing.
Should this go longer than expected, your association should already
have some next steps outlined. I know at Affinity Management
Services, as a team, will be working on extraordinary efforts to
prepare for this potential economic situation. This working group
will be baking into the operational plans for our community
directives, such as reviewing redundant service, contracts, budget,
etc. Further, we are starting to analyze and will soon be
communicating three major risk factors that we must all pay
1. Associations Current Liquidity
2. Associations Receivables/ Delinquency
3. Budget Elasticity.
While some believe it’s too early to start thinking this way, we
consider it our responsibility to prepare and protect now rather
than later. As most, we are hoping it won't get like it did in 2008;
however, we will be prepared and ready should it go that way.
I'd love to hear from our readers... has any of this crossed your
mind? Are you reviewing your financials to understand your current
position? Should it go south, what do you have in mind to protect