Articles Posted in Current Affairs

Prepared by the California Community Association Attorneys at SwedelsonGottlieb

By now, most people have heard about the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020 H.R. 748). The breadth and scope of this Act, and the speed at which it passed both houses of a divided Congress and became law, is truly remarkable in these partisan times and speaks to the gravity of the COVID-19 crisis.

The Act is a massive stimulus bill that contains a variety of different programs of grants, loans, credits, debt forgiveness, and tax changes. Each of these programs is administered differently and has different criteria for eligibility.

Two of the Act’s provisions have become of particular interest to community associations: the federal Small Business Administration’s (SBA) new Emergency Economic Injury Disaster Loan Advance Grant program (the EIDL Loans which are available to HOAs), and the Paycheck Protection Program (the PPP which is not currently available to HOAs).

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The COVID-19 pandemic has disrupted the community association industry both in terms of operations and morale. Community association members, board members, and community managers are presumably staying home to avoid contracting the coronavirus, and are not meeting in person. This seems to have led to a reluctance, by some association boards, to conduct business. Further, the social distancing requirements imposed by our State and local governments are eliminating social interaction that is critical to the functioning of the community.  Along with this, the fear and uncertainty of the COVID-19 pandemic has altered the mood and attitude of board members and professionals involved with operating the community association.

The disruption has become apparent and severe. However, we must examine the “silver linings” and “play with the cards we have been dealt” – so to speak – in order to preserve the integrity of our communities and functioning of same. The business that needed to be done before we all retreated to our homes to be safe still needs to get done and the longer boards wait to do that business, the more likely it is that there will be complications. Below are a few ideas that board members should consider moving forward in the face of this pandemic that may last for months.

1. Meetings.  While in-person meetings should be avoided, associations may still be able to conduct meetings via conference call and/or videoconference (e.g., Zoom). The Davis-Stirling Act sets out a procedure for telephone conference meetings, but the Code requires that someone be at a physical location where the owners can listen to the call via speakerphone and participate during open forum. We believe that the ongoing pandemic would warrant a substantial compliance approach. That is, associations can conduct the meeting via telephone or video conference and attempt to comply with the applicable statutes, as much as possible, while at the same time complying with the State and City social distancing orders now in effect. This way, associations may still conduct business and hold meetings so that the common area components continue to be maintained, insurance policies do not lapse, and other obligations like enforcement of the Governing Documents are met.  In other words, California community associations can still function while the board members and management are at the same time complying with government mandated social distancing requirements.