By: Tracy Danner-Bond, Esq.
Q: What should we do in preparation for an increase in delinquencies due to the COVID-19 pandemic?
A: Check out Greg Fioritto’s article posted March 30, 2020 on our website’s special COVID-19 Support Center (www.zdfattorneys.com) entitled COVID-19 and Collections – How to Prepare Your Association for a Possible Spike in Delinquencies. Here are some highlights from his article:
- Examine (and adjust) your 2020 budget and expenditures.
- Review your collections policy (or adopt one).
- Plan and revise your 2021 budget.
- Review your relationships and contracts with your association’s collections professionals.
- Reach out to the membership ahead of time about how the Association will handle collections.
Q: Should the Association waive assessments due during the COVID-19 pandemic?
A: NO.
Q: Does the Board of Directors have the authority to waive late fees due to the COVID-19 pandemic?
A: YES.
Q: Should the Association waive late fees during the COVID-19 pandemic?
A: YES, if the Co-owner’s delinquency is directly related to the COVID-19 pandemic. Collection of late fees is generally not an income line item on an Association’s budget, so waiving late fees during the pandemic will not have a direct effect on the Association’s current budget.
Q: Should the Association make a community-wide announcement that Co-owners can postpone payment of their assessments during the COVID-19 pandemic?
A: NO. Such an announcement could invite abuse. Reviewing Co-owner requests for payment plans or waiver of late fees should be reviewed on a case-by-case basis, as some Co-owners may be financially affected more severely than others.
Q: Should the Association make a community-wide announcement that late fees will be waived during the COVID-19 pandemic?
A: NO. Such an announcement could invite abuse. Reviewing Co-owner requests for waiver of late fees should be reviewed on a case-by-case basis, as some Co-owners may be financially affected more severely than others.
Q: What should we do if a Co-owner who was delinquent prior to the COVID-19 pandemic requests a waiver of fees due to the COVID-19 pandemic?
A: If the delinquent Co-owner had a payment plan in place, that plan could be revised to take into consideration their change in financial circumstances. Documentation to support the change in financial circumstances due to COVID-19 should be required from the Co-owner before the payment plan is revised. The revised payment plan terms should be put in writing.
Q: Should the Association automatically file a lien against the Unit of a Co-owner who became delinquent due to COVID-19.
A: It depends. If the Association has a Collection Policy in place, the provisions of that policy must be followed. If the Co-owner is requesting a payment plan with a term that extends past the time a lien would be filed against their Unit pursuant to the Collection Policy, the Association should proceed with filing the lien to protect the Association’s interest.
Q: What should we do if a Co-owner contacts the Association because they can’t pay their assessments due to the COVID-19 pandemic?
A: The Association’s Property Management Company should communicate directly with the Co-owner regarding the delinquency. If the Co-owner is requesting a waiver of late fees, that request should be put in writing by the Co-owner for the Board of Directors’ review and consideration. If the Co-owner is requesting a payment plan, that request should be put in writing by the Co-owner for the Board of Directors’ review and consideration. Regardless of the type of request, the Co-owner should describe their financial hardship (ex. job loss or reduction in wages due to COVID-19) and provide documentation to support their claim. The Board of Directors may review each request on a case-by-case basis, or it can develop a standard policy for Co-owners who become delinquent solely due to the COVID-19 pandemic.
Q: If the Board of Directors agrees to a payment plan with a delinquent Co-owner, what details should be in the payment plan?
A: Payment plans should be in writing, either drafted by the Association’s Property Manager or the Association’s legal counsel. The payment terms should be clear, including the following:
- Length of the payment plan
- Start date of the payment plan
- Amount of the monthly payment toward the account arrearage, in addition to the current regular monthly assessment
- Whether late fees will be waived or applied during the payment plan term
- Consequences for default of the payment plan
Q: How long should a payment plan be with a Co-owner who became delinquent due to the COVID-19 pandemic?
A: It depends. It is still uncertain when the entire state will be back to work, so consideration must be taken when determining when a payment plan should start and how long the payment plan should be. For example, there is talk that hair and nail salons and spas will be one of the last group of businesses to reopen. It may be reasonable for a payment plan to start 30 days after the Co-owner is back to work in their industry and last 90 days. If a Co-owner will not have a job to return to because their job has been eliminated due to the COVID-19 pandemic, it may be reasonable for a payment plan to start later than 30 days and last longer than 90 days. In most cases, a payment plan for up to 6 months will be reasonable. Assuming everyone is back to work and able to start making payments by July 1, 2020, most delinquent accounts will be current by December 31, 2020.
Q: How should an association respond to a Co-owner’s request for a reduction in assessments if common areas or facilities have been closed during the COVID-19 pandemic?
A: The association’s property manager should remind the Co-owner that the common areas or facilities were closed for health and safety concerns, pursuant to Governor Whitmer’s Executive Orders. Cleaning costs for these common areas or facilities will increase once they are open for use, due to new health and safety guidelines.
Q: What if Co-owner delinquencies have decreased an association’s income so much that the association can’t sustain its current operating budget and pay its bills?
A: The Board of Directors has several options available to counteract decreased association income due to increased Co-owner delinquencies:
- Review and revise the current budget. The Board should consider postponing projects scheduled for the spring/summer that could be completed in the fall, when Co-owners’ finances have (hopefully) improved.
- Revise the annual budget and reallocate reserve funds to pay Association’s immediate expenses. Condominium Bylaws generally indicate that reserve funds shall be used for major repairs and replacements of Common Elements and for emergency expenditures. The COVID-19 pandemic is arguably an emergency.
- Increase the annual assessment or levy an additional assessment. Condominium Bylaws generally indicate that the Board has the authority to increase the annual assessment or to levy an additional assessment as it deems necessary, to meet deficits incurred or anticipated because current assessments are insufficient to pay the costs of operation and maintenance of the association or for any emergencies, without a vote of the Co-owners. While those Co-owners who have become delinquent due to the COVID-19 pandemic will not be able to pay the increased annual assessment or additional assessment, those Co-owners who are in a better financial position will be able to assist the association in meeting its short-term financial shortfall.

Tracy N. Danner-Bond is a partner with the Firm. She graduated from Michigan State University with Honors in 1993, where she obtained her Bachelor of Arts in General Business Administration-Prelaw and was a member of the Spartan Marching Band and Spartan Brass. Ms. Danner-Bond earned her Juris Doctorate from the University of Detroit Mercy School of Law in 1997, where she was the Managing Editor of the University of Detroit Mercy Law Review and a member of the American Inn of Court. Prior to joining the Firm in 2004, Ms. Danner-Bond practiced estate planning, probate, and tax law with a firm in downtown Ann Arbor.
In addition to being certified in probate and estate planning law by The Institute of Continuing Legal Education, Ms. Danner-Bond has extensive experience in community association law. She handles assessment collection matters, lien foreclosure, bylaw enforcement, master deed and bylaw amendments, as well as FHA certification issues. Ms. Danner-Bond has presented lectures on community association topics for United Condominium Owners of Michigan and for private community management classes. Ms. Danner-Bond has been licensed to practice law in Michigan since 1998 and has been admitted to practice before the United States Federal District Court for the Eastern District of Michigan and the United States Tax Court. She has spoken at several events for United Condominium Owners of Michigan, the Michigan Chapter of the Condominium Association Institute, and the Firm’s Condominium and HOA Board Education and Training (B.E.A.T.) program.
Ms. Danner-Bond served 8 years on the Board of Directors for her own condominium association in Canton, Michigan. This first-hand experience as a Co-owner and Director, in addition to being a Community Association Attorney, allows her to relate well to the many challenges that community association Boards face each day.
Ms. Danner-Bond resides in Plymouth with her husband, two children, and their rescue dog. She has numerous interests, including spending time with family and friends, riding her Harley, reading, cooking, and traveling.
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