CAI-NJ April 2021

Planning For A Possible INCREASE IN DELINQUENCIES as a Result Of The Pandemic By Martin C. Cabalar, Esq., Becker & Poliakoff, LLP

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T he Coronavirus pandemic has been with us for approximately one-year and among many unanswered questions is the potential future impact on the ability of community associations to collect monthly maintenance fees. While the majority of communities have not seen a significant increase in delinquencies as a result of the pandemic, there remains concern that once the economic relief some received ends, (such as mortgage forbearance), we could see an increase in foreclosures. If that occurs, it may have a significant impact on the very lifeblood of community associations: the monthly income stream from its residents. To ensure stability and the capacity to keep essential operations in place, com- munity associations need to plan accordingly. A good place to start is communication with the member- ship with respect to the association’s budget and expenses. Be sure the members of your community understand the importance of monthly common expenses in the role of essen- tial services provided to the community, including necessary building maintenance, management, operations, and vendors who supply services and other essential upkeep. While your community may be saving some expense due to the closure of certain amenities, it is likely that other areas of your bud-

get, (particularly those dedicated to cleaning and sanitation), have seen a significant increase. Make sure this is presented and explained to the membership. Demands from residents for a refund in maintenance fees need to be appropriately addressed with a transparent explanation as to why it is not possible or recommended. For example, even in the unlike- ly event that your community has seen a cost savings, it is

much more prudent to put those amounts in reserves. We do not yet know what the future holds in terms of a potential increase in delinquencies. In addition, even if your community does not ultimately suffer from increased delinquen- cies, there will be addi-

“Demands from residents for a refund in maintenance fees need to be appropriately addressed with a transparent explanation...”

tional expenses associated with re-opening amenities, such as cleaning, sanitation and other safety protocols that may need to be put in place. Thus, while it is critical that members understand your community’s budget, it is just as important to communicate the potential negative impacts on the associ- CONT I NU E S ON PAGE 26

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