Hindsight is 2020 – A Look Back at Impact of COVID-19 on Community Associations Focuses Efforts Moving Forward

Vandeventer Black LLP
Contact

Since March 2020, society has learned how to navigate through and adjust to many upheavals and changes caused by the COVID-19 pandemic. This is certainly true for community associations conducting business and carrying out routine operations. Looking back on what was an extraordinary year due to the pandemic provides clarity for Virginia community associations about where to focus in 2021 and the future. 

  1. Governmental Orders and Legislation

The circumstances surrounding Virginia’s State of Emergency due to COVID-19 changed frequently during the pandemic.  It became critical for community associations to keep abreast of federal, state, and local governmental orders and guidelines and emergency legislation. The rapid changes illustrated the need for Boards to adapt quickly and be nimble.  Rules and resolutions had to be implemented in a way that addressed temporary restrictions that were subject to change.  It caused associations to review the scope of its purpose and rule-making authority to determine what measures it could implement and how.

Of specific significance for Virginians are Governor Northam’s Executive Orders, which address limitations on in-person gatherings, mask mandates, physical distancing, cleaning requirements, signage, and more. These state orders directly impact how community associations conduct association business (e.g., board and member meetings, notices, proxies, etc.) as well daily operations (access to and use and cleaning of onsite management office, common areas (elevators, clubhouses, fitness facilities, pools, etc.) and staff and management considerations. Governor Northam’s Executive Orders can be found here.  

The Virginia General Assembly is now in session and legislation has been introduced regarding virtual meetings for boards and members. Virginia community associations should be on the lookout for COVID-19-derived legislation.  We will provide updates regarding these and other legislative changes when new laws are adopted.  Visit Vandeventer Black’s Open Session page, an online resource with curated content for Virginia community associations for articles and links to statutes and regulations.

  1. Board Meetings

Speaking of legislation….prior to April 2020, the Virginia Property Owners’ Association Act and Condominium Act permitted boards to meet electronically only if at least two members of the board were physically present at the meeting place.  Recognizing the dangers of COVID-19 and how it transmits, the Virginia General Assembly quickly responded to the pandemic by approving two budget amendments that allow boards to meet entirely virtually when the following conditions are met:

  1. the Governor has declared a state of emergency;
  2. the nature of the emergency makes it impracticable or unsafe for the board to assemble in a single location;
  3. the purpose of the meeting is to discuss or transact the business statutorily required or necessary to continue operations of the association and the discharge of its lawful purposes, duties, and responsibilities; and
  4. the board distributes minutes of the meeting to its members using the same method it used to provide notice of the board meeting to its members.  

In addition, boards are also required to: (1) give notice of the board meeting to association members using the best available method in light of the emergency and such notice must be given at the same time as notice is provided to members of the board; and (2) make arrangements for association members to access the meeting electronically, including, to the extent practicable, videoconferencing technology and, if the means of communication allow, provide members with an opportunity to comment.  Further, the minutes of the meeting must state the nature of the emergency, the fact that the meeting was held by electronic communication, and the type of electronic communication used.  It important to make sure that the procedural requirements are followed and that templates are modified to match the requirements.

Notably, these amendments are temporary, available only during a Governor-declared state of emergency, and last only through June 30, 2022, unless the General Assembly decides to modify, extend or make permanent this provision.  If these amendments are not extended or made permanent or a Governor-declared state of emergency is no longer in place, then the statutory requirement to have at least two board members physically present at the meeting place remains in place.  See Va. Code §§ 55.1-1816C and 55.1-1949B.  As a reminder, these amendments apply only to board meetings and not member meetings (e.g., annual or special meetings of the members).  For more information, see our previous article.  As indicated in 1 above, however, legislation has been filed early in the 2021 session that addresses virtual meetings for boards and members.

  1. Member Participation

With boards conducting meetings electronically in whole or in part and some associations holding member meetings electronically in part[1], associations and their members quickly took to this new meeting platform.  In fact, one of the positive side effects of COVID-19 is that associations have seen increased attendance by members at board and member meetings due to the convenience of participating electronically.  There is no travel time, members can participate from anywhere, and it reduces the spread and complies with the various governmental orders.  It would not be surprising if community associations continue to include electronic platforms even when boards and members can return to in-person meetings as a way for members to stay informed and engaged.

As for board meetings, associations must ensure that members are afforded an opportunity to comment on association-related matters—regardless of whether board meetings are conducted electronically, in-person, or a combination of both.  The Virginia Property Owners’ Association Act, Condominium Act, and the temporary legislation still require boards to reserve a portion of each meeting for member-comment (i.e. homeowners forum and allow members to participate), subject to reasonable rules.  Associations should promulgate rules establishing procedures that allow board meetings to run smoothly while dedicating time to member-comment.  These rules include matters such as when members may comment during the meeting, time allotted, advance sign-up, prohibiting profanity or harassment, etc.   

As for member meetings, some documents contain additional hurdles regarding notices, place of meetings, voting, and proxy requirements.  The pandemic highlighted the need to be able to act by electronic means.  Boards should consult with legal counsel and consider what amendments can be made to governing documents that would facilitate remote participation.

  1. Reasonable Rules

In response to the pandemic and the restrictions put in place by Governor Northam’s Executive Orders, many boards adopted policies and rules for what they deemed to be in the best interests of their associations and in furtherance of the orders. Associations also made difficult decisions to provide limited (or zero) access to common area amenities due to the significant cost associated with complying with the various Executive Orders and potential liability.  No doubt these decisions emanated from paramount concerns for the health, safety and well-being of the associations, members, residents, and staff.

A Charlottesville Circuit Court recently held that a pandemic-related rule promulgated by a property owners’ association requiring residents to sign an assumption of the risk form prior to using certain common areas was reasonable.  See Norman v. Foxchase Owners’ Assoc., Inc., Case No. CL20-1481 (Albemarle Cnty., Oct. 30, 2020). This case is an excellent example that reasonable rules, for which there is express rule-making authority in a recorded document, will be upheld.  For more information on this case, including its limitations, please see our article

Associations considering pandemic-related rules should consult with legal counsel for guidance.  This is also a good opportunity to holistically review the rules for revisions.   

  1. Budgets

The various Executive Orders from Governor Northam contain best practices that address, among other things, guidelines for signage, routine cleaning and disinfecting, availability of soap and running water for hand washing or hand sanitizers, and usage of masks.  The guidelines forced many associations to adjust their budgets to account for increases in corresponding expenses.  Some associations had to adjust the timelines on projects and contracts as a result.  If necessary, associations should consult with their accountants, managers, and/or legal counsel to discuss possible solutions to budget shortfalls, amendments to documents, and modifications to contracts. 

  1. Contracts

The importance of contract terms came to light for many associations once the pandemic hit—particularly, with pool contracts.  Not surprisingly, most association pool contracts for Summer 2020 had already been signed prior to the declared state of emergency.  With the uncertainty of the 2020 pool season, associations scrambled to review and renegotiate pool contracts.  In some cases, associations decreased services for pools that remained closed while other associations expanded services to account for extra cleaning, physical distance monitoring, temperature checks, and reservation enforcement.

Regardless of the type of contract, the pandemic shone a bright light on the often overlooked as boilerplate, but important contractual provisions about which associations should be aware and ensure every contract addresses.  Many proposals or contractor prepared contracts do not include provisions that protect the association and manage its risk.  These require boards to look beyond the simple pricing structure.  These provisions include: scope of services, term, termination, notice, modification, force majeure, insurance, indemnification, and more. Association contracts are not a DIY project.  Instead, associations should engage legal counsel to review proposals and contracts and make recommendations before signing so that directors make informed decisions and manage the risks.  It is often less costly for counsel to review a contract before it is signed then to address a problem that develops later.

  1. Communication

Communication is an integral part of any relationship, including the relationship between a community association, the board, and its members.  Communication provides transparency, which builds trust.  In addition to communications during meetings (see 3 above), associations should take steps to stay connected with members between meetings.  Communication furthers compliance when members are informed about changes in policies, rules and practices.  Let members know the steps a board takes to comply with governmental orders, agency guidelines, and the law, to continue business safely, and to act in the best interest of the association.

Required notices are also a form of communication.  At a minimum and notwithstanding the pandemic, both the Virginia Property Owners’ Association Act and Condominium Act require certain notices, including:

  • Notices of board meetings must be published where it is reasonably calculated to be available to a majority of members. See Code. §§ 55.1-1816 and 55.1-1949B
  • Notices of member meetings must be provided in specific manner and within certain time frames. See Code. §§ 55.1-1815G and 55.1-1949A.  Check your association Bylaws and, if applicable, Articles of Incorporation, for association-specific notice requirements. 
  • Member communications: Associations must provide a reasonable, effective, and free method, appropriate to the size and nature of the association, for members to communicate among themselves and with the board regarding any matter concerning the association.  See Code §§ 55.1-1817 and 55.1-1950.

Beyond the statutory requirements, community associations should consider publishing a newsletter (whether in paper or electronic form), creating an official association webpage, and adopting certain social media platforms (NextDoor, Facebook, etc.) and policies.  These communication channels are not only COVID-19 friendly, but inform members of upcoming meetings, events, rules, board decisions, and election results, and serve as the medium where members can communicate among themselves.  There are a number of potential issues to consider with social media platforms.  Consult legal counsel with any questions.  It is a good practice to annually confirm or update member email addresses, as well as mailing addresses so that association communications reach the members.

  1. Insurance

When grappling with whether to provide access to association amenities (e.g., fitness room, clubhouse, pool, etc.), many associations learned that general liability insurance policies exclude claims related to viruses and communicable diseases, such as COVID-19.  This means that community associations would not have insurance coverage for the cost of defending a lawsuit or for the payment of a settlement or judgment related to a claim for bodily harm or property damage caused by COVID-19.  Some associations discovered that their directors and officers insurance also did not cover non-monetary claims, such as a board decision to close amenities and/or to postpone the annual member meeting.  Accordingly, if your association has not already done so, it would be prudent to consult with the association’s insurance broker or agent to discuss the policies, coverages, and exclusions in place, and whether additional insurance coverage is needed and available.  Knowing what coverage is in place and/or available will help guide decisions.

Looking Forward

There seems to be a light at the end of the pandemic tunnel.  There have been many lessons learned that can focus goals and direct resources in 2021 and beyond, including:

  1. Follow governmental orders and legislation;
  2. Consider how to conduct electronic board meetings to comply;
  3. Virtual attendance can increase participation if done right;
  4. Propose amendments to governing documents;
  5. Consider reasonable rules within the scope of authority;
  6. Review budget and make adjustments;
  7. Review and update contracts;
  8. Increase communication to build community; and
  9. Review insurance coverage to mitigate risk and inform decisions.

[1] Neither the Virginia Condominium Act nor the Property Owners’ Association Act expressly authorize meetings of the members by electronic means.  Community associations should consult with legal counsel to determine whether and how member meetings may be conducted electronically. This may change in the 2021 legislative session.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Vandeventer Black LLP | Attorney Advertising

Written by:

Vandeventer Black LLP
Contact
more
less

Vandeventer Black LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.