In response to the economic destruction wrought by COVID-19, Senators Faith Winter and Julie Gonzales, and Representative Leslie Herod introduced Senate Bill 211 on June 1, 2020. SB 20-211 quickly made its way through the chamber and was referred to the Committee of the Whole today. It has not yet made its way to the House, but the speed with which it flew through the Senate indicates this is a bill with a lot of support. It is also a bill that can significantly harm nonprofit community associations and prevent them from collecting the assessments necessary to pay their regular bills, such as insurance, mainteannce expenses, and management fees.
The bill, as amended, will establish the right to a moratorium on “extraordinary collection actions” through November 1, 2020, with potential extension through February 1, 2021. Extraordinary collection actions are garnishments, attachments, levies, and executions to collect or enforce a judgment on a debt. “Debt” does not include child support obligations, but does include past-due community association assessments. The bill mandates certain disclosures from a judgment creditor before attempting to undertake these extraordinary collection actions. This disclosure will inform the judgment debtor that they have the right to temporarily suspend the collection action if they have experienced hardship (directly or indirectly) due to the COVID-19 emergency, and the steps to take to achieve this suspension.
The bill narrowly establishes a time frame to suspend garnishments and other frequently used collection activities, and a debtor must reach out to the creditor to take advantage of this suspension. If all debtor homeowners take advantage of the right of suspension, however, communities may find themselves with delinquencies that exceed the thresholds for FHA certification, unable to qualify for bank loans, and forced to defer maintenance and incur the liability of that deferral. While COVID-19 is certainly a crisis in this country, we urge legislators to carve community association collection efforts out of the restrictions of SB 20-211, as community associations are typically nonprofit corporations funded solely by assessments, the debts that are being collected generally existed long before the pandemic, the owners who are being collected from have already had the opportunity to enter into payment plans under C.R.S. 38-33.3-316.3, and the unintended consequences of a collection moratorium will negatively impact all members of our communities and force paying owners to subsidize those who do not pay.