After much anticipation, North Carolina Governor Roy Cooper issued Executive Order 141, ("Order") on May 20, 2020, labeled "Phase 2", which, among many other things, allows for the reopening of certain businesses and lifting the stay at home order. This Order is in effect from May 22, 2020 until June 26, 2020, unless altered by the Governor. The full text of the Order can be found here:
With this Order, retail businesses are allowed to open to the public, with restrictions as the Order sets forth. Pertinent to community associations, Section 6 E of the Order allows for the operation of indoor and outdoor pool facilities, but only if in compliance with the requirements of Order. The requirements to open pools are fairly clear, and are as follows:
1. Indoor and Outdoor Pools May Open. During the effective period of this Executive Order, indoor or outdoor pool facilities (whether stand-alone or part of other facilities) may operate, but must be in compliance with this Subsection.
2. Requirements. While this Executive Order is in effect, all open pool facilities
must do all of the following:
As expected, South Carolina Governor Henry McMaster issued Executive Order 2020-36 ("Order") today, May 18, 2020, which allows for "Incremental Modification of Non-Essential Business Closures". Included in the list of facilities that may reopen for access or use by the public, are fitness, exercise centers, commercial gyms, and commercial or public swimming pools.
Subsection 1 B of the Order provides that:
Any businesses, venues, facilities, services, and activities that elect to re-open to non-employees and for access or use by the public, as authorized herein, should consider and incorporate any corresponding industry guidelines regarding the same, in addition to undertaking and implementing all reasonable steps to comply with any applicable sanitation guidance promulgated by the CDC, DHEC, or any other state or federal public health officials.
(Emphasis added.) We note the bolded language to highlight the non-mandatory nature of the Order. The Order authorizes the South Carolina Department of Health and Environmental Control (SCDHEC) to issue additional or supplemental guidance, rules, regulations, or restrictions.
Based upon the language in the Order, association pools and exercise facilities may reopen, at the discretion of the association, and are advised to adhere to CDC and SCDHEC requirements, if any, and requested to adhere to the published guidelines. Association boards will want to weigh the opening with the requirements/guidelines, that we discuss below, against the option of leaving the pool closed for an additional time for public safety reasons. Boards should be discussing with association members the options, keeping in mind that almost every set of recorded restrictions gives association members the right to use the common facilities (pool, clubhouse, gym), subject to the rules and regulations passed by the board. While we believe most communities will choose to open the pool and gym facilities, such decisions should be made after taking in all relevant information from governmental authorities, managers, attorneys and vendors. Decisions made in this fashion exhibit the reasoned business judgment of the board and should expose the association to little, if any liability.
What is less clear is whether an association clubhouse, primarily used for meeting space, may reopen for regular use. Many association exercise facilities require entry through the association clubhouse. Others have additional entrances. Considering that the Order allows for close contact service providers (i.e. barber shops, hair salons, etc.) to open while observing social distancing guidelines, it is our opinion that clubhouse facilities, may reopen for limited use, such as a board meeting, provided that social distancing parameters are followed. We do not recommend opening the clubhouse to hold annual meeting or social functions where the entire membership is involved.
As to pool operation, the SCDHEC has provided "Interim Guidelines for Re-Opening of Public Swimming Pools". Those guidelines can be viewed at:
We strongly recommend that everyone carefully review this document. We have reviewed these guidelines and, there are mandatory actions, as follows:
In order to reopen and successfully remain open for business, everyone individually and collectively must actively participate in the core recommendations:
While these guidelines are voluntary, it is in everyone's best interest to follow
them diligently as we move to re-open our economy and keep it open.
It is safe to say that for many of us, the events of the last few weeks have brought unique challenges to our work, home and play. Those of us who practice community association law are continuing to evaluate the ever-changing environment; from the spread of the virus, to what will likely be the phrase of the year, "social distancing", and to what businesses/practices are "essential". Many of our colleagues have published articles, blogs, etc. that provide sound recommendations on the pressing issues that face community associations during this time. These have been posted on the CAI-NC website, and we urge everyone to continue to review those as questions arise and to reach out to your managers and attorneys with additional questions.
Further, it is important to highlight a few important areas of concern for association boards and to address some issues that may arise as all of us try to stay the course, fulfill our duties as association representatives, and protect our communities:
As you may know, officers and directors have a fiduciary duty to their associations to collect assessments. Associations are likely to see delinquencies rise during this time of economic turbulence and social unrest. In most cases, our recommendation to boards of directors is to stay the course and continue with the normal process and policies when dealing with delinquent owners. This is an issue of fairness to the owners who do pay the required assessments, and also one of duty to ensure the association's financial obligations are met. As suggested in Jim Slaughter's post of March 26, 2020, linked here for your reference, (lawfirmcarolinas.com/blog/what-to-doabout-hoa-condo-finances-assessments-during-the-coronavirus), the board can consider many options, including the extension of payment terms to owners, cutting certain expenses if possible (e.g. non-essentials, like the installation of pool key fobs for members), and perhaps even suspending the imposition of fines and late fees while still continuing the charge of interest. We think it important to continue with the filing of liens, if appropriate, pursuant to the North Carolina statutes and also the association's collection policy. Associations need to secure their position "in line" against other potential creditors.
Amenities and Common Areas
At this point, we assume that most associations have closed clubhouses and other amenities due to social distancing requirements. If not, we recommend that they be closed immediately to comply with North Carolina and in some circumstances, county orders. Association boards should keep most amenities closed to association members during this time until further instructions/order are given my state authorities. That said, it is our position that associations should not "police" or attempt to regulate social distancing in the community by issuing violation letters, holding hearings, and/or levying fines. While such measures are authorized for violations, enforcement of social distancing violations would likely be viewed as draconian in nature and would likely cause unwanted and unnecessary backlash. Enforcement of governmental regulations should be left to the governmental authorities themselves. However, it is important to inform and publicize the closing of amenities and need for community members to respect their neighbors and also to adhere to mandated rules and regulations.
Remember that board meetings do not require members of the board to be in the same location during the meeting. The use of Zoom, Skype, conference call, etc. and other platforms is acceptable to conduct meetings among board members. Proper notice of meeting times, and in this time, platform, is still required. Statutorily, N.C.G.S. § 55A-8-20, (part of the N.C. Non-Profit Corporation Act) allows for participation at a board meeting, "through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting." Check your individual bylaws and articles of incorporation to determine if these types of remote meetings are prohibited. Additionally, as authorized in N.C.G.S. § 55A-7-04, boards make take action without a meeting via unanimous written consent. Member meetings will likely need to be postponed and rescheduled absent some reliable platform use in which all members can remotely access without interference.
Pool Season and Vendor Contracts
Pool season is rapidly approaching. Based upon the uncertainty that surrounds us, associations may not be able to open pools at their traditional seasonal dates. Even if the pools are allowed to be open, if social distancing guidelines remain in place, associations would be forced to monitor and put in crowd control measures. If pools do not open due to COVID-19 restrictions, boards should review their contracts with pool companies to determine whether payments and services are suspended or even excused. Terms like "force majeure" and "act of God" may affect the terms of these contracts. You should contact your manager and attorney to review the terms of your pool contract to see what the association's responsibilities and duties are under the law and the contract terms. The need for review applies to any vendor contract, (e.g. landscaping), where the vendor may not be, or has not been, determined to be "essential", as well as to contracts with vendors who may temporarily suspend services by choice. Each contract is different and it is incumbent on boards to act appropriately, using sound business judgment, when acting under such contracts.
We are in a unique, challenging time. However, we should be encouraged by the response of our members in working together for everyone's safety and also be optimistic that when this is over, we will be stronger and wiser. Please stay safe and healthy.
Please do not hesitate to contact us if you have any question about these issues or any other issues.