Coronavirus Introduces New Legal Considerations for Common-Interest Communities

Coronavirus Introduces New Legal Considerations for Common-Interest Communities

[ Blog/News ]

Coronavirus Introduces New Legal Considerations for Common-Interest Communities

By Allison Peryea, Esq.

The novel coronavirus compelled communities to confront a number of new challenges with legal implications. The overarching challenge has been for an association to figure out its role in a completely new type of environment. While associations always have had to be mindful about making sure people are safe in the common areas, the reality of this pandemic is that associations have had to explore the scope of their authority to preserve that safety. This can involve questions about who to let into shared-access buildings, and what information to report when a resident tests positive for the illness. (The general rule is for the association to exercise its right to regulate the common areas using its reasonable discretion, while staying mindful of people’s privacy considerations.)

Liability Considerations

Other considerations have involved concerns about liability exposure when an association decides to—or declines to—get involved in efforts to bring neighbors together to provide support for each other, whether it is to pick up prescriptions or lend exercise equipment. The general rule in that context is that an association should be comfortable with relaying helpful information among neighbors, but that associations should be wary about serving as the “center of command” for these sorts of efforts.

Stay Home, Stay Healthy” Order Considerations

A third issue involves the governor’s “Stay Home, Stay Healthy” order. A question arises about an association’s right or duty to enforce the terms of the order—for example, if association management sees people gathering in recreational areas in violation of the order. The general rule in that case is that an association is not responsible for enforcing the order—but it can take steps that dovetail with the order with respect to keeping the common areas safe. This could include, for example, requiring people to stand at least six feet away from the concierge.

The question of enforcement of the order does come up with respect to construction projects. While many construction projects are on hold, some are ongoing. It is up to each association to determine whether an ongoing construction project presents an unreasonable danger to residents in the current public-health situation. For instance, it may be appropriate to hold off on projects involve likely contact between workers and residents with immune-system concerns.

Associations & Board Meeting Considerations

A final issue that many communities have faced concerns association and board meetings. Fortunately, today’s technology has facilitated face-to-face meetings over the phone and computer with programs such as Skype and Zoom. The question has arisen however whether Boards and owners have the legal right to hold meetings and take action without an in-person meeting.

The good news is that most communities have the legal right to conduct board and owner meetings over the phone or by computer so long as the means of meeting allows real-time communication. Accordingly, meetings and business may not usually be conducted by email—except that boards may be able to conduct business by email if there is unanimous approval of the action. Communities also have the option of participation through proxies or (depending on the language of the governing documents) voting by mail or email.

Communities may need to get creative if there is a desire to keep votes confidential during a Zoom meeting or teleconference. One option to consider for communities that do not allow for voting by email is to have owners email their vote to the manager and then have the manager have the owner verbally confirm that the emailed vote is their intended vote during the meeting.

Our New Reality

While likely few of us expected that we would ever be in a situation like the current one, this new reality has taught us a lot about the limitations of our governing documents and also creative ways to keep operating and serving owners and communities. In the future, consider working with your association counsel to amend your governing documents to help your community better navigate unusual situations like the one we are currently facing together. End Of Article

By Allison Peryea, Esq.

By Allison Peryea, Esq.

Allison Peryea, Esq. is a partner at Leahy Fjelstad Peryea. She has worked in the community association industry for eight years. Her practice focuses on dispute resolution including litigation, and general counsel. She is a longtime member of the WSCAI Communications Committee and a former editor of the WSCAI Journal.

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SBA’s Paycheck Protection Program: Coronavirus Relief Act Offers Loans to Management Companies, Others

SBA’s Paycheck Protection Program: Coronavirus Relief Act Offers Loans to Management Companies, Others

[ Blog/News ]

SBA’s Paycheck Protection Program: Coronavirus Relief Act Offers Loans to Management Companies, Others

By Michelle Ein, J.D. & Ken Harer, CCAL
Management companies and other vendors hit hard by the coronavirus may have some relief headed their way. On Friday, April 3, 2020, the application process opens for the Small Business Administrations’ Paycheck Protection Program (“PPP”). This $350 billion emergency program is part of the federal government’s $2 trillion federal coronavirus relief package, officially known as the CARES Act.

The PPP is not only a loan; it is meant to incentivize business owners to keep employees on the payroll by offering loan forgiveness. Details of the program are still being ironed out, but here is what is known at the time this post goes live:

Who is Eligible?
  • Small businesses with fewer than 500 employees.

    • Note that for some types of industries (restaurants and hotels), locations with fewer than 500 employees may apply for loans even if they belong to a larger chain. This may apply to management companies with a national reach.
  • Includes self-employed individuals, independent contractors and sole proprietors.
  • Entities must have been in business as of February 15, 2020.
Some Features of the Program:
  • Loan amounts up to 250% of the average covered monthly payroll and selected overhead expenses (payroll, benefits, rent, mortgage and interest) not to exceed $10 million.
  • No fees.
  • No prepayment penalties.
  • No business collateral or personal guarantees are required.
  • Use the funds for anything your business needs.
  • Loan forgiveness available for eligible payroll and benefits, rent, mortgage and interest for the 8-week period after origination. Reduced forgiveness amount if payroll costs are lessened through layoffs or wage cuts.
  • Payments may be deferred up to 12 months.
  • Repayment term of 10 years.
What Portions of the Loan May Be Forgiven?

While there’s no limit on what the loan can be used for, loan forgiveness is available for certain expenses paid with loan proceeds within the first 8 weeks after loan origination:

  • Payroll (but not exceeding salaries is excess of $100,000 a year).
  • Health care for employees.
  • Mortgage payments on preexisting loans.
  • Rent on preexisting leases.
  • Utilities.
  • Interest on debt for preexisting loans.
Which Lenders Are Participating?

Any SBA-approved lender. As of this writing, Chase Bank has announced that while it will have the program up and running on April 3, it will not offer PPP loans except to existing business customers. US Bank, the largest SBA lender in the Seattle area, also expects to be up and running on April 3, and will accept all applications, whether or not the borrower is a current US Bank client.

How To Apply
  • Lender applications will be accepted through June 30, 2020 or until funds run out

    • The program is first come, first served, so apply early!
  • The Treasury Department has an application form available:
    https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
    • However, it is unknown whether lenders will be using this form in conjunction with their own applications, or whether the banks’ applications will replace the Treasury Department’s form. It may be worthwhile to check your preferred lender’s website first.
  • At a minimum, you’ll want to have the following information:

    • The date you started your business.
    • Your company’s mailing address.
    • Detailed information in order to calculate the past 12 months’ payroll for your employees, mortgage, rent and utilities.
    • Your company’s annual revenue.
    • 2019 financials, including P&L and balance sheet.
    • Your most recent IRS Form 941 – Employer’s Quarterly Federal Income Tax Return.
  • Lenders applications will be available online.

  • While the PPP application process will be almost entirely self-reported (less verification than is typical for SBA loans is expected), do note that there are criminal penalties of up to $1 million for submitting fraudulent information to a federally-insured lender.
More About Loan Forgiveness

SBA will issue additional guidance on loan forgiveness by April 26, 2020.

For now, we know that the loan amounts will be forgiven so long as:

  1. 75% or more of the loan amounts are used to cover payroll, mortgage interest, rent and utilities during the first 8 weeks after the loan is made.
  2. Employee payroll and compensation is maintained.

Borrowers who reduce the number of full-time employees or salary levels between February 15, 2020 and April 26, 2020, face a reduction in loan forgiveness unless they restore the number of full time employees and salary levels by June 30, 2020.

Loans covering payroll above $100,000 per person will not be forgiven. It is unclear if this is inclusive or exclusive of benefits.

All indications are that this emergency program will be heavily subscribed, and applications will no longer be accepted once all funding is awarded, so apply early. End Of Article

By Michelle Ein, J.D.

By Michelle Ein, J.D.

Michelle Ein, J.D., has represented community associations since 2002. She is the owner of Law Offices of Michelle A. Ein, PLLC in Seattle. Michelle is devoted to helping her association clients solve their legal matters and keep the peace. By listening, diffusing conflict, and finding common ground, Michelle enjoys helping people find reasonable resolutions to tough problems. While she mostly appreciates single family home ownership, she is considering “condominiumizing” her yard, and designating sole and exclusive authority over its maintenance to her husband.

By Ken Harer, CCAL

By Ken Harer, CCAL

Ken Harer, CCAL, is Condo Law’s managing partner. He’s an experienced attorney and has been working with community associations for more than twenty years. His practice, formed in 2000, provides assistance on all types of legal matters for condominium and homeowners associations. He offers legal assistance with contracts, construction disputes, and warranties related to the Washington Condominium Act and general legal advice on interpretation, enforcement, and modification of governing documents. An active WSCAI volunteer, Ken is a frequent speaker at industry events and homeowner association seminars, and contributes regularly to industry periodicals.

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Coronavirus & Community Associations

Coronavirus & Community Associations

[ Blog/News ]

Coronavirus & Community Associations

In Washington State,  at least 19 people in King and Snohomish counties had been diagnosed with COVID-19 (as of noon Monday), and 9 people have died. CAI is monitoring the outbreak of the COVID-19 coronavirus and its impact on community associations on a national level, while WSCAI is monitoring on the local level.
CAI and WSCAI recommend following the latest guidance and updates issued by the Centers for Disease Control and Prevention. The Seattle Times also has live updates on their website as well as information about the coronavirus. In the meantime, here is some information on the coronavirus, tips to preventing spreading, as well as some advice for community associations.
Background

The coronavirus is a family of viruses that can cause the common cold and more severe diseases such as COVID-19. Symptoms of COVID-19, which can appear in as few as two days or as many as 14 days after exposure, can include fever, runny nose, cough, and breathing trouble.

Most develop only mild disease. But some people, usually those with other medical complications, develop more severe symptoms, including pneumonia, which can be fatal. There is currently no vaccine for COVID-19.

As of late February, there have been nearly 82,000 confirmed COVID-19 cases and 2,770 deaths around the globe. Only 60 cases have been confirmed in the U.S. Compared to the seasonal flu, CDC estimates that so far this season there have been at least 29 million flu illnesses, 280,000 hospitalizations, and 16,000 deaths.

Stay Up-To-Date!

For the latest, most up-to-date information, visit the following:

Washington State Updates:

National & Global Updates:

The CDC has recommended that travelers avoid all nonessential travel to China and South Korea and is suggesting postponing nonessential travel to Iran, Italy, and Japan.

If you think you have been exposed to COVID-19, contact your health care provider immediately.

You can visit the World Health Organization’s website for the most up-to-date information on COVID-19.

Prevention

Communities and businesses should take the appropriate measures to ensure a hygienic environment, including regular cleaning of common areas and meeting spaces, and refilling of soap and hand sanitizers.

The best way to prevent the spread of illnesses, such as COVID-19, seasonal flu, and other respiratory viruses and germs, is to practice everyday preventive actions, including:

  • Get a flu vaccine.
  • Wash your hands often with soap and water for at least 20 seconds. If soap and water are not available, use an alcohol-based hand sanitizer.
  • Avoid touching your eyes, nose, and mouth with unwashed hands.
  • Avoid close contact with people who are sick.
  • Stay home when you are sick.
  • Cover your mouth or sneeze with a tissue, then throw the tissue in the trash.
  • Clean and disinfect frequently touched objects and surfaces.
  • Follow CDC’s recommendations for using a facemask:
    • CDC does not recommend that people who are well wear a facemask to protect themselves from respiratory diseases, including COVID-19.
    • Facemasks should be used by people who show symptoms of COVID-19 to help prevent the spread of the disease to others. The use of facemasks is also crucial for health workers and people who are taking care of someone in close settings (at home or in a health care facility).

CAI has also posted a story on HOAResources.com“Steps to Safeguard your HOA from Illnesses”

Community Associations

In the event of a widespread outbreak in the U.S., CAI is recommending that community associations review state statutes and governing documents to determine whether it’s possible to conduct association business remotely. Generally, there are several methods by which association members or association boards transact business in the absence of everyone gathering at the same time and location—some form of written consent, electronic meetings, or a vote outside a physical meeting.

In-person meetings are almost always preferred. Announcing and holding a meeting avoids questions about notice and due process. In addition, meetings allow for deliberation where proposals can be discussed and minds changed. Most online and electronic voting simply permits an up or down vote on a proposal. There are circumstances in which a meeting is simply not possible, so it is worth considering what other options exist to transact business.

Classes & Events

WSCAI will continue to monitor the situation, and we will inform you if there are any changes to upcoming classes and events. End Of Article

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