The final PPP loan regulations are not yet released as of April 23, 2020, but there are certain things we are pretty sure about: you will need to meticulously document your spending on allowable expenses in order to receive full forgiveness for your loan.

At the end of your 8 week period following your PPP loan disbursement, you will need to submit your forgiveness to your lender. Your lender will make the decision on whether a portion or all of your PPP loan is forgiven. At a minimum, your request should include:
• Written proof of payroll costs;
• Written proof of the number of full-time equivalent employees with their pay rates;
• Written evidence of invoices and payments you made on eligible mortgage, lease, and utility obligations; and
• Certification that all supporting documentation provided are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.

You should be compiling this information from the moment you receive your loan, so you are not scrambling later on, and to ensure that the payments you made from the PPP loan proceeds comply with the restrictions. If you can put your PPP loan proceeds in another account, even better to track! If you have questions about proper documentation, contact your accountant or financial advisor.

Again, we hope this information is helpful, but please note that this blog post does NOT constitute legal or tax advice. These are simply my observations and notes based upon information I have gathered through an analysis of the CARES Act, an analysis of proposed regulations governing the PPP, and my attendance at numerous webinars given by tax and banking experts explaining the PPP.

YOU SHOULD CONTACT YOUR TAX ADVISOR AND BANK FOR PERSONALIZED INFORMATION FOR YOUR CIRCUMSTANCES.

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We have pointed out the fluidity of this pandemic, and now we have some updates for you on holding meetings and closing facilities (including pools). We have received relief on some of the requirements found in the POAA and the Condominium Act on holding remote meetings.  We have also obtained information on the closing of community association pools.

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Everybody who applies for a PPP loan must certify under oath that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Undoubtedly, all of our local businesses who have applied and who made that certification thought there was NO DOUBT that the economic uncertainty was obvious and evident.

But then it came to light that many publicly traded companies and larger private companies applied for and received PPP loans. Although those companies technically qualified for the PPP loan, there is no doubt that the CARES Act was not intended for entities like Shake Shack and the Los Angeles Lakers.

So to address these issues, the SBA offered more pointed guidance to dissuade these types of companies from applying for the loans. But the ambiguous guidance proposed in the interim rule applies to everybody who applies for a PPP loan, including a sole proprietor. In this post, I hope to provide you some guidance to help you “paper your file” supporting certification of need, which you may need when you apply for loan forgiveness, 8 weeks after receiving your loan proceeds.

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Virginia became one of the latest states to pass legislation limiting the use of employee noncompete agreements. Beginning July 1, 2020, certain noncompete agreements are prohibited by statute. This blog post examines that new statute and what it means for employers and employees.

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Our pandemic situation continues to be fluid. It is difficult to get a handle on stay-at-home orders, best practices for health and safety, and where all of this is headed. We have many who are out of work. We have health workers who are exhausted and taxed beyond limits. We have shortages of protective equipment, and some grocery items. All of this stays with us all day even if we are fortunate enough to be able to work, and to continue to have work to do. It is more important than ever for our community leaders to have consistent and frequent communications with their residents, and for our managers and attorneys to continue to provide guidance to our communities. It is also critical that community leaders, managers and attorneys take time for their own mental health.

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It is relatively routine for developers or “declarants” to include arbitration provisions into the declaration of restrictive covenants recorded to establish a common interest community. Generally, arbitration clauses are preferred by developers for a variety of reasons including avoiding a jury and having a say in the choice of the fact-finder. However, those decisions made by the developers have long lasting effects upon homeowner boards following transition, because it is difficult for a board to effect a change in the documents.

Continue reading “Virginia Supreme Court upholds arbitration award granted to homeowners who sued their HOA”

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Though the majority of businesses in the United States are sole proprietorships, those of you who read an earlier post know that I recommend, for a myriad of good reasons, that an entity of some kind be placed between a person doing business and the rest of the world. Find an experienced business attorney to help establish your business entity.

In this post, I address briefly the general partnership form of business entity, the only form I consider more dangerous to the financial health of an individual than the sole proprietorship.  Why, you ask?  Because with the sole proprietorship, the sole proprietor is personally liable for the acts of the sole proprietor, the business and the business employees.  In the general partnership, the partners are personally liable for the acts of the business, the employees and each other.  What partners do can be fairly unpredictable, like contracting to purchase or lease things that cannot possibly be paid for out of the profits of the business, or like contracting to do that which cannot possibly be done profitably.

Continue reading “General Partnerships, The Way To Go . . . Financially Under”

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We have written previously on the litigation of homeowner association cases. Generally, homeowner associations can file a lawsuit in the General District courts to enforce collection of assessments. However, If an HOA needs to enforce a covenant, seeking an injunction to require a homeowner to comply with the restrictive covenant, as of 2011, the HOA must file a lawsuit in the Circuit Court can now file a lawsuit in the General District Court, as well. Virginia Code sections 55-79.80:2, and 55-513 give jurisdiction for those matters to the General District Court. Those lawsuits can be expensive and time-consuming.

Continue reading “Enforcing HOA covenants important for common interest communities”

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Once an association has obtained a reserve study, two questions arise: 1) Do we have to fund a reserve account?   and 2) If so, how do we fund a reserve account?

The statutes for condominiums and property owners associations require an association’s budget to include, among other things, an annual amount to fund the reserve account that is consistent with the obligations in the reserve study.  This means that an association should be placing funds into the reserve account that permits it to meet is obligations to repair, replace and restore capital components based on the estimated replacement cost, the estimated remaining life and the estimated useful life of the capital component.

Continue reading “Okay, how do we establish a funding plan for our HOA’s Reserves? (Part 2 of a 3 part series on Reserves)”

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The analysis of the enforceability of noncompete agreements begins with the question “How did the covenant not to compete arise?”  Employee covenants not to compete generally arise in one of two ways:  1) solely as a result of employment; and 2) arising as ancillary to another agreement, such as an agreement to purchase the prospective employee’s business.

Continue reading “Can your business enforce an employee noncompete agreement?”

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There are many issues that confront your common interest community as its board of directors and management company work hard to maintain the HOA. One issue that has recently come up is the need to be knowledgeable about the chemicals an HOA applies to its common areas.

The Property Owners’ Association Act in Virginia Code § 55-510.3 and the Condominium Act in Virginia Code § 55-79.80:01 both require that an association post notice of all applications of pesticide in or upon the common areas/elements. This notice must be provided by conspicuous signs placed in or upon the area where the pesticide will be applied, at least 48 hours prior to application. This blog post analyzes one particular question that an association should consider when applying chemicals to its common areas: What is a pesticide?

Continue reading “Pesticides, Fungicides, and Herbicides: Why do Virginia HOAs need to know the difference?”

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Many small businesses rely upon loans from friends and family for startup funds, for business expansions, or to support existing operations. Many times, these loans are made upon an oral agreement. As we have written previously, although oral agreements can be enforceable, without a writing, the terms of the agreements can be difficult to prove. In this blog post, we will describe other problems with informal lending transactions between family and friends.

In a study entitled “Lenders’ Blind Trust and Borrowers’ Blind Spots: A Descriptive Investigation of Personal Loans,” researchers outlined many of the difficulties of maintaining a lender-borrower relationship  between friends and family. In many “informal” lending relationships, the borrowers and the lenders remember the transactions differently. This “self-serving bias” can lead to problems. For example, borrowers may believe that the “loan” was a “gift,” or although agreeing that the transaction was a “loan,” may believe they paid off the loan. On the other hand, the lenders may feel angry when the “loan” is not repaid, especially when the borrower never raises the issue of repayment.

The study documented these differences between borrowers and lenders:

 Many borrowers thought the idea for the loan originated with the lender, not themselves, although the lenders thought otherwise;

 Borrowers reported far fewer delinquent loans than lenders;

 Borrowers were fairly confident they would eventually repay the loan, but lenders thought even one missed payment probably meant the loan would never be paid off;

 Delinquent borrowers “are much more likely to report feeling guilty, and also strangely, relieved and happy. Lenders associated with delinquent loans, in contrast, are much more likely to report feeling angry.”

Even though banks are flush with cash to lend, you may not qualify for a loan, or the bank’s terms may be too onerous. Consequently, family and friends are natural sources of funds for startup funds or for operating capital. However, as the proverb says,”Before borrowing money from a friend, decide which you need most.” Therefore, if you must borrow from friends or family, it is a small price to pay to perserve your personal relationships to have your business attorney draft the appropriate loan documents, including a promissory note, so that everybody knows the expectations of the transaction. Taking this step at a relatively small price can save your friendships.

Tarley Robinson, PLC,  Williamsburg, VA

Attorneys and Counsellors at Law

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We have received many questions about how community associations should adjust their operations to comply with the health guidance on COVID-19, also known as the Coronavirus. Federal, state and local guidance and requirements change everyday. This article provides you with practical operations advice based on the current guidance that is available. As we have learned during the past weeks, all guidance is subject to change.

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Continue reading “Can an engineering firm limit its liability by contract?”

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