Blog Layout
Necessary Documentation and Privacy Considerations
LOUISIANA REALTORS • April 1, 2020
CORONAVIRUS: NECESSARY DOCUMENTATION AND PRIVACY CONSIDERATIONS[1]
By: Patricia B. McMurray, JD and Melissa M. Grand, JD
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
450 Laurel Street, Chase Tower North, 21st Floor
Baton Rouge, Louisiana 70801
In this uncertain time, it is critical that REALTORS® consider what paperwork related to COVID-19 they should be maintaining. Federal loan programs, like the new CARES Act, and other grant programs require that certain documents be submitted in the application process to prove the loss sustained as a result of the pandemic. You might have business interruption insurance or be eligible for other new programs that are still being formulated if you can show your lost income. Not having proper documentation may mean not being able to apply for or receive certain loans, grants, or other funds. Additionally, REALTORS® may be collecting confidential documentation, such as health information in a coronavirus screening questionnaire from clients, employees, and independent contractors. REALTORS® also store personal and confidential information of clients and employees during the regular course of their business. Maintaining the confidentiality and security of this information obtained by your business is important.
1. What documentation should I be keeping as I consider applying for various reimbursement programs, loans, grants, business interruption insurance or other sources of funding?
Short Answer:
In addition to your general record-keeping practices, we suggest that you maintain documentation of any COVID-19 related expenses or losses separately from other payments and expenses, if possible.
The CARES Act created two new Small Business Administration (SBA) initiatives: the SBA 7(a) “Payroll Protection Program” and the SBA “Economic Injury Disaster Loan” (EIDL) grant program. Visit SBA's Disaster Assistance website for more detailed information on these programs. See also, the National Association of REALTORS®’ (NAR) guidance on the CARES Act
and REALTOR® Magazine article on new small business loans. As the U.S. Chamber of Commerce guidance
explains, in evaluating eligibility under the CARES Act, lenders will ask for a good faith certification that the uncertainty of current economic conditions makes the loan request necessary to support ongoing operations. It is a best practice to maintain detailed documentation of your COVID-19 related payments and expenses separately from your regular business payments and expenses, for your use in demonstrating the economic impact of COVID-19 on your business. For example, emails, copies of texts or correspondence related to closings which were canceled because of delays related to the Governor’s Stay Home Orders, documentation of canceled open houses, etc. should be retained.
Other information you may be asked to provide in applying for a loan under the CARES Act includes basic identifying information for your business, your business TIN number, your average monthly payroll, the number of jobs supported by your company and what specifically you want to use the loan money for. See Treasury.gov. You will also be asked to list all owners who hold at least a 20 percent ownership stake in the company and affirm that they are not party to federal crimes. See id. Also, you may be asked to provide the lender with documentation regarding your employee headcount over time, as well as your payroll costs. Tax returns may also be required.
2. I am requesting that all clients complete a coronavirus questionnaire before they enter a property I am showing. I am also asking my employees and independent contractors to complete a coronavirus questionnaire form and self-report if they have been exposed to coronavirus. What should I do with these completed forms?
Short Answer: You should maintain a copy of the screening forms when completed. Keep the completed forms secure and confidential such as in a locked filing cabinet or password-protected electronic file.
The information collected on the screening forms may contain medical information and should be treated as confidential. The National Association of REALTORS® guidance on general document retention may be found here. Also Louisiana REALTORS® (LR) discussed coronavirus screening questionnaires and provided sample questions in LR’s article on hold harmless agreements, here.
3. What are my obligations to generally maintain documents?
Short Answer: You must maintain certain records for 5 years pursuant to the real estate license law. Keep the documents properly indexed, and secure (physically secure, for example in locked cabinets, and/or electronically secure) to preserve client privacy and confidentiality.
LA. R. S. §1449D1 provides:
D. (1) Individual real estate brokers shall retain all of the following records, readily available and properly indexed, for a period of five years:
(a) Bank statements, copies of deposit slips, and canceled checks on all escrow or trust accounts.
(b) Copies of all documents that pertain in any way to real estate transactions wherein the individual real estate broker or licensees sponsored by the individual real estate broker have appeared in a licensing capacity.
(2) The requirement regarding copies shall not be altered by the transfer of a broker to that of an associate broker, an unlicensed person, or an inactive licensee.
E.(1) Partnerships, limited liability companies, associations, corporations, or other legal entities, foreign or domestic, and real estate brokers shall retain the following records, readily available and properly indexed, for a period of five years:
(a) Bank statements, copies of deposit slips, and canceled checks on all escrow or trust accounts.
(b) Copies of all documents that pertain in any way to real estate transactions wherein the partnership, limited liability company, association, corporation, or other legal entity, foreign or domestic, the designated qualifying broker, or licensees sponsored by same, have appeared in a licensing capacity.
(2) This requirement, regarding copies, shall not be altered by the partnership, limited liability company, association, corporation, or other legal entity, foreign or domestic, transferring the broker license to the inactive status or failure to renew such license.
All businesses, including real estate firms, should have policies and procedures in place for keeping client information secure and disposing of consumer information in a manner that preserves client privacy and confidentiality. A comprehensive data security plan will ensure that businesses collect only the consumer information needed, keep the information safe, and dispose of the information securely.
There is no one-size-fits all approach to data security and compliance, but many resources exist to assist businesses in complying with their legal responsibilities. Available resources include:
DISCLAIMER
Information and additional guidance and orders regarding the pandemic are being issued daily. The information is the article was last updated on April 1, 2020 at 12:30 p.m.
These materials are to be used for informational purposes and should not be construed as specific legal advice. These materials are not designed to cover every aspect of a legal situation for every factual circumstance that may arise regarding the subject matter included.
This publication is for reference purposes only and association members or other readers are responsible for contacting their own attorneys or other professional advisors for legal or contract advice. The comments provided herein solely represent the opinions of the authors and is not a guarantee of interpretation of the law or contracts by any court or by the Louisiana Real Estate Commission.
As previewed last week, NAR is pleased to share the latest consumer guide focused on preparing for homeownership. This guide covers what prospective buyers should consider as they kick off the home purchase process, including the importance of credit scores, mortgage pre-approval, down payments, budgeting, and educational resources. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow a few days for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Preparing for Homeownership Escrow and Earnest Money Pricing Your Home Preparing to Sell Your Home Fire Damage and Policy Coverage Thank you for your continued engagement with the “Consumer Guide” series and for sharing the resources with potential clients to ensure they have the information they need to be successful in their homebuying or selling journey. Remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. Be on the lookout for next week’s guide on Wednesday, which will cover property taxes.
As previewed last week, NAR is pleased to share the latest consumer guide focused on escrow. This guide covers what homebuyers should know about earnest money deposits, including the general terms and use cases in real estate transactions. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow a few days for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Escrow and Earnest Money Pricing Your Home Preparing to Sell Your Home Fire Damage and Policy Coverage Flood Insurance Thank you for your continued engagement with the “Consumer Guide” series and for sharing the resources with prospective clients to ensure they have the information they need to find success in their homebuying or selling journey. Remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. Be on the lookout for next week’s guide on Wednesday, which will cover preparing prospective buyers for homeownership.
The Louisiana REALTORS® Board of Directors will conduct several elections this Spring. Interested candidates that meet the qualification who are looking to serve at either the state association level or the national association level are encouraged to view the criteria and submit an application. An application that is not submitted on the appropriate form or not submitted pursuant to the instructions shall not be considered as submitted timely.
821 Main StreetBaton Rouge, LA 70802
821 Main Street
Baton Rouge, LA 70802