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.
Louisiana REALTORS® welcomes SpaceX’s announcement of a more than $100 billion investment to build its largest launch facility in Vermilion Parish, recognizing the historic project as an opportunity to create thousands of jobs while generating significant demand for housing, construction, infrastructure and commercial development across the Acadiana area and Louisiana. According to Louisiana Economic Development, the SpaceX project is expected to create more than 3,000 direct new jobs over the next 10 years, with an average annual salary of $92,600, as well as more than 8,100 indirect jobs. The project is also expected to generate 34,516 construction jobs at peak construction. For Louisiana REALTORS®, the significance of the investment extends beyond the jobs created at the SpaceX campus. Major economic development projects bring new workers, families and businesses to Louisiana, creating demand for homes, rental housing, commercial properties and the infrastructure necessary to support growing communities. “An investment of this magnitude creates opportunities that reach far beyond the project itself,” said Norman Morris, Chief Executive Officer for Louisiana REALTORS®. “Thousands of new jobs mean more families looking for places to live, more businesses needing space and more construction activity to support that growth. Louisiana REALTORS® welcomes this investment because a strong economy and a strong housing market go hand in hand.” The planned SpaceX campus is expected to become the largest spaceport in the world, with capacity to support thousands of launches annually. At full buildout, the site is expected to include five launch complexes with two launch pads each, propellant facilities, power generation, vehicle processing and residential housing for employees and their families. Construction is expected to begin in 2027, with initial operations targeted for 2030. The construction component alone represents a significant opportunity for Louisiana's workforce and businesses. LED estimates that the project could support more than 34,000 construction jobs at peak construction, while SpaceX has joined Source Louisiana to provide Louisiana suppliers, contractors and service providers with a pathway to compete for project-related opportunities. “Louisiana has an opportunity to make sure this historic investment translates into lasting opportunities for Louisiana families and businesses,” Morris said. “That includes having enough housing available for the people coming to work here and creating an environment where builders, developers, contractors and real estate professionals can help meet the needs of growing communities.” Louisiana REALTORS® supports continued efforts to prepare Louisiana communities for the growth associated with major economic development investments. Ensuring adequate housing supply, encouraging responsible construction and development and maintaining infrastructure are essential to making Louisiana an attractive place for businesses, workers and families. SpaceX’s investment adds to a historic period of economic development in Louisiana and further establishes the state as a destination for advanced industries, manufacturing, technology and aerospace. LED describes the project as positioning Louisiana as a global hub for next-generation aerospace and a new center of private spaceflight activity. “Louisiana REALTORS® is excited to see what this investment can mean for the future of our state,” Morris said. “When Louisiana wins major economic development projects, our communities have the opportunity to grow with them. We want to see that growth supported by quality housing, strong communities and opportunities for Louisiana businesses.” Louisiana REALTORS® welcomes SpaceX to Louisiana and looks forward to the opportunities this transformational investment can create for Vermilion Parish, Acadiana and communities across the state. Enjoy the video below from the Louisiana Department of Economic Development .
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