Modrall Sperling COVID-19 Task Force Updated October 16, 2020
*This article is authored by Roberta Cooper Ramo with Jamie L. Allen, Nicole T. Russell, Haley B. Adams, and other Modrall Sperling attorneys.
In a very short period of time, the COVID-19 virus already has made a lasting imprint on the daily lives of individuals. In New Mexico, Governor Michelle Lujan-Grisham is refining and changing the rules and guidelines for reopening businesses on an approximately weekly basis. Nationally, as Congress and the White House continue to struggle to reach agreement on a bill to provide further relief to those financially impacted by COVID-19, President Donald J. Trump signed four (4) executive orders responding to economic fallout from the virus on August 8, 2020 (summarized more fully below). However, it remains unclear what immediate impact, if any, these executive orders will have. It is also important to note that New Mexico businesses now have an immediate reporting requirement if any employee tests positive for COVID-19. Please see Section 5 below for details.
It is important to recognize, though, that the complicated and impactful implications of the virus on businesses have only just begun. Modrall Sperling lawyers have mobilized to deal with client issues as they arise and strive to be a resource for our clients as they strategize the near and long term effects of the shutdown and stay at home orders.
During our consultations with clients over the last several months, a pattern of frequently arising questions has emerged. We endeavor to summarize those questions and the corresponding answers in this article, and we hope that this will serve as a resource to our clients as we face the coming weeks and months of recovery. Please note that the law, the regulations and judicial interpretations are in a constant state of flux. Before acting upon any of the information contained herein, please consult with one of our attorneys to ensure that there have not been changes that might affect your planned course of action. Earlier archived versions of this Article may be accessed here. Though the information they contain is outdated, the history and fuller context of the issues discussed may be helpful.
1. What Federal Programs are aimed at helping business and individuals?
A. The CARES Act as Modified by the Paycheck Protection Program Flexibility Act of 2020.
The key federal program in place today is the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act (“CARES” or “CARES Act”), key elements of which have since been extended through the Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”). One of the main purposes of CARES is to provide loans to businesses for specific expenses incurred during the period of February 15, 2020 through June 30, 2020 (extended by the PPP Flexibility Act to December 31, 2020). Some relief for individuals is also provided in the CARES legislation.
Although the Small Business Administration (SBA) issues CARES loans, the loans are serviced by banks authorized by the SBA. A list of authorized New Mexico Banks can be accessed here (SBA New Mexico Edition Resource Guide 2019-2020, page 30). Please be aware that some banks are imposing restrictions and choosing to work only with their existing business customers.
Though many businesses were unable to secure loans from the SBA in the initial round of funding, another round of funding—replenished with $310 billion— opened on Monday, April 27, but closed August 8, 2020, as the SBA is no longer accepting applications from participating lenders. Since the program launched, through the end of June, PPP lending provided 22,105 loans to New Mexican businesses, totaling just over $2.2 billion. Entities fortunate enough to secure funding will have received an SBA loan number. While most banks were able to transfer the money to their approved borrowers quickly, the loan volume at some banks may have caused a delay. If you received an SBA loan number and have not yet been asked to sign a loan note, you should contact your bank to inquire.
There are stringent rules associated with an applicant’s ability to obtain forgiveness of the loan. The Rules for the CARES Act loans, especially the Paycheck Protection Program (“PPP”) portion, are quite specific and must be followed to have eligible amounts of the loan amount forgiven. Some of the initial dates and provisions set forth in the Rules and FAQs have since been changed by the PPP Flexibility Act; those changes are detailed below. On June 22, 2020, the SBA issued Interim Final Rule on Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule, available here, and the Frequently Asked Questions (FAQs) can be accessed here. Please note that the FAQs clarified and in important ways enlarged definitions like “compensation” to include such things as payment of health insurance and many other benefits. Two more interim final rules, published June 1, 2020, address requirements for loan forgiveness (available here) and provide PPP loan review procedures and related borrower and lender responsibilities (available here).
Several of these requirements were adjusted on June 5, 2020, when the President signed into law a bill to amend certain provisions of the PPP. This law, called the Paycheck Protection Flexibility Act (the “Flexibility Act”), available here, changed the PPP in the following ways:
- Covered Period Extended: Borrowers may now choose to extend the period during which they may use the proceeds from their PPP loans from eight to twenty-four weeks (but in no instance later than December 31, 2020). Borrowers with an existing PPP loan may elect to continue using the eight-week covered period. As of August 8, 2020, the SBA is no longer accepting PPP loan applications.
- Required Payroll Percentage Lowered: The Flexibility Act reduces the percentage of the PPP loan—from 75% to 60%–that must be used for payroll costs in order for the applicant to qualify for loan forgiveness. Consequently, up to 40% of the loan proceeds may now be used for interest on mortgage debt, rent and utilities. What qualifies as a forgivable expense has not changed.
- Loan Forgiveness Timeline: For new and existing loans, if a borrower does not apply for loan forgiveness within ten months after the end of the borrower’s covered period, payments of principal and interest on the loan will begin at the end of that 10-month period.
- Spending and Repayment Periods Extended: Prior to the Act’s passage, spending of the loan by borrowers had to occur within the “covered period,” which was eight weeks of receipt of the loan proceeds. Now, the covered period for new and existing loans will be:
- Beginning on the origination date of the loan (which SBA has indicated will be the date loan proceeds are disbursed), and ending the earlier of:
- the date that is 24 weeks (168 days) after the loan origination date, or
- December 31, 2020.
- Borrowers who received loans before June 5 may elect to continue to use their eight-week covered periods under the original CARES Act provision.
- Beginning on the origination date of the loan (which SBA has indicated will be the date loan proceeds are disbursed), and ending the earlier of:
- Workforce Restoration Timeline Extended: Borrowers now have until December 31, 2020, to restore their workforce levels and wages to qualify for full loan forgiveness. The prior deadline was June 30, 2020.
- Forgiveness Requirements Loosened: If borrowers can in good faith document that from February 15, 2020 to December 31, 2020 they could not: (1) rehire individuals who were employees on February 15, 2020, or hire similarly qualified employees for unfilled positions on or before December 31, 2020; or (2) return to the same level of business activity at which such business was operating before February 15, 2020, because of COVID-19-related operating restrictions, they may still have their loans fully forgiven without fully restoring their workforces. The borrower can seek forgiveness as soon as their funds are expended.
Importantly, the borrower is required to certify its own eligibility to receive a PPP loan. To this end, an applicant generally must: (1) have fewer than 500 employees whose principal place of residence is in the United States, or (2) be a “small business” under the applicable NAICS code employee size standard to be eligible for a PPP loan. A business otherwise ineligible can qualify for the PPP as a small business concern if it meets the SBA’s “alternative size standard” as of March 27, 2020: (1) maximum tangible net worth of the business is not more than $15 million; and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million. The FAQs setting forth this information can be accessed here.
On June 11, 2020, the Small Business Administration (SBA) posted a new interim final rule, available here, which clarifies certain key changes made to the PPP by the Flexibility Act.
On July 3, 2020, the President signed into law a bill extending the PPP loan application deadline to August 8, 2020, but as discussed above, the SBA is no longer accepting applications for the PPP loans.
Loan forgiveness applications, updated June 16, 2020, are available here. The forgiveness amounts may be limited under the PPP as follows:
- No more than 40 percent of the loan forgiveness amount may be attributable to non-payroll costs (i.e., mortgage interest, rent and utilities)
- Proceeds from any advance up to $10,000 on an Economic Injury Disaster Loan will be deducted from the loan forgiveness amount
- Though the PPP Flexibility Act loosened requirements for forgiveness, loan forgiveness still could be proportionately reduced if the business has reduced its number of full-time equivalent employees or has reduced the salary or wages of certain employees. The potential for proportional reduction remains unclear until further guidance is received from the federal government. Applicants should continue to maintain detailed records, ask for receipts, and keep all supporting information, from the beginning of the covered period and for six 6 years after the date that the loan is forgiven or repaid in full. Applicants should draft memos—reviewed by counsel—to document and analyze the rationale for certification to be eligible to obtain funds through the PPP.
- See Question 3, below, for further information.
The SBA recently released a three-page “EZ” Paycheck Protection Program loan forgiveness application, available here, that requires less documentation and fewer calculations than its predecessor. This form may be used by borrowers who:
- Applied for the PPP loan as self-employed, independent contractors, or sole proprietors with no employees; or
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return); or
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
If you are uncertain of the status of your application, it is very important that you check with your bank and not assume that if your loan application is already in the hands of the bank that that application will work under any new funding act. Every item required to be documented must be complete for a bank to submit a loan application to the SBA.
The SBA has also offered guidance on appealing rejections of PPP loan forgiveness. Through an interim final rule, available here, the SBA and the Treasury Department outline the procedure to appeal PPP loan applications that have been turned down. The SBA is accepting appeals by email at email@example.com, by fax at (202)205-7059, and via the Hearing and Appeals Submission Upload Application, available here.
A second source of federal help is the Economic Injury Disaster Loan Advance (EIDLA). SBA resources regarding this program can be found here. While the loans under PPP can be largely forgiven if certain criteria are met, the loans under the SBA Economic Injury Disaster Loan program are low interest loans that must be paid back. Those funds are also currently all expended and the amount to be allocated under the new bill under consideration in Congress is unknown.
The Modrall lawyers able to help with questions concerning Loans under PPP or the EIDLA or what may follow are: Meg Meister, Jennifer Anderson, Robin James and Tiffany Roach Martin.
B. The Main Street Lending Program
The Federal Reserve established the Main Street Lending Program (Program) to support lending to small and medium-sized businesses that were in sound financial condition before the onset of COVID-19. The Federal Reserve Board and U.S. Department of the Treasury released instructions for borrowers and lenders in advance of the opening of the Program, available here, which aims to provide up to $600 billion in loans for small and midsize businesses. The Program operates through five facilities, and the term sheets for each facility and FAQs can be accessed here.
Small and medium-sized businesses interested in the Program can apply for Program loans by contacting an eligible lender, a list of which can be found here.
C. President Trump’s Executive Orders
On August 8, 2020, President Trump signed four executive orders aimed to help ease economic crisis brought on by the COVID-19 pandemic. These executive orders are
- The Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic, available here.
- The Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners, available here. Further relief for renters and homeowners has been implemented at the state level. For a discussion of the New Mexico Supreme Court’s action in this area, see Section 9 below.
- The Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, available here.
- The Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019, available here.
While the relief focused on continued student loan payment relief has shown to have a significant impact on federal student loan borrowers, it remains to be seen what immediate impact, if any, the remainder of the executive orders and memoranda will have on Americans financially impacted by COVID-19.
2. Is there any guidance regarding loan forgiveness under the PPP?
Yes, on July 23, 2020, the SBA issued a procedural notice (“Notice”), found here, providing detailed instructions for PPP lenders on the PPP forgiveness process. This notice outlines:
- The loan forgiveness process,
- How to submit loan forgiveness decisions, supporting documents, and requests for forgiveness payments,
- The lender confirmation required for PPP forgiveness submissions,
- Documentation and data required to be submitted when the lender issues its decision to the SBA,
- Requirements for lenders when SBA notifies the lender it is initiating a loan review,
- What happens when SBA remits the forgiveness payment to the lender, and
- Whether a borrower may appeal the SBA’s determination that the borrower is ineligible for a PPP loan or the loan forgiveness amount claimed by the borrower.
Notably, the Notice included the announcement of an online platform by which PPP lenders can upload required data and documentation, monitor the status of a forgiveness request, and respond to SBA in case of an inquiry or if SBA selects the loan for review. The PPP Forgiveness platform went live and began accepting lender submissions on August 10, 2020. Lenders can access the portal here.
For Borrowers: The loan forgiveness application is now available here. Though the passage of the Flexibility Act may introduce a new regulatory framework, based on current guidance and interim rules, we know the following:
Loan forgiveness will be based upon the business’ actions during the covered eight or twenty-four week period. From there, forgiveness will be determined by certain costs incurred and payments made throughout the covered period. Payroll costs are the primary eligible cost, and include:
- Salary, wages, commission or similar compensation (limited to $100,000.00 compensation or less per employee)
- Payments for vacation, parental, family, medical or sick leave (this may be limited if the Employer got benefits under the Families First Corona Virus Response Act, FCRA)
- Allowance for dismissal or separation
- Payments for the provision of group health care benefits, including insurance premiums
- Payments for retirement benefits
- State or local payroll taxes
Under the Flexibility Act, available here, no more than 40 percent of the loan forgiveness amount can be attributable to non-payroll costs. Those non-payroll costs eligible for forgiveness include:
- Interest payments on mortgages incurred in the ordinary course of business on real or personal property in existence as of Feb. 15, 2020
- Rent payments under leasing agreements in existence as of Feb. 15, 2020
- Utility payments for electricity, gas, water, transportation, telephone or internet for which service was in existence as of Feb. 15, 2020.
It is possible the borrower’s forgiveness amount could still be proportionately reduced if the business has reduced its number of full-time equivalent (FTE) employees, or if the business has reduced the salary or wages of certain employees, though the PPP Flexibility Act has loosened those restrictions (see Question 1). We will provide regulations promulgated under the Flexibility Act as they become available.
At least one company has offered PPP loan forgiveness calculators to those seeking further guidance. NAV’s free tool, available here, is not to be construed as a legal opinion or as legal advice, but rather provides a helpful starting point for the calculation of potential forgiveness amounts.
3. What do PPP Recipients Need to Know?
After several publicly-traded companies reportedly received PPP loans, the SBA and the Treasury Department on April 23 and on April 28, 2020 issued FAQ No. 31, which seems to add to the loan requirements. The FAQ, available here, effectively amends the certification to supplement the factors businesses are required to consider when making the certification. Notwithstanding the Question’s reference to “businesses owned by large companies,” the answer states that “all borrowers must assess their economic need under the standard established by the CARES Act and the PPP regulations at the time of the loan application.”
Though the Department of the Treasury’s recent Interim Final Rule—available here—extends “safe harbor with respect to certification concerning need for the PPP loan request,” and, in so doing, allows borrowers who may have been mistaken about the Certificate Requirement to return their loans, the FAQ and subsequent regulation may be confusing to borrowers. Recognizing this confusion, the Department of the Treasury added FAQ No. 43, which extended the safe harbor provision to May 14, 2020. That date was subsequently extended to May 18, 2020, per FAQ 47. FAQ 47 also provides that “the SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.” Borrowers should, at a minimum, document in detail upon application:
- the economic uncertainty necessitating the loan, including as many figures and contract obligations as possible;
- the absence of alternative sources of liquidity;
- requests already received to reduce charges;
- any limitations on the ability to use working capital;
- any inability to borrow additional funds;
- any business risks to using existing working capital or taking on new debt to fund current operations;
- any plan for reducing staff and payroll costs and the extent to which such plan is put on hold due to forgiveness expectations;
- any pre- and post-application assessments of the threats and/or impacts to your business from the COVID-19 situation.
It is possible that this list of recipients will be disclosed to the public, as the Associated Press accessed, combed through, and publicized regulatory filings following the first round of PPP loans.
On April 28, Secretary Mnuchin announced that the SBA would conduct a “full review” of all loans over $2 million before there is loan forgiveness. Further, the SBA may review any PPP loan, regardless of size, to determine if the borrower is eligible for PPP loans under the CARES Act, whether the borrower calculated the loan amount correctly and used the funds for eligible costs, and whether the borrower is eligible for the amount of loan forgiveness it requests. For this reason, it is critical that borrowers keep all paper and electronic records related to loan disbursement and spending for 6 years after the date that the loan is forgiven or repaid in full. However, FAQ 46, available here, provides that if the SBA in the course of its forgiveness review comes across a mistake on the part of the borrower, the SBA will notify the borrower, who can return the loan without penalty. We will continue to update the Modrall Sperling website with federal guidance as it develops.
4. Is there a New Mexico Loan Program to aid businesses harmed by the COVID-19 shutdown?
Yes, the New Mexico Investment Council has established a New Mexico Recovery Fund managed by Sun Mountain Capital. That program opened August 5, 2020, and allocates $400 million in loan funds available for New Mexico small businesses. The rules for application may be found here. Eligible businesses are those which are:
- A New Mexico business or nonprofit corporation organized under Section 501(c)3 or 501(c)6 that has closed or reduced operations due to the public health order, and
- Had annual gross revenue of less than $5 million as determined by its 2019 federal income tax return or Form 990, and
- Experienced a 30% decline in monthly gross receipts or monthly revenue in April and May of 2020 as compared to the same months in 2019.
On August 25, 2020, the Governor’s Economic Recovery Council issued a press release, available here, urging small businesses to apply for an emergency loan available through the New Mexico Finance Authority. Note that these loans must be repaid under the terms of the program. These are the lawyers familiar with the program: Meg Meister and Robin James.
5. What is the Status of New Mexico’s Re-opening?
Although New Mexico had begun to loosen several business-related restrictions over the summer, Governor Lujan Grisham announced an amended emergency public health order effective October 16, 2020, which may be accessed here.
Per the Governor’s press release, available here, the tightened restrictions include:
- A temporary closing time of 10:00 p.m. for any food or drink establishment serving alcohol.
- Restrictions on Hotel occupancy.
- A mandatory 14-day quarantine is still in place for all individuals traveling into New Mexico from states deemed high-risk based on COVID-19 positivity rates. The list of those states deemed “high-risk,” found here, is continually changing, and is thus updated weekly.
- All gatherings of more than 5 people are prohibited, previously gatherings had been limited to 10 people.
At this point, New Mexico’s amended emergency public health order has not changed the occupancy allowance for retail and dining establishments. Therefore, the previously announced limits are still in place until a new order is announced. Those occupancy allowances are referenced in the October 16, 2020 public health order, found here. However, occupancy allowances for indoor dining and other retail establishments are expected to be further restricted absent a decrease in the spread of the virus. This amended emergency public health order will be in effect until Nov. 13, 2020.
New Mexico’s Guide to COVID-Safe Practices for Individuals and Employers was updated on October 13, 2020 and may be accessed here.
If you feel your business has not been allowed to fully open and are not clear whether it is allowed to do so, you may send inquiries to firstname.lastname@example.org. These are the lawyers who have been working in this area: Marco Gonzales, Walter Stern, Lynn Slade, Stuart R. Butzier, Brian Nichols and Christina C. Sheehan.
6. How has COVID-19 affected tax filings, tax matters and retirement plans?
The due date for filing individual income tax returns was automatically extended by the IRS and the State of New Mexico from April 15, 2020 to July 15, 2020.
The CARES Act has a number of very important exemptions or changes to rules concerning retirement plans of all kinds. These range from changes providing large loans and distributions from qualified plans for those qualifying for them to suspension of required minimum distributions. Other changes were made that might make a difference in your decisions about charitable gifts from IRA’s and certain estate planning matters.
Of note, the IRS recently issued further guidance under the CARES Act, available here, expanding the categories of individuals eligible for coronavirus-related plan distributions and loans. Previously, the IRS only considered an employee’s adverse financial experiences for COVID distributions and loans from retirement plans. Under this recent guidance, additional factors are also considered, such as the adverse financial experiences of the employee’s spouse (or household member). These adverse financial experiences include being quarantined, furloughed or laid off, having work hours reduced due to COVID-19, being unable to work due to lack of childcare due to COVID-19, closing or reducing hours of a business that they own or operate due to COVID-19, having pay or having self-employment income reduced due to COVID-19, or having a job offer rescinded or start date for a job delayed due to COVID-19.
Furthermore, many Americans have received a required minimum distribution (“RMD”) from an IRA or employer plan they may not want to keep. The CARES Act contains a waiver of RMDs, pushing back the deadline for qualified individuals to repay their RMDs.
A “qualified individual” is one who falls within one of the following categories:
- An individual who has been diagnosed with the SARS-CoV-2 or COVID-19 virus by a test approved by the CDC;
- An individual whose spouse or dependent has been diagnosed;
- An individual who experiences adverse financial consequences on account of the individual, the individual’s spouse, or a household member:
- Being quarantined, being furloughed or laid off, or having work hours reduced due to the virus;
- Being unable to work due to lack of child care due to the virus;
- Having reduction in pay (or self-employment income) due to the virus; or
- Having a job offer rescinded or start date for a job delayed due to the virus; and
- An individual who experiences adverse financial consequences on account of closing or reducing hours of a business owned or operated by the individual, the individual’s spouse, or a household member due to the virus.
Qualified individuals have three years to return unwanted RMDs.
For Retirement Plan questions of all kinds, Karen Kahn is working on these matters. For other tax matters, including state taxes and estate tax questions the following lawyers are able to help: Vanessa Kaczmarek, Ian Bearden, Zack McCormick, Roberta Ramo, Marjorie Rogers and Nadine Shea. For State Gross Receipts Tax questions, please contact Zack McCormick or Ian Bearden.
7. Are there any health insurance or health plan issues?
Certain protection of continuation of health benefits are covered by the CARES Act. However, many depend upon the hour requirements of the employer’s plan and there may be state insurance rulings that have changed. The DOL and the IRS have waived health plan claims deadlines for both employees and employers, including deadlines for paying COBRA premiums. On May 13th, the IRS issued Notices that permit Employers the option of: 1) extending the grace period for unused amounts from 2019 in Health FSAs and DCRAs to December 31, 2020; 2) prospectively permitting changes to health plan coverage and to Health FSAs and DCRA amounts without a qualifying status change (although Employers can limit the amount and the election change period); 3) permitting use of telehealth services without disqualifying HSA contributions, and 4) increasing the Health FSA carryover to $550 and permanently indexing the carryover dollar amount. Amendments are not required until 12/31/2021.
Further, the New Mexico Office of Superintendent of Insurance has issued various guidance documents relating to the COVID-19 pandemic. A continually-updated collection of these documents can be found here.
Also important are the requirements of HIPAA when an employer finds that an employee has been diagnosed with COVID-19. Kevin Pierce is ready to answer HIPAA questions and Karen Kahn can help with health plan and cafeteria plan questions.
9. How does COVID-19 affect employers?
The U.S. Department of Labor (DOL) is requiring employers to post a notice of the Families First Coronavirus Response Act (FFCRA). The FFCRA became effective on April 1, 2020. The current poster applicable to non-federal employees (as of March 26, 2020) can be found here. The DOL has provided additional information regarding the FFCRA and related posters on the DOL website here. Note that businesses that are currently open must follow many requirements in the Governor’s original and renewed Order, including the number of people that can be in their business and other requirements.
As businesses reopen, they should review the guidelines from the CDC, available here and here, and the State of New Mexico, available here. In addition,
Employers are required to inform employees of the rights afforded by the FFCRA. The DOL counsels that an employer may satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website. Several attorneys in our Employment Group can help with these kinds of issues.
9. How has COVID-19 impacted real estate leases?
Both residential and commercial leases are impacted by the COVID-19 shutdown.
For commercial leases, look first to the language of the lease.
Many tenants have stopped paying rent during the shutdown and both landlords and tenants are looking at their leases. The result is in part dependent upon the language of the leases. However, many leases do not address a virus in a clear way. Additionally, tenants who were recipients of PPP loans may be required to pay rent under certain terms of that loan. Other loans may not have a similar requirement. Landlords should be clear about following the notice provisions of the default clauses in their leases and tenants would be well advised to get in touch with their landlords directly. Any written communication of either the landlord or tenant should be reviewed by your attorney. Meg Meister, Roberta Ramo and Robin James are working in this area.
For residential leases, the following information may be helpful:
The CARES Act contains a 120-day “moratorium” on landlords evicting tenants or imposing fees/fines due to a tenant failing to pay rent. The CARES Act eviction moratorium applies to “covered dwellings” and “covered properties”, which include any property that participates in a covered housing program including such as (among other programs) the Low Income Housing Tax Credit program (26 U.S.C. § 42) and programs pursuant to which the landlord’s mortgage is a HUD, VA, USDA or Fannie Mae or Freddie Mac loan. However, this moratorium expired on July 24, 2020, allowing landlords to issue 30 days’ notice for tenants to vacate properties.
However, even though the federal moratorium has expired, relief for renters continues to be in effect at the state level. Before the enactment of the CARES Act, the New Mexico Supreme Court issued an Order staying the execution of all writs of restitution under the Owner Resident Relations Act (even for landlords not covered by the CARES Act moratorium) for non-payment of rent, provided the resident “has demonstrated by a preponderance of the evidence a current inability to pay monthly rent established by the rental agreement.” The Order does not contain a termination date, and instead, “shall remain in effect until amended or withdrawn by future order of the Court.” Accordingly, the Order continues to apply even though the CARES Act moratorium has expired.
10. What about creditors’ rights issues?
In addition to leases, COVID-19 has had a dramatic input effect on loans. Businesses that extend credit are being requested to forbear collection and the CARES Act has expanded certain bankruptcy relief. Moreover, the dramatic oil price reduction has hurt businesses and individuals within, and dependent on, the oil and gas industry for revenue. Creditors should understand their rights and the rights of their borrowers, including the revisions to the Bankruptcy Code under the CARES Act.
On Friday, June 5, the New Mexico Supreme Court handed down an order, available here, suspending any issuance of new writs of garnishment and writs of execution in consumer debt cases. Previously-issued writs and domestic support obligations are unaffected.
Attorneys Paul Fish, Doug Vadnais, and Spencer Edelman can provide guidance on these issues.
11. Is it possible to execute new Estate Planning Documents during the shutdown?
Yes. Documents that only need be witnessed by a notary may be notarized by video (i.e. Zoom or FaceTime), if certain requirements are satisfied. Initially, the allowance of notary by video was allowed until June 20, 2020, but has since been extended until rescinded by Governor Lujan-Grisham. Additionally, and especially important now is letting someone in your family know where your original wills, trusts, durable powers of attorney and health care directives are kept. If you have questions about creating or updating your estate planning documents, the attorneys in our Trusts and Estates Group can help.
12. What employment issues exist in the context of reopening?
The Department of Labor and EEOC have issued guidance—available here—to help employers apply the sick leave and expanded Family Medical Leave Act and to avoid claims for discrimination, retaliation, and harassment in the workplace based on COVID-19, such as the ability for employers to take the temperatures of employees entering the workplace, limitations on disclosing the identity of a COVID-19 positive employee, and the duty to accommodate an employee’s request for accommodation based on a fear of contracting COVID-19. Modrall Sperling’s Employment Group is ready to navigate employers through these and other potential areas of exposure. These guidelines continue to change and you should consult with your attorney before you take action.
13. Risk management and related litigation.
The Long Term Care and Healthcare industries are facing regulatory and personal injury claims related to COVID-19. Our attorneys have handled regulatory and litigation matters for our clients in the Long Term Care and Healthcare industries, such as skilled nursing facilities and assisted living facilities, and hospitals, including regulatory proceedings, trials and appeals, and they are well-versed in recent COVID-19 developments. Should you be threatened with COVID-19 related litigation or regulatory enforcement matters, attorneys, Michelle A. Hernandez, Tomas J. Garcia, Tim L. Fields, Martha Brown, Susan Bisong and Jeremy Harrison can help you.
The most important advice of all: Stay safe, practice social distancing, wash your hands, wear your masks and know that we all care about our whole community and are here now and in what we know will be a robust recovery for New Mexico.
 In a recent New Mexico bankruptcy decision here, the Bankruptcy Court deemed arbitrary and capricious the SBA’s “inexplicable and highhanded decision to rewrite the PPP’s eligibility requirements” regarding bankruptcy ineligibility only after publishing a First Rule that made no mention of bankruptcy whatsoever. This opinion has no weight outside this case, but highlights one Judge’s objection to adding requirements not stated in the PPP statute.