HOA's property manager applied for PPP loan for HOA, but refuses to disclose if loan was obtained

Started by PaulJ6 • 22 replies • 1408 views

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PaulJ6
Posts: 990

Posted:

The property manager of my HOA informed the HOA that the property manager applied for a Paycheck Protection Program (PPP) loan: a forgiveable loan available from the Small Business Administration due to the current economic situation. The property manager let everyone know only when I emailed the whole HOA, asking the property manager if a PPP loan had applied for.

I have asked the property manager if the PPP loan was obtained. The property manager has refused to respond. In addition, the board does not know if the PPP loan has been obtained, and the board never approved the PPP loan.

Recent guidance from the SBA indicates that HOAs are ineligible, and that applying for and keeping a PPP loan without being eligible for one could subject the applicant to criminal sanctions.

What would you think of this situation?

I figure that the property manager got the PPP loan and kept the funds, knows that doing so is unlawful and doesn't want anyone raising the topic.

Thanks.

BenA2 (Texas)
Posts: 1,273

Posted:

It's possible the manager and board do not know yet. The manager may have an agreement with the board that he or she only communicates with the board.

I would be very concerned if the manager applied for a loan on behalf of the HOA without the board's approval. If that happened, the manager is liable, not the HOA. Obviously, if they pocketed the money it is a crime and it should be reported to your local police. I think it is unlikely, though. It's not like they could get away with it.

PaulJ6
Posts: 990

Posted:

Quote:

Posted By BenA2 on 05/06/2020 5:38 PM
It's possible the manager and board do not know yet. The manager may have an agreement with the board that he or she only communicates with the board.

I would be very concerned if the manager applied for a loan on behalf of the HOA without the board's approval. If that happened, the manager is liable, not the HOA. Obviously, if they pocketed the money it is a crime and it should be reported to your local police. I think it is unlikely, though. It's not like they could get away with it.

Thanks. The property manager does not have an agreement to communicate only with the board- the property manager regular uses the HOA-wide email list to scold residents and they were fighting today on the email list.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You do realize the Property Manager company is separate from the HOA. Do you know if they applied for the loan in the HOA's name or their own companies? If it is their own company, then it isn't anyone's business including the HOA. If it was in the HOA's name, then the board should have been involved in making that decision to have applied.

So my guess is that the Property Management company applied for this for their own company and NOT in the HOA's name...

Former HOA President

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By PaulJ6 on 05/06/2020 4:29 PM

Recent guidance from the SBA indicates that HOAs are ineligible, and that applying for and keeping a PPP loan without being eligible for one could subject the applicant to criminal sanctions.

Do you have a link to an article saying as much?

PaulJ6
Posts: 990

Posted:

Quote:

Posted By AugustinD on 05/06/2020 7:16 PM

Do you have a link to an article saying as much?

https://www.forbes.com/sites/alangassman/2020/05/04/was-your-ppp-loan-necessaryif-not-there-could-be-horrific-repercussions/#7d7985ac50e1

https://www.hauseit.com/are-coops-and-condo-eligible-for-the-ppp-loan/

TimB4 (Tennessee)
Posts: 21,061

Posted:

My questions: Is the manager an employee of the Association or a contractor?

Was the loan made on behalf of the HOA or for a Management company?

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Paul,

If the loan was made on behalf of the HOA shouldn't someone from the Board be able to call and verify this?

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'm confused.

If the PM is employed by the HOA, then the HOA is the entity that must apply for the loan. In other words, employees don't apply for PPPs, their employers do. If instead the PM is employed by a management company that has a contract with the HOA, then the management company can apply for the loan to pay their people, but that affects the HOA only indirectly (the board can be somewhat confident that the management company will continue to be a going concern in the near term).

In the first case the loan will have to appear in the HOA's financials, so homeowners will find out about it eventually. In the second case, it wouldn't, and there is no need to disclose to homeowners.

And yes, the loan process can take forever, so it's possible they don't know anything yet.

MarkW18
Posts: 1,290

Posted:

The PPP part of the CARES Act is only available to an HOA who employs a manager and handles their payroll taxes.

A management company could make the argument that since homes are not selling, their escrow income has dried up. To some companies, that can amount to $100K per month. Right now, it affects my daughter's company to the tune of $10K per month. We never filed because we know if will come back and if we did the loan, it would have to be repiad, so we will just wait it out.

PaulJ6
Posts: 990

Posted:

Thanks. I don't have details of the loan other than that the property manager said that he submitted PPP loan applications for all of his firm's HOA's.

MarkW18
Posts: 1,290

Posted:

The problem with the PPP and the CARES act was/is there is no supervision or oversight. People on the right didn't want it so the wrong entities were allowed and/or encouraged to game the system. Not the first time and definitely not the last time.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By PaulJ6 on 05/07/2020 7:30 AM
https://www.forbes.com/sites/alangassman/2020/05/04/was-your-ppp-loan-necessaryif-not-there-could-be-horrific-repercussions/#7d7985ac50e1

https://www.hauseit.com/are-coops-and-condo-eligible-for-the-ppp-loan/

Quote:

Posted By PaulJ6 on 05/07/2020 11:48 AM
... the property manager said that he submitted PPP loan applications for all of his firm's HOA's.

PaulJ6, thank you for the citations.

I think the property manager should have gotten board approval for this. I wonder if this was an act of ultra vires. I doubt the HOA will get in any trouble. Still, HOA boards should not have to closely supervise a property manager to prevent occurrences like this.

SheliaH (Indiana)
Posts: 6,964

Posted:

Is this your new or soon to be former HOA? If it's the latter, I thought you couldn't wait to get out, so why do you keep asking questions about what they do or not - they're not your problem anymore.

If it's the new one, I see you can't help getting involved in HOA issues, even though you said you wanted to stay out of them. I knew that would happen - owning a home in a HOA community IS NOT a spectator sport, so here you go again.

This time, why not ask the board (in front of the property manager) if this will impact the HOA operations and if so, how. If the loan was for the property management company, it's probably not the HOA's concern, other than it may ensure people doing maintenance for the HOA via the property manager will still get paid and services will still be provided.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

PaulJ6
Posts: 990

Posted:

Quote:

Posted By SheliaH on 05/07/2020 3:02 PM
Is this your new or soon to be former HOA? If it's the latter, I thought you couldn't wait to get out, so why do you keep asking questions about what they do or not - they're not your problem anymore.

If it's the new one, I see you can't help getting involved in HOA issues, even though you said you wanted to stay out of them. I knew that would happen - owning a home in a HOA community IS NOT a spectator sport, so here you go again.

This time, why not ask the board (in front of the property manager) if this will impact the HOA operations and if so, how. If the loan was for the property management company, it's probably not the HOA's concern, other than it may ensure people doing maintenance for the HOA via the property manager will still get paid and services will still be provided.

Sheila:

Why not ask which HOA this is for before attacking a person ("here you go again")?

Why assume?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

As some have asked, was this PPP applied for by the PM for their business versus on behalf of the HOA?

PaulJ6
Posts: 990

Posted:

Quote:

Posted By JohnC46 on 05/07/2020 5:14 PM
As some have asked, was this PPP applied for by the PM for their business versus on behalf of the HOA?

The PM stated that the PM applied for a PPP loan for the HOA.

HOAs aren’t eligible for PPP loans but the SBA counts on applicants to be honest: most anyone is approved for a PPP loan.

Now the PM refuses to answer and reveal any more info about the loan.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By PaulJ6 on 05/07/2020 6:25 PM

Posted By JohnC46 on 05/07/2020 5:14 PM
As some have asked, was this PPP applied for by the PM for their business versus on behalf of the HOA?

I still don't understand why a Board member can't just call the SBA and ask?

PaulJ6
Posts: 990

Posted:

Quote:

Posted By JohnT38 on 05/07/2020 6:34 PM

Posted By PaulJ6 on 05/07/2020 6:25 PM

Posted By JohnC46 on 05/07/2020 5:14 PM
As some have asked, was this PPP applied for by the PM for their business versus on behalf of the HOA?

I still don't understand why a Board member can't just call the SBA and ask?

These board members say that they don’t know how to keep minutes of board meetings. That’s the level we’re dealing with.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Why do they need a copy of the minutes to pick up the phone, call the SBA and ask do you show a loan application under our name?

PaulJ6
Posts: 990

Posted:

Quote:

Posted By JohnT38 on 05/08/2020 4:05 AM
Why do they need a copy of the minutes to pick up the phone, call the SBA and ask do you show a loan application under our name?

They don’t but they don’t know how to find out about PPP loans. My point was that they aren’t capable of even easy things such as keeping board minutes.

MarkW18
Posts: 1,290

Posted:

I received this email a few minutes ago. This BS is one of the reasons I no longer belong to their group.

The U.S. Congress will vote as early as next week on a fourth economic stimulus package. CAI is asking Congress to include two provisions that will help community associations and association homeowners survive the economic crisis.

Paycheck Protection Program (PPP) & Economic Injury Disaster Loan (EIDL) Program
CAI is calling on Congress to make community associations eligible for PPP loans so emergency funding will be available to associations that need it.

Demand for EDIL is so great the Small Business Administration (SBA) is no longer accepting applications. CAI is calling on Congress to increase SBA resources so these emergency loans are available to community associations when needed.

Housing Assistance Fund
CAI is calling on Congress to establish a Housing Assistance Fund that state governments can use to help homeowners avoid foreclosure. A similar fund was established during the financial crisis of the early 2010s and helped association homeowners pay past due assessments.

PaulJ6
Posts: 990

Posted:

I want free stuff from the government.

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