New bill limiting COVID-19 liability covers HOAs

ON March 12, Gov. Steve Sisolak issued a Declaration of Emergency to facilitate the state of Nevada’s response to the COVID-19 pandemic. On the following day, the president of the United States declared a nationwide emergency, pursuant to Section 501(6) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In addition, the World Health Organization and the United States Center for Disease Control and Prevention have advised that there is a correlation between density of persons gathered and the risk of transmission of COVID-19.

As a direct consequence, common-interest communities were initially faced with mandatory closures of association amenities including, but not limited to, swimming pools, spas, clubhouses, gyms and other facilities. Since that time, some, but not all, associations have attempted to reopen their common area amenities, subject to controlling health standards, the governor’s directives and the Local Empowerment Advisory Panel guidelines.

Among the issues confronting associations considering reopening common area amenities is the potential liability claims alleging the COVID-19 virus was contracted while using the association’s amenities. The Nevada Legislature recently attempted to address this issue.

During the 32nd special session, the Nevada Legislature passed and the governor signed Senate Bill 4, which limits liability for COVID-19 related claims for most businesses and nonprofits. Initially, the bill did not cover common-interest communities, but thanks to the work of industry groups such as Community Association Institute of Nevada’s Legislative Action Committee and the Nevada Association of Community

Managers, SB4 was amended to include our industry.

It is important to understand that SB4 does not grant blanket immunity to a covered entity from COVID-19-related claims. Rather, a business or nonprofit is only immune from civil liability for personal injury or death resulting from exposure to COVID-19 if the business or private nonprofit organization substantially complied with controlling health standards.

Pursuant to Section 29 of Senate Bill 3, immunity does not apply if the nonprofit organization violates controlling health standards with gross negligence, and the gross negligence is the proximate cause of the personal injury or death. A court, as a matter of law, will determine substantial compliance with controlling health standards.

These procedures apply to any cause of action or claim that accrues before, on or after the effective date of the bill and before the later of: (1) the date on which the governor terminates the emergency described in the Declaration of Emergency for COVID-19 issued on March 12, 2020; or (2) July 1, 2023. Further, the secretary of state may suspend the state business license of an entity that fails to comply with controlling health standards. See SB4, Section 30.

Like any new law, definitions are critical. Section 29 of SB4 includes the following:

“Controlling health standards” means any of the following that are clearly and conspicuously related to COVID-19 and that prescribed the manner in which an entity must operate at the time of the alleged exposure:

(1) A federal, state or local law, regulation or ordinance; or

(2) A written order or other document published by a federal, state or local government or regulatory body.

“Entity” means the nonprofit and its officers and employees.

“Substantial compliance” means the good faith efforts of an entity to help control the spread of COVID-19 in conformity with controlling health standards. The entity may demonstrate substantial compliance by establishing policies and procedures to enforce and implement the controlling health standards in a reasonable manner. Isolated or unforeseen events of noncompliance with the controlling health standards do not demonstrate noncompliance by the entity.

An entity demonstrates substantial compliance by:

■ Having a plan that establishing policies and procedures to enforce and implement controlling health standards; and

■ Carrying out the plan through systematic enforcement with the understanding that isolated noncompliance will not be held against the entity.

The governor’s emergency directives and the re-opening guidance, along with Centers for Disease Control and Occupational Safety and Health Administration guidance are “controlling health standards.” Please keep in mind that these standards change regularly and a plan that is in compliance today may not be in compliance tomorrow or next week.

The information above will cover most community associations. However, if your association is in Clark County and also has amenities that are places of public accommodation, then your association must do more to be immune from civil liability for COVID-19 related claims. In summary:

If your association limits the use of its amenities to members and their guests, then in order to enjoy the protections from civil liability for COVID-19 related claims, your association should:

1. Have a written plan that is compliant with current directives and guidelines.

2. Enforce that plan.

3. Review and update as necessary when new guidelines are issued.

If your association has its own employees (i.e., individuals who do not work for the management company but are directly employed by the association), then the board must ensure that it is informed of its obligations as an employer regarding COVID-19 prevention and that it has a compliant plan for workplace safety.

Even with the Legislature’s passage of SB4, which intends to limit liability for COVID-19 related claims, common-interest communities must proceed cautiously and with the advice and guidance of its community management team and attorney. It is not sufficient to have a plan. The plan must be implemented among the members and reasonably enforced to have the protections of the new law.