(From various web sources)
Homeowner Association (HOA) boards, along with countless other organizations, have been closely monitoring the evolving status of the Corporate Transparency Act (CTA). Enacted in January 2024, the CTA was designed to increase financial transparency by requiring certain entities to register their beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN). This included HOAs, making the law particularly relevant to board members.
However, the legislative path of the CTA has been anything but straightforward—leaving many organizations stuck in a state of uncertainty. Here’s a breakdown of the latest developments to help HOA boards stay informed.
Key Updates on the Corporate Transparency Act
- Initial Requirements
Initially, the CTA required homeowner association boards and other qualifying entities to comply by December 31, 2024, or face fines and penalties for failing to register. This called for immediate action by HOA boards nationwide.
- Legal Challenges
On December 3, 2024, the CTA faced its first major legal setback after being challenged in court. While this was not the first legal challenge of the Act, it did lead to appeals and further scrutiny of the Act’s constitutionality.
- Court Rulings
The federal government appealed the challenge swiftly. By December 23, 2024, a court ruled that the CTA was indeed constitutional, seemingly solidifying the Act’s standing.
- Hold Order Issued
The developments didn’t stop there. On December 26, 2024, the Fifth Circuit put the Act on hold, throwing HOAs and other organizations back into uncertainty. This “legislative whiplash” has left many boards unsure of how to move forward.
What Does This Mean for HOA Boards?
As of now, HOA boards are not required to register with FinCEN, thanks to the Fifth Circuit’s hold. However, voluntary registration remains an option if your board wishes to act proactively. Until further rulings or legislative updates are issued, there’s no penalty for delaying registration.
What Should HOA Boards Do Next?
The situation is rapidly evolving, and it’s crucial for board leaders to stay informed. Key next steps include:
- Monitoring the latest legal and legislative developments on the CTA.
- Consulting legal or compliance experts to understand how the Act may impact your HOA if registration requirements resume.
- Relying on reputable resources, like the HOA Leadership Network, for timely updates.
Stay Updated with HOA Leadership Network
We know this is a confusing time for HOA boards. The HOA Leadership Network is committed to keeping you informed about the CTA’s status and what it means for your community. For now, there is no immediate action required, but we continue to monitor developments closely.
Stay tuned for updates, and don’t hesitate to contact us with any questions. Together, we’ll ensure your HOA remains compliant and ahead of the curve.
