Condo Living Made Easy

On December 5, 2024, an appeal was filed against the preliminary injunction put into place on December 3, 2024.

FinCEN has noted on its website that due to the current injunction, reporting companies are not currently required to file by the initial 1/1/25 deadline. However, FinCEN continues to accept BOI filings and has stated that it believes the CTA will be upheld.

While the situation continues to evolve, Haus Financial Services is encouraging clients to file now before the initial deadline to avoid any last-minute scramble. Even if the deadline is extended, the requirement may still stand. We feel it is best to check this item off your To Do List rather than to continually monitor the status of the legal actions. It may be the only filing you will need to do, but at least it will be done.

Ultimately, it is up to the board of your community association to determine whether or not to file its BOI report at this time. 

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a NATIONWIDE preliminary injunction against the Corporate Transparency Act. This preliminary injunction halts enforcement and compliance of the requirement for corporations to file a Beneficial Ownership Report by January 1, 2025.

Communication from law firm Keough and Moody states:

"On December 3, 2024, the U.S. District Court for the Eastern District of Texas entered a preliminary injunction enjoining enforcement of the CTA. In the Memorandum Opinion and Order for the Texas Top Cop Shop, Inc. case, Judge Mazzant declared that “…reporting companies need not comply with the CTA’s January 1, 2025, BOI (Beneficial Owner Information Report) reporting deadline pending further order of court.” Based upon this decision, it appears that reporting companies, such as community associations, have received at least a temporary reprieve from having to file a BOI.

With the above said, it is important to note that this situation is fluid. At the time of the drafting of this update, the Department of the Treasury has not expressed any public position on the ruling, nor has it provided an update as to the next steps (including whether it is agreeing to suspend or extend the deadline for compliance). The FinCEN website is still open for business. Given action taken in response to past adverse rulings, specifically that related to the National Small Business United v. Yellen case in the U.S. District Court for the Northern District of Alabama, we expect Judge Mazzant’s order to be promptly appealed. As a result, we caution against assuming that the CTA is dead and that filing of a Beneficial Owner Information Report is no longer needed. Action may still ultimately be required and may still be required by January 1, 2025."

Associations who have already filed their reports can rest easy, regardless of any future developments. Associations who have not yet filed their BOIR may still want to do so to ensure that they are protected should the injunction be reversed. 

The court's full opinion can be read here.

Effective financial management is crucial for condo and HOA boards, as all members share a fiduciary responsibility to ensure their community's financial health.

This includes actively reviewing financial statements, budgets, and reserve studies to identify irregularities, plan for future expenses, and avoid shortfalls or fraud. Boards should adopt clear policies for managing operating and reserve funds, including ensuring proper transfers, updating signers as needed and investing reserves properly.

By staying informed and involved, board members can uphold their community’s financial stability and foster long-term success.

Learn more.