Corporate Transparency Act: Support Efforts to Exempt Community Associations

The Community Associations Institute urges support for H.R. 9045, introduced by Rep. Richard McCormick, which seeks to exempt community associations from the Corporate Transparency Act (CTA) reporting requirements. Under the CTA, associations must currently submit detailed information about board members and individuals with financial control to the Financial Crimes Enforcement Network (FinCEN) by January 1, 2025, or face significant penalties.

The law aims to detect financial crimes but exempts certain entities like tax-exempt organizations, and CAI argues that community associations, which operate similarly to these entities, should also qualify for exemption. The Institute calls on members to contact Congress to co-sponsor H.R. 9045 and to advocate for a companion bill in the Senate.

Contact you congress member today.

Preparing Budgets - FREE Webinar on 10/24/24

The next free Condoly webinar will focus on preparing your condominium association's 2025 Budget.

An appropriate budget is the foundation for your community's financial stability, and a legal requirement as set forth by the IL Condo Act.

Join Condoly on Thursday, October 24th at 6:30 pm to review best practices for preparing your budget and the required process for approving it.

Register your FREE Condoly account or Sign in to your existing Condoly account to register.

Best Practices for Electronic Voting in Condominiums

Online elections in community associations have grown in popularity due to their convenience, efficiency, and enhanced security compared to traditional paper voting. With increased mobile phone usage, online voting encourages greater participation, ensures accessibility for members who cannot attend in-person, and provides real-time results. 

If your association is considering a move to electronic voting, legal compliance, owner education, and pilot testing are key steps to ensure a smooth transition from paper voting. These systems streamline governance while promoting transparency and inclusivity.

Learn more here to determine if online voting is an option for your community.

Charging Special Assessments: Key Considerations for Condominium Boards

Special assessments are often necessary for covering unexpected or large-scale expenses, such as major repairs, improvements, or emergency costs. However, handling these assessments effectively is critical to ensuring fairness and maintaining financial stability for your association. Here are some key considerations for condominium boards when charging special assessments.

Charge by Ownership Percentage
When issuing a special assessment, it’s important to allocate costs based on ownership percentage, unless the expense is specifically for limited common elements (e.g., balconies, specific hallways, or parking spaces that are reserved for use by certain units). Charging by ownership percentage ensures that each owner contributes proportionately to the association’s costs, following the terms set out in your governing documents.

For example, if the cost of a new roof is $100,000 and a unit represents 2% of the building’s ownership, that owner should contribute $2,000. This method is transparent and consistent, helping to prevent disputes.

Keep Payment Deadlines Simple
One common mistake boards make is offering too many payment options. While it’s important to provide flexibility, having multiple payment schedules can complicate the collection process and create confusion. Instead, consider these two straightforward approaches:

  • One-Time Payment: Set a clear deadline by which the entire amount is due. For instance, the full amount could be due within 60 or 90 days of issuing the assessment.
  • Monthly Installments: Offer the option to pay the assessment in equal monthly installments over a set period, such as six or twelve months. This allows owners to spread the cost over time while keeping the payment process simple.

Avoid Multiple Payment Plans
Providing owners with several payment options may seem accommodating, but in practice, it can lead to administrative headaches. Collecting on different schedules, following up on missed payments, and maintaining various records can overcomplicate an already challenging process. Instead, stick to one consistent payment method for all owners.

Be Open to Individual Payment Arrangements
While standardizing payments simplifies the process, there may be instances where owners face financial difficulties. Boards should be open to negotiating individual payment arrangements with owners who communicate their needs proactively. This flexibility allows boards to accommodate hardship cases without overhauling the entire assessment structure. However, it's critical that owners reach out to the board before the payment deadline to discuss alternative arrangements.

Charging special assessments is never easy, but with clear guidelines, transparency, and consistent payment structures, your condominium board can manage the process smoothly.

Protecting Community Associations: CAI Files Lawsuit Against the United States Department of Treasury

On September 10, 2024, the Community Associations Institute (CAI) filed a lawsuit against the U.S. Department of Treasury challenging the application of the Corporate Transparency Act (CTA) to community associations. CAI argues that community associations, as nonprofit organizations under IRS section 528, should be exempt from the CTA's beneficial ownership filing requirements. The lawsuit claims that the Financial Crimes Enforcement Network (FinCEN) failed to follow proper rulemaking procedures, acted arbitrarily by not exempting community associations, and violated constitutional rights by imposing invasive reporting requirements.

Additionally, CAI asserts that the act exceeds federal authority by infringing on state powers and discriminates against community associations compared to other nonprofits. CAI seeks a judicial review and a preliminary injunction to halt CTA enforcement until a court ruling is made, while the compliance deadline of January 1, 2025, remains.

Learn more here.