CTA Deadline for Community Associations Imminent
Lawsuit seeking to suspend filing deadline goes against community associations.
A
lawsuit intending to suspend or altogether eliminate the requirement
for community associations to file Beneficial Ownership Interest (BOI)
reports under the Corporate Transparency Act has failed for the
time-being, leaving the looming December 31st deadline in place.
As has been reported in prior articles in A Legal Moment,
the CTA requires various entities to file personal information about
their owners, directors and officers ‒ all in the government’s efforts
to fight money laundering. Although the objective is laudable, the
requirement extends to not-for-profit entities including most home- and
condominium owner associations, a group hardly given to illegal money
laundering.
In recognition of that fact, in September 2024 the
Community Associations Institute (CAI), a not-for-profit trade
association supporting community associations across the country, filed
suit in federal district court in the Eastern District of Virginia,
seeking, among other things, a preliminary injunction that, if granted,
would have suspended the filing requirement pending the ultimate
disposition of the suit.
On October 24, 2024, the trial court denied CAI’s motion,
finding that the association was unlikely to prevail on the merits of
its lawsuit ‒ a necessary prerequisite to the issuance of a preliminary
injunction. While a somewhat ominous forecast by the court,
CAI has already filed an appeal of the ruling with the Fourth Circuit
Court of Appeals. That appeal is pending and not likely to be
resolved ahead of the deadline.
For the moment, however, the law remains active and it is
therefore advisable for home- and condominium owners associations to
comply with the CTA’s reporting requirements inasmuch as noncompliance
carries potential criminal and civil penalties.
MRG’s earlier articles on the subject include Corporate Transparency Act Launches January 1, 2024 and Deadline for Community Association Reporting Under the Corporate Transparency Act Approaches
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