The Community Associations Institute (CAI) is calling on lawmakers to exempt homeowners’ associations, condominiums, and housing cooperatives from the beneficial ownership interest reporting requirements outlined in the Corporate Transparency Act.
Enacted by Congress in 2021, the Corporate Transparency Act is designed to enhance transparency in corporate ownership structures and combat financial crimes, including money laundering and terrorist financing. But CAI argued the law will create an unintentional burden on community associations by adding new compliance demands and liability risks that could result in greater financial strains on their operations. CAI added the law could also discourage volunteer leaders to take on the responsibility of governing their community due to the exposure to liability posed by the compliance requirements and penalties.
At the moment, the law’s future is unclear – last month, a federal court ruled the act was unconstitutional but did not issue an injunction blocking its enforcement. The federal government is appealing this ruling.
“The Corporate Transparency Act, while well intentioned, poses significant challenges and potential harm to the millions of homeowners residing in community associations across the nation,” said Dawn M. Bauman, CAI’s chief strategy officer and executive director of the Foundation for Community Association Research. “CAI recognizes the importance of transparency in corporate structures; however, the law fails to address the unique complexities and nature of community associations.”
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