CAI Sues to Exempt Community Associations from Corporate Transparency Act

 Posted on July 10, 2024 in Condominium & Homeowner Association Law

In a groundbreaking decision last month, the Community Associations Institute (CAI) Board of Trustees approved the filing of a lawsuit aimed at exempting community associations from the strict requirements detailed in the Corporate Transparency Act (CTA). The CTA has brought with it an avalanche of obligations that the CAI firmly believes are overburdensome for community associations.

The CAI represents the rights and interests of homeowners, condominium associations, and other community associations worldwide. To ensure that their rights are not trampled upon, attorneys representing the CAI are standing firm, ready to shield the community association housing model and the interests of its members.

What is the Corporate Transparency Act?

The Corporate Transparency Act, enforced by the U.S. Department of Treasury, mandates businesses to disclose detailed ownership and beneficiary information. These regulatory measures aim to stop illegal activities such as money laundering and tax evasion. However, community associations (the non-profit entities managing residential communities) are trapped by these stringent requirements despite their different operational structures.

Please take some time today to contact your representatives in Congress and urge them to tell the Financial Crimes Enforcement Network (FinCEN) to use its authority to exempt community associations! Click Here to Contact Your Member of Congress Today!

Click Here to Watch the Manager's Update on Corporate Transparency Act and Click Here to Watch the Board of Director's Update on Corporate Transparency Act.

Why the Current Burden is Unjust

The foundation of community associations is rooted in the communal aspect of property management. This often includes focusing on the well-being and cohesiveness of their communities. Community associations seek to maintain, operate, and protect the residential environment, unlike typical corporations or small businesses driven by profit motives.

The exhaustive requirements of the CTA, including detailed reporting and various compliance obligations, constitute an unfair strain on these associations. They basically stretch already limited resources thinner, which then takes away from their primary mission, which is to serve the community.

The CAI is Committed to Advocacy

By deciding to legally challenge the U.S. Department of Treasury's restrictive obligations under the CTA, CAI emphasizes its firm commitment to supporting the needs of community associations. The CAI believes community associations should be treated differently from traditional profit-driven businesses. The lawsuit aims to highlight this distinction, ensuring community associations can function effectively without disproportionate compliance requirements hampering their operations.

Anticipated Impact of the Lawsuit

If successful, the lawsuit filed by CAI could establish a precedent allowing community associations to focus on managing their communities without the crushing weight of the CTA's regulations. This move would alleviate considerable administrative burdens and, in the process, free resources to enhance the community-oriented initiatives that these associations were designed to promote.

Furthermore, it underscores the importance of tailoring regulatory requirements to suit the operational realities of different organizational models. This helps foster a more equitable and practical approach to governance.

Contact a Cook County, IL Condominium and Homeowner Association Attorney

The CAI's decision to challenge the Corporate Transparency Act exemplifies a significant step toward protecting community associations from unjust regulatory demands. If you represent a community association and seek to push back through legal action against the CTA, the Arlington Heights, IL condominium and homeowner association lawyers with Dickler, Kahn, Slowikowski & Zavell, Ltd. are ready to represent your party's rights and interests. Call 847-593-5595 for a private consultation.