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The Corporate Transparency Act (“CTA”) is a federal law that was initially enacted in 2021 to prevent fraud and money laundering. Effective January 1, 2024, there are new reporting requirements regarding ownership under the CTA for certain types of corporate entities (arguably including condominium and homeowner associations). 

The CTA defines a “domestic reporting company” as “a corporation, limited liability company, and any other entity created by the filing of a document with a secretary of state or any similar office in the United States.”Although unclear, this definition appears to incorporate all condominium and homeowner associations incorporated with the State of Illinois as of January 1, 2024, as most are organized and registered as non-profit organizations. If a condominium or homeowners association is unsure if it qualifies, we recommend compliance. Failure to file initial reporting and subsequent changes can carry a daily penalty of $500, up to a maximum of $10,000. 

Reporting Guidelines

Under the new reporting requirements of the CTA, all reporting companies are required to file beneficial ownership information reports with FinCEN. The CTA defines a “beneficial owner” as “any individual who, directly or indirectly, (i) exercises substantial control over the entity or (ii) owns or controls 25% or more of the ownership interests.” This definition appears to include Board officers and directors of a condominium or homeowner association as they have substantial influence over the decisions of the reporting company (condominium or homeowner association). 

According to FinCEN, a reporting company will have to submit the following information about the corporate entity:

  • Its legal name;
  • Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
  • The current street address of its principal place of business;
  • Its jurisdiction of formation or registration; and
  • Its Taxpayer Identification Number.

The person who submits the report, known as the “company applicant,” will need to provide the following information:

  • The individual’s name;
  • Date of birth;
  • Address; and
  • An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.

The reporting company will also have to provide an image of the identification document used to obtain the identifying number. If the company applicant works in corporate formation—for example, as an attorney or corporate formation agent—then the reporting company must report the company applicant’s business address. Otherwise, the reporting company must report the company applicant’s residential address.

FinCEN also requires the following information to be reported for everyone who qualifies as a beneficial owner (all board members):

  • The individual’s name;
  • Date of birth;
  • Residential address; and
  • An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.

The reporting company also must provide an image of the identification document used to obtain the identifying number. The only acceptable forms of identification are:

  • A non-expired U.S. driver’s license (including any driver’s license issued by a commonwealth, territory, or possession of the United States);
  • A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;
  • A non-expired passport issued by the U.S. government; or
  • A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).

We understand that beneficial owners and applicants may be concerned about access to this information.  FinCEN allows Federal, State, local and Tribunal officials, as well as certain foreign officials who submit a formal request through a U.S. Federal governmental agency for authorized activities related to national security, intelligence and law enforcement. Financial institutions will also have access in certain circumstances with the condominium/homeowner association permission.

This report, like an association’s annual report, is filed yearly. Additional reporting may be required if officers or directors of a board change. The reports are to be submitted electronically through a secure filing system that is available on FinCEN’s website. 

Board members of an association or its property manager can submit a report as a company applicant.  However, Tressler’s team of HOA attorneys are here to help you. 

If your association needs assistance with filing this report, please reach out to one of our experienced HOA Attorneys: Kat Formeller at kformeller@tresslerllp.com or Kathy Heitkemper at kheitkemper@tresslerllp.com.

Tressler attorneys are known for providing fast, personalized and cost-effective legal support. We’re here and ready help.