Kieran J. Purcell, Esq., Managing Shareholder for Epsten, APC, participated on a webinar hosted by Keystone Pacific Property Management, diving into how HOA operations affect lending, insurance, and disclosure requirements. This panel breaks down key risks that can lead to loan denials, project ineligibility, and compliance issues, especially with new 2025 standards on the way.
On December 23, 2024, the Fifth Circuit Court of Appeals granted a stay over the preliminary nationwide injunction against the Corporate Transparency Act (Act) created by the December 3, 2024 decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al. The Fifth Circuit Court of Appeals also issued an order reinstating the January 1, 2025 beneficial ownership information (“BOI”) reporting deadline.
On December 24, 2024, the Financial Crimes Enforcement Network (FINCEN) extended reporting deadlines. Notably, FINCEN extended the reporting deadline for reporting companies created or registered to do business before January 1, 2024. These companies have until January 13, 2025, to file their initial BOI reports.
FINCEN also extended other BOI reporting deadlines. Information about these additional extensions can be found at https://www.fincen.gov/boi.
The Fifth Circuit Court of Appeals court order can be read here. Please note this order just stays the initial preliminary injunction and is still not a final ruling on the Act’s constitutionality. To that end, the Fifth Circuit’s order directed the appeal in this lawsuit be expedited to the next available oral argument panel.
CAI continues to track federal courts for challenges of the Act and is in contact with the United States Department of Treasury about the Act. For additional information and updates on the applicability to the Act visit www.caionline.org/CTA.
On December 23, 2024, the Fifth Circuit Court of Appeals granted a stay over the preliminary nationwide injunction against the Corporate Transparency Act (Act) created by the December 3, 2024 decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al. The Fifth Circuit Court of Appeals also issued an order reinstating the January 1, 2025 beneficial ownership information (“BOI”) reporting deadline.
The Fifth Circuit Court of Appeals court order can be read here. Please note this order just stays the initial preliminary injunction and is still not a final ruling on the Act’s constitutionality. To that end, the Fifth Circuit’s order directed the appeal in this lawsuit be expedited to the next available oral argument panel.
At present, the Fifth Circuit’s order means all reporting companies created or registered to do business before January 1, 2024, have until January 1, 2025, to file their initial BOI reports.
CAI continues to track federal courts challenges of the Act and is in contact with the United States Department of Treasury urging an administrative delay be issued due to the chaos and confusion created by these recent court rulings, Congress’s decision not to take legislative action to extend the filing deadline, and the end of year holidays.
On December 17, 2024, the U.S. District Court for the Eastern District of Texas denied the Government’s Motion to Stay Preliminary Injunction Pending Appeal of the December 3, 2024 decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al. which imposed a preliminary nationwide injunction against the Corporate Transparency Act (Act).
In making its decision, the Court noted when Congress enacted the Act almost five years ago, the Act had no implementation date, so there is no compelling need to lift the stay, especially where the Court has found the statute to likely be unconstitutional.
The Court also cited FinCEN’s recent website alert announcing a stay on the January 1, 2025, beneficial ownership information (“BOI”) reporting deadline pending determination of the appeal. Due to the widespread media coverage of FINCEN’s alert, the Court concluded lifting the stay would add to, not alleviate, public confusion about the Act.
In conclusion, the Court’s decision means the December 3, 2024 injunction remains in effect until the Fifth Circuit Court of Appeal rules otherwise. However, it is important to remember the order is still a preliminary injunction only. While it temporarily pauses enforcement of the Act on a nationwide basis, enforcement could resume if the injunction is later reversed.
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On December 5, 2024, the Government appealed the December 3, 2024, decision of the U.S. District Court for the Eastern District of Texas in the matter of Texas Top Cop Shop, Inc., et al. v. Garland, et al. which issued a preliminary nationwide injunction against the Corporate Transparency Act (Act).
Shortly thererafter, FinCEN posted an alert on its website announcing a stay on the January 1, 2025, beneficial ownership information (“BOI”) reporting deadline pending determination of the appeal. In its alert, FINCEN noted “in light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
As previously reported, the court’s order is a preliminary injunction only. While it temporarily pauses enforcement of the Act on a nationwide basis, enforcement could resume if the injunction is later reversed.
For additional information about the Texas Top Cop Shop case and its applicability to the Act visit www.caionline.org/CTA.
On December 3, 2024, the U.S. District Court for the Eastern District of Texas published a decision in the matter of Texas Top Cop Shop, Inc., et al. v. Garland, et al. issuing a preliminary nationwide injunction against the Corporate Transparency Act (Act).
The court granted Plaintiff’s request for a preliminary injunction, blocking the U.S. Department of Treasury from enforcing the Act or its beneficial ownership information (BOI) reporting requirements, ruling “Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
On December 4, 2024, the Community Association Institute (CAI) stated the court’s preliminary injunction applies nationwide, halting enforcement and compliance of the Act’s beneficial ownership reporting requirements across the entire United States. Notably, CAI’s legal team stated it believes the injunction applies to all common interest developments incorporated in the United States.
The court’s order is a preliminary injunction only. While it temporarily pauses enforcement of the Act on a nationwide basis, enforcement could resume if the injunction is later reversed. As of this writing the federal government has not issued a public statement so it is unclear if it intends to appeal the court’s decision.
For additional information about the Texas Top Cop Shop case and its applicability to the Act visit www.caionline.org/CTA.
Epsten, APC’s Managing Shareholder Kieran J. Purcell, Esq., CCAL, has been awarded as a 2024 Leader in the Law by the San Diego Business Journal. This special report celebrates and honors influential leaders by acknowledging their contributions and commitment. Kieran’s work on behalf of community associations includes providing advice on all types of corporate matters including litigation, interpretation and enforcement of governing documents and reconstruction issues.
Kieran served three terms on the Board of Directors of the San Diego Chapter of the Community Associations Institute (CAI), where he served as its President, co-chaired the National Seminar Committee, and co-chaired the Golf & Tennis Charity Classic. Kieran is a former delegate for the San Diego Chapter’s Legislative Support Committee (LSC), a former Legislative Co-Chair for the California Legislative Action Committee (CLAC), and a former CLAC Chair. He currently serves as an Emeritus Delegate for CLAC. Kieran is a four-time recipient of the San Diego Chapter’s President’s Award, and a recipient of the Samuel L. Dolnick Lifetime Achievement Award. In 2023, he was recognized with the San Diego Chapter’s Legacy Award. He is a fellow of the College of Community Association Lawyers (CCAL).
As a reminder, in an effort to enhance corporate transparency and combat money laundering, tax fraud, and other illicit activity, Congress passed The Corporate Transparency Act (CTA) back in 2021. The CTA will be enforced by the Financial Crimes Enforcement Network (FinCEN) of the United States Treasury. FinCEN published the Small Entity Compliance Guide (Guide)[1] to help small entities comply with the requirements of the Beneficial Ownership Information Reporting Rule (Reporting Rule) issued on September 30, 2022.[2] Although the CTA applies to many types of small business entities, this article addresses movement towards potential exemptions and some of the most frequently asked questions about how the CTA currently applies to common interest developments (CIDs).
As you may be aware, on March 1, 2024, a federal court ruled the Corporate Transparency Act (CTA) unconstitutional, and the federal government appealed the decision on March 11, 2024. In June 2024, the Community Associations Institute (CAI) Board of Trustees approved filing a lawsuit to exempt common interest developments from the Corporate Transparency Act. Click here for more information about CAI’s lawsuit.[3]
CAI is pursuing this case in the U.S. District Court for the Eastern District of Virginia because CAI is incorporated in the District of Columbia and headquartered in Virginia. Additionally, the Eastern district is known for having a rapid docket process that allows it to hear cases more quickly than other federal courts and offers the potential for a faster resolution. However, CAI National cautions common interest developments should be prepared to comply with the CTA and file the required beneficial ownership information by December 31, 2024 if the lawsuit is not resolved or the law has not been amended. While CAI is actively pursuing legal action to seek an exemption, it urges common interest developments to prepare to comply to avoid potential penalties and ensure they meet all legal requirements. More information can be found on CAI’s CTA FAQ page [4].
The Corporate Transparency Act exempts non-profits that hold an IRS non-profit tax determination. Common interest developments are generally incorporated as a local state non-profit corporation [5]; however, they usually do not have an IRS non-profit tax determination (i.e., 501c).
On July 15, 2024, H.R. 9045 was introduced seeking to exempt common interest developments from the requirements of the Corporate Transparency Act. CAI requests concerned individuals contact their Member of Congress urging them to support H.R. 9045 [6], even if they have done so already about the Corporate Transparency Act.
H.R. 9045 is in the first stage of the legislative process. It will typically be considered by committee, then if approved in committee, sent on to the House as a whole to approve.
While CAI’s lawsuit and H.R. 9045 provide hope that there might be an exemption from CTA requirements for common interest developments in the future, it is difficult to anticipate how near that future is. Common interest developments boards should take the time now to become educated on the requirements and to prepare for compliance in case an exemption is not obtained before the filing deadline at the end of this year. Unless and until an exemption is made for CIDs, CIDs will need to comply with the annual filing requirements. For answers to frequently asked questions about the CTA filing requirements, read our article on The Corporate Transparency Act (Updated on 2/1/2024) [7].
[1] FinCEN’s Small Entity Compliance Guide, December 2023, Version 1.1 can be found at: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf
[2] Beneficial Ownership Information Reporting Rule, Title 31, Section 1010.380 of the Code of Federal Regulations.
[3] https://www.caionline.org/Advocacy/Priorities/CTA/Pages/landing.aspx
[4] https://www.caionline.org/Advocacy/Priorities/CTA/Documents/FAQ%20FINAL.pdf
[5] https://www.caionline.org/Advocacy/Priorities/CTA/Pages/default.aspx
[6] https://www.votervoice.net/CAI/Campaigns/116499/Respond
[7] https://www.epsten.com/the-corporate-transparency-act/
By Kieran J. Purcell, Esq.
As political races heat up, you may notice more political signs in the community, which leads to questions such as: Can homeowners display political signs? If so, where can they post them? Perhaps most importantly, how soon after the election can we make them take down their signs?
You may find answers to these questions in your association’s governing documents, the California Civil Code, and local ordinances. The bad news is that you may not like the answers.
News flash: An association has the authority to restrict the placement of political signs in the common areas, while owners are generally permitted to display them on their separate interest property. Typically, an association’s CC&Rs grant the board of directors exclusive control over the common areas, including the placement of signs. Some CC&Rs may state that no signs are allowed to be displayed in the common area without permission from the board.
Nevertheless, some CC&Rs allow specific signage. For example, placing one (1) sign that follows customary and reasonable dimensions promoting a condominium for sale or lease.
Consequently, does this mean a board has no say in determining whether an owner may put political signs in the common area? Additionally, if an owner does place a political sign in the common area but fails to remove it promptly the association can remove it, correct? The answer to the first question is NO, and the answer to the second question is YES. To learn more about this, read Civil Code Section 4710.
Summarizing Civil Code Section 4710 “in a nutshell,” a homeowner may post political sign(s) not larger than nine (9) square feet made of statutorily permitted materials in or on his or her separate interest property. However, Civil Code Section 4710 does not grant a homeowner the right to post signs in the common area.
How long can a political sign be displayed before and after an election?
While CC&Rs rarely address time limitations for signs, many cities and counties have ordinances that specify time ranges during which political signs may be posted; for example, ninety (90) days before and ten (10) days after an election. It would be reasonable for an association to adopt a rule with similar time limitations for owners to post political signs within their association. Civil Code Section 4710 permits an association to restrict posting noncommercial signs on an owner’s separate interest property if it violates any applicable laws. Therefore, if an association would like to impose time limitations, an association may want to consider adopting rules that align with the time limitations set out in local ordinances with the help of legal counsel.
Okay, we have to let someone post a political sign. But just one! Right?
Maybe. Civil Code Section 4710(a) says governing documents may not prohibit noncommercial signs, posters, flags, or banners, all plural. Unless prohibiting the sign(s) serve(s) to protect public health or safety or if the posting or display violates a local, state, or federal law. For instance, (a) if an owner were to display an excessive number of flags near the street, obstructing drivers’ view of other vehicles, (b) if the city mandates a permit for a flagpole of a specific height and the owner has no permit, or (c) if the city imposes restrictions on the number of signs allowed on private property at any given time.
Needless to say, it is essential to carefully review an association’s CC&Rs before drafting or revising rules governing signs’ displayed in your communities and properties. If we can assist you in this process, please do not hesitate to contact us.
By Kieran J. Purcell, Esq.
As with real estate, what an association can do about political signs is a matter of location, location, location.
Continue reading Political Signs – What Can an HOA Do About Them?
