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CORPORATE TRANSPARENCY ACT
IN CHAOS
 1-1-21. Because companies doing business in the U.S. (including HOAs) could be shell companies laundering money and supporting terrorism, President Biden signed into law the Corporate Transparency Act (CTA).
The Act requires HOAs to report detailed, personal information about board members to the Financial Crimes Enforcement Network (FinCEN) on pain of severe penalties. Boards have until January 1, 2025 to submit their reports.
3-1-24. A federal court in Alabama ruled the CTA unconstitutional. Unfortunately, the ruling protected only the parties who filed suit. HOAs nationwide were still required to comply with the CTA.
4-11-24. The U.S. Department of Justice appealed the ruling with the 11th Circuit.
4-15-24. The Community Associations Institute (CAI) met with FinCEN to seek an exemption for HOAs. Its request was denied.
9-10-24. CAI sued FinCEN seeking a preliminary injunction to stop enforcement of the CTA against HOAs.
10-24-24. CAI's motion for a preliminary injunction was denied.
11-4-24. CAI appealed the court's denial of its motion.
12-3-24. In a separate action, a federal court in Texas halted all enforcement of CTA's reporting requirements nationwide. The court ruled that the CTA and its reporting requirements were likely unconstitutional.
12-10-24. Due to the Texas ruling, FinCEN stated that companies were not subject to liability if they failed to report by the January 1, 2025 deadline.
12-23-24. The government appealed, and the 5th Circuit granted an emergency motion to stay the nationwide preliminary injunction, which reinstated CTA's reporting requirements.
12-24-24. FinCEN extended the reporting deadline to January 13, 2025.
12-26-24. The Fifth Circuit issued an order vacating the stay it had issued three days earlier. The preliminary injunction was again in effect.
12-27-24. FinCEN reported that "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."
BOTTOM LINE: For now, HOAs do NOT need to report to FinCEN. Litigation is ongoing and the matter may ultimately end up before the U.S. Supreme Court.
NEIGHBOR TO NEIGHBOR
DISPUTES
 The court of appeal issued an important ruling involving neighbor to neighbor disputes.
In the Woolard case, neighbors in a condominium association had a long-running dispute that ended in a physical altercation and injuries. The injured parties sued the association and its management company alleging negligence for not doing something to prevent their dispute.
The HOA argued that it did not owe a duty to contact police or intervene in the dispute. The trial court agreed and ruled in favor of the association and its management company. Plaintiffs appealed.
The court of appeal upheld the lower court's ruling noting that associations are run by volunteers who do not have police powers or subpoena power. They cannot compel owners or tenants to sit down and work out their differences. Imposing a duty to intervene in such disputes would leave associations liable for their outcome without the tools to prevent them.
Accordingly, an HOA's standard of care does not include mediating, de-escalating, or resolving disputes between neighbors. (Woolard v. Regent Real Estate Services.)
Thank you to Adams|Stirling attorney Johanna Deleissegues for getting this case published.
HARASSMENT SOCIAL MEDIA,
DEFAMATION AND RESTRAINING ORDERS
A|S attorneys Rob Ward and Jason Savlov will discuss the authority and obligation of boards of directors to address harassment in their associations. Can they and should they seek restraining orders? Beginning January 1, 2025 what can boards do to protect themselves and employees under SB 428?
Should boards get involved with social media? Can they be sued for defamation? What are their rights and duties?
This one-hour free webinar will be held at noon on Tuesday, January 14, 2025. Register for it here.
HIRING
EXPERIENCED ATTORNEYS
 We are looking for experienced HOA attorneys for our offices in San Diego, Los Angeles and Northern California. Learn more about us here.
If you are interested, or know someone who may be a good candidate, you can contact Adrian Adams confidentially by email or by phone at (800) 464-2817.
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DISCLAIMER. Our newsletter provides commentary, not legal advice. Boards need to retain an attorney to review the facts surrounding their particular situation before providing a legal opinion. We serve as corporate counsel to California associations only. Request a proposal to represent your association.
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