On December 3, 2024, a federal court in East Texas issued a nationwide preliminary injunction against the Corporate Transparency Act (CTA), halting its January 1, 2025, enforcement and reporting requirements. While the Department of Justice appealed this decision on December 5, 2024, companies are not currently required to file beneficial ownership information with FinCEN and face no liability for non-compliance while the injunction is in place.
At first, a group of judges allowed the U.S. government’s request to pause the rule on December 23 while they appealed. However, another group of judges canceled that pause and brought back the original order. As it turns out, on December 26, 2024, the Fifth Circuit Court canceled a temporary pause on a rule that stopped the enforcement of the Corporate Transparency Act (CTA) and its Reporting Rule. This decision brings back the order from December 3, which was made by the District Court in Texas in the case of Texas Top Cop Shop, Inc. v. Garland.
The appeal process is moving quickly, and more details will be shared soon. Meanwhile, the rule from the district court that stops the enforcement of the CTA is back in place until the appeal is finished.
How the CTA impacts property owners
The CTA is a federal regulation targeting money laundering, tax fraud and terrorism. Enacted in 2021, the CTA could require U.S. businesses to disclose information about their owners. While business owners may have prepared for the original deadline, they may not realize that NYC’s condo, co-op buildings and homeowners’ associations will need to comply or face steep fines.
“With the deadline looming, we’re strongly advising our members to comply,” Mary Ann Rothman, executive director of the Council of New York City Cooperatives & Condominiums (CNYC), said in a statement.
Buildings could face fines of up to $10,000 and additional penalties of up to $591 per day for failing to file the required information with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
LLC Transparency Act modified and delayed until 2026
New Yorkers also need to be aware that the LLC Transparency Act goes into effect Jan. 1, 2026, but it will still require much of the same information as the CTA when disclosing information about their beneficial owners to a New York database.
Initially intended to be public, Governor Kathy Hochul modified the law to make the database accessible only to law enforcement and government agencies.
What a board needs to provide
If your board has not filed yet, here is what you need to know about these new requirements. The regulations require beneficial owners—those with considerable influence over the business—to provide their personal information. In a condominium or co-op’s case, beneficial owners include the board of directors and anyone who owns at least a 25 percent interest in the company, which could be your building’s sponsor.
The required information is:
- Full name
- Date of birth
- Address
- Social Security Number
- Image of and unique identifying number of one of the following documents, including either a U.S. Passport, state driver’s license, foreign passport or an identification document issued by a state, local government or Indian tribe
LLCs formed or authorized to do business in New York will need to disclose beneficial ownership information to the New York Department of State (NYDOS) in a Beneficial Ownership Information (BOI) Report that includes:
- Those who directly or indirectly exercise substantial control over the LLC
- Those who own or control 25% or more of the ownership interests
Other details forthcoming
As with any new regulation, there are both expected and unexpected effects. Board members and other beneficiary owners with questions can consult with a real estate attorney who handles this and other real estate legal matters involving property ownership.