CTA Filing

I don't know if anyone has done their CTA filing yet. I just attended a webinar given by one of the big HOA law firms. They walked us through the actual application and it seems very straight forward.

One of the attorneys is part of the CAI lawsuit on this. Their lawsuit is working its way through the courts and there may be something that happens before the end of the year, but probably not. There is federal legislation to exempt HOAs from the law, but it's been stalled since 2023.

A few points:

-There are very few exceptions. Almost all HOAs and COAs are required to file by January 1. They said 99.9% of HOAs and COAs must comply.
-It's a one-time reporting, and after that you only need to update if there's a new board member or if the identification for a board member that expires. If you use your driver's license for ID on the site, then every time it expires you need to update the ID on the FINCEN site.
-All board members must provide their ID, not just one board member. All board members are considered beneficiary owners of the association.
-If you have committees, unless they are separately registered with the secretary of state as a separate non-profit, they don't need to be included.
-There is no cost to file this. You don't need your attorney to file it because it's just filling out an online form. The hardest part is uploading images of driver's licenses and passports. The information they require on the form is simple - name and address of asssociation, and names and addresses of each board member plus their ID.
-If you don't file, there are criminal penalties. If you have a director who refuses to provide their ID, in some states you can remove the director. In Florida, it's not easy to remove a board member, but you should try to get them to resign. D&O insurance will not cover the board if one person doesn't provide their info and the government comes after the association for not fully filing. One director not providing ID is potentially hurting all the others.

Apparently there are scammers who are offering to fill this out for a fee. It's an pretty easy form. I really don't think you need your attorney or anyone else to do this for you. But I would trust my attorney more than some random company.

Once I get the recording link for the webinar, I will post it. It was very useful.

Our board discussed the CTA at our last meeting. Fortunately, all of us plan to report our information, so won't be facing receivership because the entire board had resigned over this.

The important thing about CAI's lawsuit is that you probably need to be a member to be protected if the court rules in favor of CAI. The same thing happened with the lawsuit filed by the National Small Business Association - you need to be a member of the class in order to be protected by a class action lawsuit.

CAI also filed a motion for preliminary injunction. A preliminary injunction is temporary relief that maintains the status quo until the court decides the merits of the case. CAI’s first hearing on the motion has been scheduled for Oct. 11. So it's possible we'll get a temporary reprieve on reporting our data. I plan to wait until late in December to do this - but not until the very last minute in case the website crashes because so many people are trying to use it.

(Based on comments I've seen on CAI's posts about the lawsuit, there's an incredible amount of ignorance among owners and board members about the CTA, its aims, and the potential impact on persons who report their information. The comments tend to fall into two categories: one," if the CTA had existed, the Surfside condo collapse wouldn't have happened" - ie., the CTA will clean up incompetent boards; and two, "if you have nothing to hide, you should have no problem with reporting your personal information". My response to all this: oh, sweet summer child....)

Aside from concerns about the vulnerability of the data to hackers, another privacy issue is that this information will not remain the in hands of the federal government. It will be shared with law enforcement agencies in other countries. How else would they disrupt international networks of corporations that exist only on paper, or track money flowing through these?

And while we are protected by the constitution from government overreach (allegedly), we enjoy no such protections from actions by foreign governments or foreign institutions. And I have no faith that our government will hesitate to share the information with anyone who wants it if they think they're on the trail of bad guys who are financing terrorist networks.

The lawsuits filed by CAI and others specifically cite unconstitutional sections of the CTA as well as other violations of federal law and procedures. Among other things CAI's lawsuit cites the following:

* Improper Procedures as to Rulemaking: The FinCEN office issued a number of “FAQ” policy decisions without following notice-and-comment procedures required by federal law.

* Constitutional Violations: The CTA violates’ constitutional rights under the Fourth, Fifth, and Ninth Amendments by requiring invasive personal disclosures without adequate privacy protections or sufficient cause.

* Federal Power Overreach: CTA unlawfully intrudes on the authority of states to regulate corporate formation and governance, exceeding the federal government’s constitutional powers.

* Equal Protection Violations: The act discriminates against community associations by not exempting them as nonprofit organizations, unlike similar entities under section 501(c) of the IRS code.

Regarding the federal power overreach, CAI's lawsuit notes that the large majority of community associations are organized and operate entirely within the state in which they are located. The lawsuit also noted the irony that community associations are actually models of transparency, because boards serve at the pleasure of the membership and the membership is entitled to inspect corporate records upon request with a few exceptions.

Personally, I find the idea that untrained and unpaid volunteers (some of whom don't even want to serve) should be subjected to criminal penalties is outrageous. It is even more outrageous when you realize that the real bad actors who are the targets of the CTA will evade the requirements. Does anyone seriously think that the bad guys will dutifully report anything - or that they wouldn't use aliases and other false information to muddy the waters? It's infuriating.

(In a related topic, yesterday I sat through some training on how AI is being used by the bad guys to do their business. We're doomed.)

"Apparently there are scammers who are offering to fill this out for a fee"

SOME scammers? LOL LOL. virtually every management company and or HOA lawyers are eating this up and charing $400 to $800 to fill this out. I've yet to hear any mgt company doing it for free.

And that's one of the reasons I have a problem with this. Law enforcement generally has to demonstrate probable cause to obtain this information. Eliminating the need for probable cause is worrisome, despite what the "if you're not doing bad things, you don't have to worry" crowd thinks.

One last thing that seriously concerns me is having the HOA/COA maintain this information. It's one thing for it to have names and addresses, which are public information. But it's a whole different ballgame if they have social security numbers and passport numbers. Frankly, I don't trust boards or community managers to maintain this information securely. I'd bet good money that the large majority of them won't. And while we're on the topic of stolen data, I wonder how The Powers That Be will sort out stolen identities. Victims of data breaches can assume that their information will end up on the dark web, which is exactly where the criminals operate. Good Ol' Joe, board president, has his data stolen - and Boris Badenov is doing his nefarious deeds under Joe's name and social security number. Just how does law enforcement propose to sort this out? Or will they just arrest Good Ol' Joe, who will be forced to lawyer up to prove his innocence?

Good intentions paired with incompetence is a recipe for trouble.

A local law firm that specializes in community associations allows their clients to upload the necessary information to the firm's website, from where it will be transmitted to the government. This is part of their service. It also allows them to keep track of which clients haven't yet filed and to remind them of the impending deadline.

As I'd mentioned previously, I have no problem with law firms or community managers charging a reasonable fee for doing this. Websites don't spring into existence or maintain themselves for free, and presumably some staff time is needed as well.

Are there scammers? Of course there are. There are always scammers. People who are afraid of this or who don't want to pay are free to use the government website.

(I think it would be hilarious if some of the scammers are bankrolled by the very people that the CTA is targeting. It also wouldn't surprise me.)