Moving Communities Forward
Official Publication of Advance HOA Management, exclusively for board members
Board Newsletter | Issue 7
Published December 2024
Update on The Corporate Transparency Act
FinCEN and Beneficial Ownership Information Reporting
As this article was published, breaking news was released that the the Corporate Transparency Act was blocked by a US District Court.
No further action needs to be taken pertaining to CTA and BOI reporting until further notice
Per CAI:
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’s beneficial ownership information reporting requirements.
​
In his opinion, Judge Amos L. Mazzant III grants the Plaintiff’s request to preliminary enjoin the Government from enforcing the Corporate Transparency Act and its Implementing Regulations, ruling that “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.”
​
This preliminary injunction applies nationwide, halting enforcement and compliance of the Act’s beneficial ownership reporting requirements across the entire United States. CAI’s legal team believes the injunction applies to all community associations incorporated within the U.S.
​
Please disregard the article below until further notice.
​
As you have been made aware, a Federal law that impacts community associations throughout the US, the Corporate Transparency Act (CTA), imposes strict reporting requirements on nearly all business entities in the US, including community associations. Compliance with this new law is mandatory and failure to comply will lead to fines, to include civil penalties of $500 per day and criminal penalties of up to $10,000 and up to 24 months in prison. The regulations require many types of legal entities to file a “beneficial ownership information” (“BOI”) report to the Financial Crimes Enforcement Network. Specifically, any entity that is a corporation, limited liability company, or any entity created through a filing with a Secretary of State or any similar office under the law of any State or Indian tribe is required to submit a BOI.
Please know that we understand how frustrating this law is, but we have a duty to inform you of this requirement and have decided to support the communities we manage with this process. We have also sent several updates directly to all Board members. Below is additional information in response to the questions we have received.
​
1) Are all board members considered a beneficial owner?
The consensus with this definition from various legal counsel we have worked with is that ALL board members are considered a beneficial owner. (See definition below.) We recommend that the board reach out to legal counsel for any direction on whether designated board members can be considered beneficial owners for the purposes of filing the BOI report vs. the entire board.
A beneficial owner is:
• An individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity; or (ii) owns or controls not less than 25 percent of the ownership interests of the entity.
• The 25% ownership criterion is fairly straightforward. In practice, for a community association, this test likely will be triggered for communities under development by a declarant, for commercial condominiums or for smaller associations.
• Exercises Substantial Control – This is the standard under which HOA Directors and Officers will be required to register with FinCEN.
​
2) Is a FinCEN ID# required?
For filing a report, either a person’s FinCEN# or personal identifying information (Driver’s License, Passport) needs to be provided when filing the report. Because Advance HOA does not want personal identifying information, we are requiring a FinCEN# be obtained if we are directed to file the BOI report.
​
3) What if the Board does not want Advance HOA Management to file the report?
No problem. We just ask that a waiver be approved and provided to Advance HOA Management. The waiver can be accessed HERE. Some HOA law firms are also providing a service for the filings, but we do not know the fees.
​
4) What is the fee to the HOA for Advance HOA Management to file?
As provided in the updated fee exhibit and prior emails, the fee is $50 for this initial filing and moving forward, a charge of $20 for each time a board member change needs to be reported.
​
5) What if a Board member refuses to obtain a FinCEN ID#?
Although each association has a duty to file a BOI report, FinCEN’s regulations impose personal criminal liability on any person who causes a reporting company to fail to file its BOI report when required. Consequently, if an association is unable to file a complete BOI report because of an uncooperative board member, that board member may be personally criminally liable for that failure. FinCEN confirmed its interpretation of its regulations in FAQ K.3. when it wrote, “an enforcement action can be brought against an individual who willfully causes a reporting company’s failure to submit complete or updated beneficial ownership information to FinCEN. This would include a beneficial owner or company applicant who willfully fails to provide required information to a reporting company.”
​
If an association board finds it is unable to file because an individual board member is uncooperative, the board should bring the prospect of personal liability to the uncooperative member’s attention. Perhaps the board member will have a change of heart or decide to resign from the board, or agree to obtain a FinCEN for filing.
To allow the report to be filed in this situation, we recommend that the board reflect in the board meeting minutes. Here is sample language you can use: “The majority of the Board has decided that the association should file the BOI report. The minutes should reflect that _________________ board member refuses to provide a FinCEN ID# and is therefore subjecting the Association to possible penalties. In its best effort to comply with the FinCEN requirement, the Board directs Advance HOA Management to file the BOI report to include the board members who have supplied a FinCEN ID# for the purposes of filing of the BOI report.”
​
6) Can a board member be removed if unwilling to provide information for filing of the report?
Whether this is a feasible approach will depend on the association’s bylaws, which typically call for a removal of a board member only by the vote of the membership. If the association’s bylaws contain no provisions for board members to remove a board member, the board may need to consider amending its bylaws. Because decisions like this can create legal rights and obligations, the association should consult an attorney before taking any of these steps.
​
7) What if I have questions when applying online for the FinCEN ID?
First, please be sure to keep your login information and password when setting up the FinCEN account. You should receive the number immediately and it will also go to the email that you provide to FinCEN (check your Junk mail). Unfortunately, Advance HOA does not have the ability to provide support. Please contact 800-949-2732 option 2 for technical assistance or try 866-346-9478 for general questions. If your community is filing a report on its own, please contact FinCEN directly for assistance.
​
8) What if I have other questions regarding CTA and FinCEN?
Please reach out to the HOA legal counsel for guidance.
​
9) Are there instructions to obtain a FinCEN# or where can I find the waiver?
Instructions to obtain a FinCEN#
Beneficial Ownership Information Waiver
​
10) Where do I go to find more information?
Below are links that are helpful.
​
Beneficial Ownership Information | FinCEN.gov
caionline.org/Advocacy/Priorities/CTA/Pages/landing.aspx
The Management Fee Matrix
Manager Time Expectations
Community managers are assigned a portfolio of communities. As part of the assignment, leadership evaluates the size of a portfolio based on many factors, such as number of units, age of properties, community types (single family, condo, townhome, metro district), invoice volume, call volume, board meeting frequency, and community locations. The management fee is directly related to these same characteristics and helps gauge the time commitment for the assigned manager to each community. Because a manager is not a full-time manager to a community, we rely on a positive partnership with the Board to ensure the community is properly functioning.
Below is a table that provides directional guidance on approximately how many hours per week a manager should spend, on average, on a community based on their monthly management fee. As projects and commitments ebb and flow, naturally this commitment will vary. However, this is a helpful reference for time spent, on average. Please keep in mind that the management fee includes accounting services, resale facilitation, enforcement, software, administrative support, etc.
We hope you find this helpful in assigning projects to the manager, establishing manager priorities, and setting expectations. If you have any questions, please do not hesitate to reach out to your manager.
​​​​
​
​
​​
Conduct of Meeting Policy
What You Should Know
With annual meetings and budget ratifications underway, today we want to do a deep dive on the Conduct of Meeting Policy, one of the nine required responsible governance policies in Colorado. This Policy promotes productive board and member meetings, and a well-written Conduct of Meeting policy can impact the board’s ability to hold constructive, respective, and effective meetings that move your community forward.
Quick reminder – there are two main types of meetings: 1) Member Meetings (typically referred to as Annual Meetings in which a quorum of all members vote on elections, amendments, etc.) and 2) Board Meetings (board makes decisions on operation and administration of the community).
​
MEETING NOTICE. Review your governing documents and Conduct of Meeting Policy for notice requirements for meetings. Meetings of the members will require specific written notice via mail or hand delivery and specify how much time before the meeting notice needs sent (typically 10 to 50 days prior to the meeting), but CCIOA doesn't require notice to owners for board meetings. However, board meeting agendas are to be made reasonably available for examination by all members and electronically posted if delivery by this means is available. Owner meetings must be held at least once a year while your governing documents and Conduct of Meeting Policy may stipulate a frequency for board meetings.
​
MEMBER PARTICIPATION. All member meetings and board meetings are open to all members of the Association or to any person designated in writing as a member’s representative. Prior to the board taking formal action on an issue (after a motion is made and seconded), a reasonable number of owners will be allowed to speak for and against the issue. It is recommended that Owners be allotted a specified amount of time (as determined by the board or Conduct of Meeting Policy) to speak during open forum section of the meeting.
​
PROPER ETIQUETTE. Your Conduct of Meeting Policy outlines basic behavioral standards during meetings, allowing productive and efficient meetings. For more lively communities, we encourage the board to have a copy of the Policy and distribute to those in attendance. The board can maintain control of the meeting by ensuring members adhere to these typical rules of conduct:
• Do not speak until you are recognized by the board. Be respectful of the fact that other owners may wish to speak and do not monopolize the floor or take up unnecessary time.
• While the board is conducting business, please do not interrupt the deliberations of the board.
• Refrain from personal attacks and be respectful of everyone in attendance. Do not yell or use profanity.
• If a member refuses to stop talking after his/her allotted time, the board may request that the owner cease speaking.
• If a speaker or person in attendance is disruptive during the meeting and continues to be disruptive after one warning, the board may vote to adjourn the meeting. Alternatively, the board is entitled to contact law enforcement and request that the disruptive person be removed from the meeting. If you are holding a virtual meeting, the host can mute the unruly person or remove him/her from the meeting.
• Recording meetings is often times expressly prohibited in the Policy and boards should be discouraged to allow meetings to be recorded.
​
To ensure the board is efficient and productive in its discussions and decision-making, leverage Robert’s Rules of Order. After board discussion, the board should make crisp motions, ask for owner comment, and request all board members indicate whether they are in favor or opposed. Discussion spinning or going long? A simple motion will move the group to a decision more quickly.
​
EXECUTIVE SESSION. There are often situations where the board will need to enter executive session to discuss sensitive issues. Executive session is a closed-door session which is not open to attendance by the homeowners. However, there are specific purposes for which a board can enter executive session and restrict attendance. CCIOA limits the use of executive session to discussion on the following matters:
​
1. Matters pertaining to employees of the association or the managing agent’s contract or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the association.
2. Consultation with the association’s legal counsel regarding pending or imminent litigation or matters that are privileged or confidential between attorney and client.
3. Investigative proceedings concerning possible or actual criminal misconduct.
4. Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure.
5. Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy, including a disciplinary hearing regarding a unit owner and any referral of delinquency.
6. Review of or discussion relating to any written or oral communication from legal counsel.
​
It’s important to note that all other matters such as reviewing proposals and budgetary items, discussing maintenance, adopting rules and regulations, amending governing documents, etc. are to be discussed and decided during an open meeting, unless special circumstances exist which justify an executive session.
​
If your community’s Conduct of Meeting Policy needs changed to allow for more administratively efficient meetings, stronger rules on member etiquette, or more clarity on ambiguous items, it’s a relatively simple process for the board to amend the policy (after legal counsel reviews the draft and it’s sent to membership for comment, as is best practice).
​
Each Association’s Conduct of Meeting Policy is unique and may include additional nuances specific to that the Association. It’s important for the board to familiarize themselves with their Conduct of Meeting Policy to ensure fair and transparent meetings. A key component of effectively managing a community is successful meetings of the board. These meetings are vital for the success of a community since they provide a platform for discussion and decisions that shape the community’s future.
The Case for Daytime Meeting
By Deborah M. Colon-Mateo, PCAM
Source: Community Manager – September/October 2024 Issue
One of the most significant challenges faced by community managers is the expectation to attend evening and weekend meetings, often extending their workday well beyond standard hours. Meetings that sometimes don't conclude until 9 p.m. can lead to manager burnout, a pressing issue in the industry. The strain of such extended hours, day after day, takes a toll on personal health, productivity, and job satisfaction.
To mitigate these challenges, association boards should reconsider the timing of meetings. Encouraging daytime meetings, scheduled between Monday and Thursday and concluding no later than 6 p.m., can offer numerous benefits to managers and the community as a whole.
​
This shift is essential for six reasons.
​
1) Improved manager well-being. By holding meetings during regular business hours, managers can maintain a healthier work-life balance. This leads to reduced stress and burnout, ensuring they remain motivated and effective.
​
2) Increased productivity. Managers who are well rested and not overworked are more productive and better able to serve the community. Daytime meetings mean managers can tackle issues with fresh minds, leading to more efficient and effective decision-making.
​
3) Enhanced communication. With meetings scheduled during the day, communication between board members and managers can be more fluid. Managers are readily available to address concerns and provide insights without the fatigue that comes from a long day of work, followed by an evening meeting.
​
4) Better attendance and participation. Board members and homeowners who attend daytime meetings are likely to be more engaged and attentive. This can lead to more constructive discussions and better outcomes.
​
5) Professionalism and respect. Holding meetings during regular business hours demonstrates respect for the professional schedules of managers. It acknowledges that their time and well-being are valuable, fostering a more respectful and professional relationship between the board and the management team.
​
6) More productive meetings. Daytime meetings can be more focused and efficient, especially if attendees need to return to work afterward. Knowing there is limited time can encourage participants to stay on topic and make quicker, more decisive actions, reducing unnecessary delays and fostering a more goal-oriented environment.
Transitioning to daytime meetings requires some adjustments and planning. Here are a few strategies to facilitate this change:
-
Advance scheduling. Plan meetings well in advance to allow board members and homeowners to adjust their schedules accordingly. This helps in ensuring maximum participation and preparation.
-
Flexible meeting formats. Consider incorporating virtual meeting options to accommodate those who may have difficulty attending in person during the day. This flexibility can enhance participation without compromising the timing.
-
Clear communication. Communicate the benefits and reasons for the shift to daytime meetings to all homeowners and other board or committee members. Emphasize the positive impact on manager well-being and overall efficiency.
-
Pilot programs. Start with a pilot program of daytime meetings to gauge the response and make necessary adjustments. Gather feedback from all participants to refine the process.
Holding meetings during the daytime acknowledges the importance of manager well-being, enhances productivity, and fosters a more respectful and efficient working relationship. Incorporating daytime meetings can lead to more focused and efficient sessions, particularly as attendees may need to return to work. The limited time frame encourages participants to stay on topic and take quicker, more decisive actions, reducing unnecessary delays and fostering a goal oriented environment. By encouraging boards to adopt this approach, we can create a more sustainable and effective model for community management.
​
*Deborah Colon-Mateo is director of project services at HBS Stratford Community Management in Tucson, AZ. She holds a doctorate in business administration.