District Judge Amos L. Mazzant of the Eastern District of Texas issued a preliminary injunction on December 3rd that media and attorneys are talking about and property managers are puzzled as to what to do. Judge Mazzant ordered that the entire Corporate Transparency Act (CTA) is enjoined nationwide. The court also enjoined the government from enforcing the BOI Reporting Rule (the final rule implementing the CTA and providing definitions and guidance for the statute) and the Jan. 1, 2025, compliance deadline. As of this morning the government has not filed an appeal to the Circuit Appeals Court that overseas the Eastern District of Texas. It is worth noting that other District Courts like the Eastern District of Virginia held that the CTA is constitutional and the government is not enjoined. There hasn’t been a decision in a New York Federal Court which governs most New York condominium, coop and HOA cases involving this topic. It is also noteworthy that the Eastern District of Texas case didn’t involve a community association or its members. That said, the Judge Mazzant felt it appropriate to hold that there is a nationwide injunction causing confusion throughout the country as to what to do.

Some commentators are just reporting that there is an injunction but not preparing their clients for a lifting of the stay by an appeals court or maybe a decision in the state that they sit in saying the opposite of Judge Mazzant and holding that there is no stay before the end of the year when compliance is required by the statute. So what is a property manager and board members supposed to do in the meantime. Some are continuing to comply with the law realizing that the January 1, 2025 deadline is just a few weeks away and if the injunction doesn’t hold, then they will have to scramble right around the holidays to comply. Some are waiting and hoping that the decision is upheld or that the government issues an extension on compliance past the January 1st deadline which hasn’t happened yet, and may not happen.

Although the nationwide preliminary injunction relieves the immediate obligation – i.e., right now – to file beneficial ownership reports with FinCEN, nonetheless it would be prudent for non-exempt reporting entities that haven’t yet filed to continue to prepare for their report filing by continuing to gather all information and documents that the CTA requires. If it turns out that compliance by January 1st is not required, then they don’t have to submit their report to FinCEN, but if they do, they can enjoy their holiday meals with their families rather than scrambling at the last minute to comply before the hefty $591 a day fines kick in as of January 1, 2025.

With Ballot Management (https://ballotmanagement.com/ballot-features/#boi-solutions) you can continue having board members submit their required information without submitting a report to FinCEN if you want to wait, and when there is clarity as to the CTA and injunction, press submit or not and be ready to comply by January 1st if required.