Technology

Community associations, like many other entities, generally have reporting requirements under the Corporate Transparency Act (CTA). Beneficial owners of the community association, like board members, have to be registered, but how about property managers. The CTA defines a beneficial owner as any individual who, directly or indirectly:   Owns or controls at least 25% of the ownership interests of the entity or exercises substantial control over the entity.

Property managers for community associations do not typically need to register as a BOI member under the CTA. Here’s why:

• Beneficial Ownership: The CTA focuses on identifying individuals who ultimately own or control a company.Property managers usually don’t have this level of ownership or control over a community association. They act as agents for the association, carrying out the decisions of the board of directors or the association members.   
• Significant Control: A property manager would only need to be reported as a beneficial owner if they had control over the association, such as owning a stake in the entity or holding a position with significant decision-making authority. This is rare in a typical property manager role.   

However, there are some exceptions:

• Direct Ownership: If the property manager has a substantial ownership stake in the community association, it would likely meet the definition of a beneficial owner and need to be reported.
• Unusual Control: In rare cases, a property manager might have an unusual level of control over the association’s operations, giving them significant influence over decision-making. This could trigger the beneficial ownership reporting requirement.
• Officers: Many property managers serve as Assistant Secretaries of the Community Association. They don’t exercise decision making control over the association, but being an officer of the association calls into question whether they should be included as BOI registrants for the association. Management should review their management contract to see if it answers the questions as to substantial decision making authority. Management may also consider changing its contract moving forward to make sure it doesn’t have substantial decision making authority for the association and thus, not have to report as a BOI member.

For all of your community association CTA compliance and electronic voting needs, visit www.ballotmanagement.com.

The Background

In a recent case, the Community Associations Institute (CAI) and several community associations sought a preliminary injunction against the enforcement of the Corporate Transparency Act (CTA). The CAI argued that requiring their members to disclose “beneficial owners” to the Treasury Department was unlawful, violated the Administrative Procedure Act, exceeded Congress’s authority, and violated the First and Fourth Amendments.   

The Decision

The U.S. District Court for the Eastern District of Virginia denied the CAI’s motion for a preliminary injunction, finding that the CAI was unlikely to succeed on the merits of their claims. The court held that the CTA’s definition of “reporting company” clearly included community associations and that the act did not violate the CAI’s First or Fourth Amendment rights.   

The Implications

This decision is a significant setback for community associations seeking to avoid compliance with the CTA. Community associations such as condominium associations, cooperative associations, and homeowners associations (HOAs) are required to file reports with the Financial Crimes Enforcement Network (FinCEN) disclosing their “beneficial owners” as defined under the CTA.   

What This Means for Property Managers

Property managers must ensure that the communities they manage comply with the CTA by the end of the year. Failure to comply could result in significant financial penalties of up to $591 per day starting January 1, 2025.   

How Ballotmanagement.com Can Help

Ballotmanagement.com offers a solution to help property managers comply with the CTA. The application easily allows for the collection of necessary information from board members, generate the required reports, and files them with FinCEN systematically. Ballot Management can set up all of management’s associations on the application quickly and compliance is then very easy for management and its boards. Whenever changes need to be made (for example, a board member changes or the information a board member submits for themselves changes), they can be done right in Ballot Management and an update report send systematically to FinCEN so that the association and it management company are in compliance and no penalties will be assessed.

Don’t Risk Non-Compliance

Visit www.ballotmanagement.com today to learn more about how compliance with the CTA is easy. Read the Court decision here.

New York City’s Local Law 97, passed in 2019, aims to drastically reduce greenhouse gas emissions from large buildings. By 2024, condominium and cooperative buildings over 25,000 square feet must meet strict emissions limits or face heavy fines. While the law’s environmental goals are laudable, the legislation poses unique financing challenges for condo and co-op boards as they undertake retrofits to improve energy efficiency. 

Assessing Costs and Financing Options

Performing an Energy Audit
The first step for any board is thoroughly auditing their building’s energy systems to identify inefficiencies. A professional engineering study can cost $10,000-$50,000 depending on building size and complexity. While expensive, the audit provides a critical roadmap for planning upgrades and identifying potential savings to help secure financing.

Understanding the Costs of Retrofits
Based on audit findings, boards must estimate costs to upgrade lighting, heating, ventilation, insulation and windows to improve efficiency. Large buildings may require heating and cooling equipment replacement costing millions. Accurately assessing upgrade costs is key for budgeting.

Securing Financing
Boards have several options to fund upgrades, each with pros and cons:
– Special assessments – spreading costs across all unit owners avoids interest payments but may overburden some financially. 
– Loans – borrowing at favorable rates preserves owner capital but adds interest costs. Securing lender approval may require financial history review.
– Government incentives – grants and rebates can significantly offset costs but often require complex applications with no guarantee of reward.
– Energy services agreements – third party installs upgrades in exchange for sharing cost savings. This avoids upfront costs but reduces potential savings.

Unique Co-op/Condo Challenges

Navigating Complicated Decision Making
Unlike other buildings, co-ops and condos require board or owner/shareholder approval for major financial decisions, requiring extensive consultation and consensus. Streamlined processes are needed to meet tight compliance deadlines.  Using electronic voting applications like www.ballotmanagment.com has helped boards meet their voting requirements which are usually a supermajority of owners in condos to approve borrowing above a certain threshold.

Managing Cash Flow Limitations
Many co-ops/condos operate on tight budgets with limited cash reserves. Large special assessments or loans may be unfeasible, especially amid broader economic uncertainty. Access to flexible government backed financing is crucial. 

Upgrading Older Building Systems 
The older systems found in many co-op/condo buildings often require more extensive upgrades to meet emissions targets, exacerbating costs. Access to qualified contractors may also be limited for outdated technology.

Call for Supportive Policy

While the environmental goals of Local Law 97 are admirable, many co-op and condo boards will struggle to finance the major capital projects required within the law’s tight timeline. To enable success, lawmakers must provide enhanced financing assistance, incentives and flexible compliance options tailored to the unique needs of residential cooperatives and condominiums. The road ahead will not be easy, but ensuring these buildings reduce emissions is critical for the climate future of New York City.

Electronic voting is a simple and efficient way to conduct condo association elections and make important decisions. Here are just a few reasons why your condo in NY should use electronic voting:

• Convenience: Electronic voting allows condo owners to vote from the comfort of their own home, without having to physically attend a meeting. This is especially important for busy individuals who may not have the time to attend a physical meeting.
• Efficiency: Electronic voting eliminates the need for paper ballots, which can be time-consuming to collect, count, and verify. With electronic voting, the results can be tallied quickly and accurately, giving you more time to focus on other important matters.
• Security: Electronic voting is a secure way to conduct elections and make decisions. The voting system can be set up with multiple layers of security, ensuring that only authorized individuals can access the system and vote. This helps to prevent fraud and ensure that the results of the election are accurate.
• Cost-effective: Electronic voting can be a cost-effective way to conduct elections and make decisions. By eliminating the need for paper ballots, you can save money on printing and mailing costs. Additionally, the system can be set up to automatically send reminders to voters, reducing the need for additional administrative costs.
• Increased participation: Electronic voting can increase participation in condo association elections and decision-making. By making it easier for condo owners to vote, you can ensure that a greater number of people have a say in how the association is run. This can lead to better decisions and a more engaged community.

Electronic voting is a convenient, efficient, secure, cost-effective, and participation-boosting way to conduct condo association elections and make decisions. If you want to stay ahead of the curve and improve the way your condo association operates, adopting electronic voting is the way to go.

Whether you’re a community association trying to collect arrears, a business trying to force a vendor to comply with a contract, or anyone else trying to enforce their rights, good record keeping is essential.  Waiting until a dispute arises or suit is necessary or ends up served on you, is too late in many instances to pay attention to record keeping.

The time to focus is the present.  It is best to proactively manage what you keep and how you keep it so when its time to prosecute or defend a matter, you’re ready.  Consider a well thought out record retention schedule.  Which emails should you keep and how long.  What documents, electronic or paper, should be kept or purged.  Consulting with counsel to make sure your business and personal record keeping complies with the law and protects you is a question your attorney should be able to answer.  Remember that being protective in keeping good records will not only protect you and your business, it will end up saving you a lot of aggravation and money in the long run.