I’ve written in the past here and here about the whipsaw court rulings on whether reporting is or is not required. On January 23, 2025, the United States Supreme Court weighed in. It lifted the trial court’s injunction preventing the FinCEN from requiring the beneficial reporting.

Noting the neck pain the various court rulings was causing observers, the FinCEN issued guidance that it is not currently enforcing the the requirements of the reporting rule against any individual or entity. Reporting companies are, therefore, not currently required to file beneficial ownership information with FinCEN. Reporting companies may continue to voluntarily submit beneficial ownership information reports.

Notwithstanding the pending litigation and FinCEN’s current stance on filing requirements, entities affected by Hurricane Milton, the filing deadline was extended to on or before July 1, 2025.

            The Florida counties benefiting from this 6 month extension are –

  • Brevard, Charlotte, Citrus, Collier, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Manatee, Marion, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucia, Volusia.

If you are in one of the affected counties, the deadline for reporting will be no earlier than July 1, 2025.

In my December 24th post to this blog, I had written that the 5th Circuit Court of Appeals had stayed the trial court’s injunction prohibiting enforcement of the Corporate Transparency Act (and of particular interest to us, the reporting requirement for your Beneficial Ownership). In other words, on December 5th, the trial court ruled that no reporting was required. On December 23rd, the appeals court ruled that filing was required.

Now on December 26th, the appeals court reversed itself, reinstating the trial court’s injunction against enforcing the CTA’s reporting requirements. Confused? Whiplashed – I am.

For the moment, non-exempt entities can ignore the reporting requirements of the CTA. The Fifth Circuit Court of Appeals may issue a new ruling as early as March 2025. Until then, if you have not yet reported your Beneficial Ownership Information, you can continue to hold off.

Also do not forget, for our friends in the following Florida counties, the reporting deadline has been extended to July 1, 2025 to accommodate businesses affected by the 2024 hurricanes – Brevard, Charlotte, Citrus, Collier, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Manatee, Marion, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucis, Sumter and Volusia.

In early December, I had blogged that a Federal Court sitting in Texas had ruled that the Corporate Transparency Act was “likely unconstitutional” and stayed the reporting requirement. Now the Fifth Circuit Court of Appeals has stayed the stay so nonexempt companies are again required to report on or before January 1, 2025. Confused yet?

To review, the Corporate Transparency Act (“CTA”) obliges certain nonexempt companies to report the identity of their owners (or in the Association world, the identities of the Board members). The reporting is accomplished by filing a report – called a Beneficial Ownership Information (“BOI”) report – with the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).

In a lawsuit filed in the Eastern District of Texas, the trial court preliminarily ruled that the “CTA is likely unconstitutional as outside of Congress’s power.” The trial court then enjoined enforcement of the CTA and stayed the January 1, 2025 reporting deadline. On appeal, the appellate court stayed the trial court’s injunction – the effect is to re-establish the January reporting deadline.

But also note that FinCEN extended the reporting deadline for victims of Hurricane Milton. For businesses located in the following counties, the deadline has been extended by 6 months to July 1, 2025. The Florida counties benefiting from this 6 month extension are – Brevard, Charlotte, Citrus, Collier, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Manatee, Marion, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucis, Sumter and Volusia.

So if your Association has not yet reported (and is located in one of the affected Florida counties), sit tight to see how things develop in the Texas courts. Otherwise, we’re down to the wire for timely filing on or before January 1, 2025.

Just as many of you may were preparing to file your Beneficial Ownership Information reports (“BOI”) with the Financial Crimes Enforcement Network (“FinCEN”), a Federal Court judge out of Texas entered a temporary injunction.

On Dec. 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the federal government from enforcing the Corporate Transparency Act (the “CTA”). This means the FinCEN, a Bureau within the Treasury Department, cannot currently enforce the BOI Reporting Rule enacted under the CTA. The lawsuit asserted that the CTA is outside of Congress’s power to regulate under the Commerce Clause and, thus, is unconstitutional. The Court preliminarily ruled that the “CTA is likely unconstitutional as outside of Congress’s power.” As a result, the Court enjoined enforcement of the CTA and stayed the January 1, 2025 reporting deadline.

Stayed tuned as this story continues to develop!

Today, the U.S. Department of Housing and Urban Development, through the Federal Housing Administration (FHA), announced the launch of its new Manufactured Home Community loan product, which will provide an FHA-insured financing option for the purchase, refinance, and revitalization of manufactured home communities. This action will help entities to preserve, stabilize, and revitalize these vital sources of affordable housing. The announcement was made this morning by HUD Acting Secretary Adrianne Todman at a media preview for the 2024 Innovative Housing Showcase on the National Mall in Washington, D.C.

“Manufactured home communities offer a stable and affordable housing option for many families. Today, HUD is providing new resources for preserving and revitalizing these communities by providing FHA-insured financing to mission-focused groups to buy or refinance and revitalize manufactured homes,” said HUD Acting Secretary Adrianne Todman. “This is just one of many ways HUD is empowering residents, industry leaders, and governments to expand access to innovative, affordable housing solutions, particularly in rural communities.”

Beginning today, certain mission-focused entities such as resident-owned manufactured home communities, cooperatives, non-profit entities and consortia, state and local governments, community development financing institutions, and Indian Tribes, will be eligible to use this program to finance the acquisition of or to improve existing communities, including making updates to common area resources and helping to maintain rent affordability. This tool provides an alternative to purchase of these communities by private equity funds and similar financial interests, whose track record reportedly includes unaffordable rent increases, failure to invest in community infrastructure, and regulations that don’t respect the community’s culture.

This permanent financing tool complements HUD’s recently announced PRICE program, which offers competitive grant opportunities for investments in affordable manufactured home communities.

HUD estimates that more than 5,000 individuals and families, based on average community size, could benefit from the program within the next five years. This Manufactured Home Communities program leverages FHA’s Multifamily 223(f) program, which will now provide permanent mortgage financing for manufactured home communities that may have previously been ineligible, and for previously ineligible manufactured home cooperative borrowers to be eligible to acquire and obtain financing for existing communities.

“With this product, HUD aims to support resident-owned communities and other mission-focused owners who are committed to high-quality, affordable manufactured housing that is not at risk of exorbitant land rent increases that jeopardize the stability of their homes and futures,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon.

“Today’s announcement is an important first step for a program that we hope will provide a meaningful path to both affordable manufactured home community creation and preservation,” said Deputy Assistant Secretary for Multifamily Housing Programs Ethan Handelman. “As we progress with the program implementation, we will continue to assess both its scope and entity eligibility.”

Since the turn of the new year, we’ve started discussing the Corporate Transparency Act’s (“CTA”) requirements that every small business – including your homeowner, condominium and cooperative association – register its business information with the US Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). The registration required providing the identities of your Board of Directors. Why – to combat money laundering and financial crimes. Many community association legal professionals – including your author – questioned the breadth of this law. How many community associations are fronts for money laundering?!?!

The National Small Business Association stepped in with a challenge to the CTA. Below is a breakdown on the US District Court’s ruling that the CTA is unconstitutional. A finding that the CTA is unconstitutional likely eliminates the need for your community association to register. As this is a quickly developing matter, stand by for further discussion on how this ruling affects the FloridaRoc community.

United States District Court for the Northern District of Alabama, National Small Business Association et al. versus Janet Yellen et al. regarding the constitutionality of the Corporate Transparency Act (CTA):

  • Background of the Case: The plaintiffs challenged the constitutionality of the CTA, which was part of the 2021 National Defense Authorization Act, arguing that its requirements for most entities incorporated under state law to disclose personal stakeholder information to the Treasury Department’s criminal enforcement arm exceeded Congress’s constitutional authority and violated multiple amendments of the Constitution.
  • Key Holding: The court granted the plaintiffs’ motion for summary judgment, finding the CTA unconstitutional as it exceeds the constitutional limits on legislative power, lacking a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’s policy goals. The court denied the government’s motion to dismiss and its cross-motion for summary judgment.
  • Legal Arguments and Analysis:
    • Constitutional Powers and Limits: The court analyzed the constitutional powers under which Congress claimed authority to enact the CTA, including the Commerce Clause, the Necessary and Proper Clause, and powers related to foreign affairs and national security. The court found that the CTA’s requirements did not fit within these constitutional powers.
    • Commerce Clause: The court determined that the CTA’s provisions could not be justified under Congress’s power to regulate commerce among the states, with foreign nations, or with Indian tribes. The act of corporate formation, the court argued, was not itself an activity that substantially affects interstate commerce in the way the Commerce Clause requires.
    • Necessary and Proper Clause: The court concluded that the CTA was not a proper exercise of Congress’s powers under the Necessary and Proper Clause because the requirement for entities to report detailed personal information about their beneficial owners did not constitute a means that was necessary and proper for carrying into execution Congress’s powers.
    • Foreign Affairs and National Security: The court rejected the argument that the CTA was justified under Congress’s foreign affairs and national security powers. It held that the regulation of domestic entities’ formation and reporting did not directly relate to national security or foreign policy in a manner that would justify the CTA’s broad sweep.

Conclusion: The court’s decision emphasized the constitutional principle that federal powers are limited to those expressly granted by the Constitution or necessary and proper for executing those powers. The CTA, according to the court, overstepped these bounds by imposing broad reporting requirements on a vast number of domestic entities based on the potential for foreign misuse of those entities, without a direct and substantial connection to interstate commerce, foreign affairs, or national security.*

* Credit to Alexander Dobrev and the Florida Bar condomania listserv for this summary.

As many of you know, Florida’s legislators, in a special session last year, attempted to respond to the tragic collapse of the condominium in Surfside with changes to the laws governing many community associations. Those changes may have been well-intended but created all kinds of headaches for condominium and cooperative associations and the unit owners, board members and managers of these communities.

Unit owners, board members and managers in resident-owned manufactured housing and RV communities found themselves struggling to answer the questions of whether–and to what extent–the “Surfside legislation” applied to their communities. Most, if not all, mobile home and RV communities do not have any buildings three stories or higher. Did these communities still have to have “milestone inspections”? Did they have to obtain “structural integrity reserve studies”? And what about their reserves? Did communities that did not have to have “milestone inspections” or “structural integrity reserve studies” have to provide for the reserve items now listed in Florida Statutes Section 719.104(1)(k) in their budgets? And could the unit owners no longer waive the reserve requirements?

History teaches us that in Florida, for every piece of well-intended and sweeping legislation, there is at least one “glitch bill” that swiftly follows. In the case of the “Surfside legislation”, that “glitch bill” is this year’s Senate Bill 154, which was signed into law by the Governor on June 9th and becomes effective unless otherwise provided immediately.

Here are some observations for our resident owned manufactured housing and RV cooperatives (and similar language can be found in the relevant provisions of Chapter 718 for those of you in manufactured housing or RV condominium associations):

  1. Florida Statutes Sections 553.899(2)(a) and (3)(a) now provide that communities with no buildings three stories or more in height are not required to have a “milestone inspection.”
  2. Florida Statutes Section 719.106(1)(k) provides that no “structural integrity reserve study” is required in communities with no buildings three stories or more in height (and the definition of “structural integrity reserve study” can be found in F.S. Section 719.103(24)).
  3. The requirement that an association’s budget provide that reserves be maintained for any of the items identified in F.S. Section 719.106(1)(k) seems to apply only to budgets adopted by an association that is required to obtain a “structural integrity reserve study.” This would appear to clarify that communities with no buildings three stories or more in height don’t need to provide for any of those items in their budgets except for those items that would otherwise already have to be included in their budgets.

There are two other important changes to note: First, the provisions in regard to the annual vote required to waive or underfund the reserves that would otherwise be required in the association’s budget under F.S. Section 719.106(1)(j) have been changed to require that a majority vote of the total voting interests in the association is now required to waive or underfund those reserves. This revision represents an increase from the former voting requirement of a simple majority of the quorum present in person or by limited proxy at the meeting. Also, in communities where no “milestone inspection” or “structural integrity reserve study” is required, all contracts for sale or resale of a unit entered into after December 31, 2024, must contain a statement, in conspicuous type, that indicated that the association is NOT required to have that milestone inspection or structural integrity study.

Let’s hope this “glitch bill” in fact makes our lives easier…we’re going to need all the help we can get over the next few months…as we’re already monitoring a developing storm (or two) out in the Atlantic!

Disaster assistance

Responding to the devastating 2021 collapse of the Champlain Towers South building in Surfside, lawmakers approved making property tax rebates available when residential properties are rendered uninhabitable for 30 days. During the December 2022 special session, lawmakers passed a measure (SB 4-A) to offer similar rebates to property owners who sustained damage in Hurricane Ian and Hurricane Nicole. Affected property owners will be able to apply to their county property appraiser between Jan. 1 and April 1st.

Our thoughts and prayers go out to everyone who has been affected by Hurricane Ian. As you probably know, Southwest Florida bore the brunt of the storm and has suffered catastrophic losses. At this time, power remains down for more than 50% of the residents from Manatee County down to Collier County. First and foremost, as Southwest Florida mitigates the damage and dangers post-storm, a few things to keep in mind are:

  • Avoid downed power lines: Do not touch or drive over downed power lines. Always assume a downed power line is unsafe and contact the power company and emergency personnel.
  • Be aware of areas where floodwaters have receded: Roads may have weakened and could collapse under the weight of a car.
  • Use a generator safely: Keep generators far from your home. Never use a generator inside a home, basement, shed or garage even if doors and windows are open as these could allow carbon monoxide to come indoors.
  • Stay out of buildings that have structural damage: Do not enter into buildings that have had any structural damage until it has been professionally inspected to ensure its safety.

Our National and State Agencies have resources available to those who have suffered loss due to the storm. Below are some links to the many resources that are available:

Together we will make it through this disaster. Our thoughts and prayers are with you.