Tag: business trade

Will Transparency Act chill HOA survival – no board volunteers?

Community associations were not given one of the twenty-three (23) exemptions under the Corporate Transparency Act (“CTA”).  CTA requires  businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.

CAI filed an amicus brief seeking HOA exclusion from reporting under CTA. (CAI Amicus Curiea, National Small Business United v. U.S. Treasury,  No. 24-10736, 11th Cir. (Ala.) 2024.) In sum CAI argued, “Homeowners will no doubt be reluctant to volunteer in light of the potential Orwellian consequences imposed by the CTA.”

In  researching the CAI brief, I do not address the issue of CTA and HOAs; CAI makes that argument.  My analysis addresses 2 aspects of the CAI brief:

  1. CAI’s candor to the tribunal (Code of Professional Ethics, R 42, E.R. 3.3 violation) in regard to misrepresentations as to what CAI is and what it does (Section I), and as to what HOAs are and do.
  • An implied defect in the HOA governance model relating to the need for unhindered, unpaid, volunteer boards of directors without whom HOA governance fails.

CAI  CANDOR

CAI continues to make broad, unsupported, half-truths as to it nature that can be found in many of its amicus briefs.  CAI claims (my emphasis):

“The Community Associations Institute (“CAI”) is an international nonprofit research and education organization formed in 1973 by the Urban Land Institute, the National Association of Home Builders, and the United States Counsel of Mayors to provide the most effective guidance for the creation and operation of  condominiums, cooperatives, and homeowners associations

“an international organization dedicated to providing information, education, resources, and advocacy for community association leaders . . . . CAI is the largest organization of its kind, serving more than 75.5 million homeowners who live in more than 365,000 community associations in the United States.”

“CAI submits that there [sic] experience in representing and supporting community associations . . . and understand the make and needs of the various community associations.”

“The primary role of community associations is to manage the common areas of the community, i.e. fix the roofs, maintain the lawns, shovel the snow, insure the buildings, etc”

Not mentioned is CAI as an IRS 501(c)6 business trade group that does not and cannot have HOAs per se as members, and was formed to combat growing problems with the HOA scheme back in 1973. In 1992 CAI dropped its education tax-exempt status to become a trade group so it could lobby more effectively. See Stable’s Community Associations and McKenzie’s Privatopia on origins of CAI.

HOA SURVIVAL — UNPAID VOLUNTEERS

“CAI submits this amicus brief on behalf of its members who recognize that the sustained health of the community association form of ownership in the United States depends in large part upon the willingness of owners to continue to serve on their associations’ volunteer boards to make their homes and communities better places to live.” 

“Volunteerism is the backbone of every community association. Board

members are not paid for their service. CAI respectfully submits that volunteer homeowners will be less likely to serve in that capacity if they are required to file a beneficial ownership report with the Government.

“Homeowners will no doubt be reluctant to volunteer in light of the

potential Orwellian consequences imposed by the CTA”

The above is a major defect in the HOA scheme based on an unreal requirement for active volunteerism that is not supported by the lack of involvement in public government.  It’s a call to utopian ideals and behavior.

REALITY CHECK

Question:  If CTA applied to HOAs, would you serve on the board?

The need to regulate CAI monopoly

To answer to the question I raised, “Is CAI a coercive HOA monopoly?,” required further research and analysis, which resulted in  finding extensive and strong evidence, gathered from over the years, that CAI is definitely acting in violation of the anti-trust statutes; steps need to be taken to break up the monopoly.  Below are my recommendations to regulate CAI’s activities to allow for the voice of others to be heard, especially from owners of HOA homes who suffer under the monopoly.

A.       Regulations on CAI monopolistic activities

1.       CAI to cease all references and implications that it represents HOAs before the legislature, all government bodies, before the courts and including amicus curiae briefs without express consent to do so;

2.      Require CAI to state that it is a business trade nonprofit, explicitly a 501(c)6 and not an educational entity;

3.      Inform readers that it cannot have HOAs as members since HOAs are consumers of the services provided by the trade group members;

4.      It is actively engaged in lobbying state legislatures on bills favorable to the HOA  and not necessarily to the membership;

5.      Inform owners and the public in general that its attorney members represent the HOA personified by the Board of Directors and not the member.

B.    Regulations on HOA activities in support of CAI monopoly

1.       Similar to representing employees in bargaining with management, propose federal laws that permit and protect HOA members to organize its membership to bargain in good faith for amendments to the governing documents and Rules changes;

2.      Propose legislation that allows for the creation and protection of a national HOA Homeowners Coalition, similar in intent as the National Labor Relations Board (NLRB);

3.      To restrict the HOA from interference with the newly established  organized national and state  member entities;

4.      Quarterly inform the membership of the number of directors, officers, managers, and attorneys who are members of CAI;

5.      Publish the total annual amount of spending for CAI dues paid for any HOA members, donations, other fees, and expenditures paid for by the HOA;

6.      Inform the membership that all communications with their attorney are not exempt from disclosure by state law,

7.      and all communications with the HOA attorney constitutes corporate documents that are accessible to the members, unless explicitly exempted under  “Pending or contemplated litigation” apply;

8.     The CC&Rs or Declaration for any planned community, condominium association or homeowners association shall state that, “The association hereby waivers and surrenders any rights or claims it may have, and herewith unconditionally and irrevocably agrees to be bound by the US and State Constitutions and laws of the State as if it were a local public government entity.”