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:
- 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?
HOA Constitutional Government 