Corporate Transparency Act Update: A Major Setback for HOAs as Judge Denies CAI’s Motion for Preliminary Injunction

By: Kristen Pierce

As homeowner’s associations (“HOAs”) are heading into the fall and winter months, the Corporate Transparency Act (“CTA”) has been weighing heavily on the minds of directors, management companies, and community association attorneys alike. Most HOAs have been holding off on filing their BOIR with the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in hope that HOAs would receive an exemption through newly passed legislation, or at the very least a delay, from the CTA’s filing requirements. However, those hopes appear diminished as Judge Michael S. Nachmanoff of the United States District Court for the Eastern District of Virginia, Alexandria Division, denied a motion for preliminary injunction.

On September 10, 2024, the Community Associations Institute (“CAI”) filed a lawsuit against the United States Department of Treasury challenging the application of the CTA to HOAs on multiple legal grounds.[1] Further, CAI filed a Motion for Preliminary Injunction seeking a prohibition on the Defendants and their agents from enforcing the CTA against Plaintiffs and CAI’s affected members.[2] On October 24, 2024, the Court denied the Motion for Preliminary Injunction stating, among other determinations that, “[g]iven the de minimis nature of the alleged harm (individual taxpayers already disclose the same information to the Treasury every time they file their tax returns) and Plaintiff’ failure to establish that a substantial number of its members are likely to resign, the Court finds that Plaintiffs have not made the clear showing of irreparable harm required for preliminary relief.”[3]

While this is unfortunate news for HOAs, this is not the final decision in the matter as CAI has expressed it will continue to explore all options moving forward. In the meantime, HOAs that are not currently exempt from the filing requirements under the CTA are required to file by the January 1, 2025, deadline. An HOA should discuss filing requirements with its management company or a community association lawyer as soon as possible and ahead of the January 1, 2025, deadline. Please do not delay in meeting the filing requirements under the CTA as fears are already emerging about the FinCEN website’s ability to accommodate an end-of-the year filing rush. For more information on filing requirements, please visit our website to review The Corporate Transparency Act - Are Homeowner's Associations Required to Comply?