What co-op and condo boards need to know about the federal Corporate Transparency Act
- Boards need to file a Beneficial Ownership Information report by Jan. 1st, 2025
- Hiring a vendor to file the BOI report should cost about a few hundred dollars
Boards need to keep the information they submit to the Financial Crimes Enforcement Network up to date.
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Time is running out for New York City condo and co-op boards to comply with a federal law meant to target money laundering. [UPDATE: On Dec. 3rd, a Texas judge issued a nationwide injunction against enforcement of the law, saying Congress had no authority to adopt such a law and that it likely unconstitutional.]
The Corporate Transparency Act (CTA), enacted in 2021, requires U.S. businesses to disclose some information about their owners in an effort to target tax fraud, money laundering and even terrorism. NYC’s condo and co-op buildings need to comply with the rule by Jan. 1st of 2025—or face steep fines.
“With the deadline looming, we're strongly advising our members to comply,” said Mary Ann Rothman, executive director of the Council of New York City Cooperatives & Condominiums (CNYC).
Buildings could see fines of up to $10,000—plus penalties of up to $591 per day—for failing to file the required information with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) by the Jan. 1st deadline, according to the U.S. Chamber of Commerce. (New condo buildings launched after Jan. 1st of this year will have a different deadline.)
The requirements are similar to those in New York's LLC Transparency Act—a state law that would require condo and co-ops to disclose their beneficial owners to a New York database. The database was initially intended to be public, but Governor Kathy Hochul modified the law to make the database only available to law enforcement and government agencies. Implementation of this law has been delayed until January 1st, 2026.
If your board hasn’t filed yet, or is just getting started, read on for what you need to know about the CTA’s new requirements.
What does my board need to provide?
Essentially, the CTA requires that your board tells FinCEN who runs your building.
To do so, your board will need to file a Beneficial Ownership Information report to FinCEN by Jan. 1st, 2025. That report will include your condo or co-op’s legal name, current address and taxpayer identification number.
The CTA also requires that beneficial owners—those with influence over the business—provide their personal information. In a condo or co-op's case, your building’s beneficial owners would include the board of directors and anyone who owns at least a 25 percent interest in the company, which could be your building’s sponsor, said Andrew Freedland, a partner at law firm Herrick Feinstein.
“In most co-ops or condos, it is going to be really uncommon,” to have an owner with a 25 percent equity interest, Freedland said. “The party that would be most likely to fall into that category is a sponsor.”
Board members need to provide their names, date of birth, address, social security number, and a copy of their state ID or passport.
| Required Information About Beneficial Owners |
|---|
| Full name |
| Date of birth |
| Address |
| Social security number |
Image of, and a unique identifying number from, one of the below documents:
|
So how do we file this report?
Many boards have turned to their building’s property manager or a service provider to handle the BOI report for them, Freedland said. But if you’re a self-managed building, you may want to get in touch with your attorney for help or hire a vendor.
This service will likely cost around $400 to $600, said Shaun Pappas, a partner at Starr Associates. Pappas recommends using a vendor rather than having the board handle the report. Your property manager should contact that vendor to update the BOI report as members join or leave the board. (The CTA requires that any updates or corrections to BOI information be made within 30 days.)
“I think a lot of this is going to be managed by the property manager,” Pappas said. “The property manager is going to know when the board members change. And that would be the impetus to get the service company involved to update your records. I don't think a lot of this will, or should, fall on the individual board.”
A property manager or vendor, however, will need to collect all the relevant information from individual board members for the BOI report, and some people on your board may grimace at the idea of sharing a copy of their ID or passport, Freedland said.
In that case, he recommends that individual board members log onto FinCEN and fill out their own information, and then provide their FinCEN number to the managing agent or vendor charged with handing the BOI report. Board members, however, should be somewhat accustomed to turning over their personal information through other required reports, Pappas noted.
Should our board wait for an exemption?
In short: no. Your best bet is to comply with this law to avoid penalties, Rothman, Pappas, and Freedland agreed.
“Compliance can be a little bit time consuming, but it sure is going to be less time consuming than dealing with the penalties on the back side,” Freedland said. “You should be getting your BOI reports in as soon as possible. Don’t leave it to the last minute.”
Most boards have already gotten started on this report, or at least put it on their agendas, Pappas said. The only boards likely exempt from the requirements are those with more than 20 full-time employees and more than $5 million in revenue, he added.
There is a chance that the deadline is extended under U.S. Senate bill S.3625 that Rothman is encouraging her members to support. In the meantime, it’s better that your board be safe than sorry.
