What You Need to Know

Just when you thought you had enough on your plate—keeping up with energy codes, structural upgrades, and managing an aging building—now you’ve got the Corporate Transparency Act (CTA) to think about. Fun, right? This new law is trying to tackle money laundering, which may feel like a bit of overkill in coops and condos. That being said staying compliant is key to avoiding potential headaches. So, let’s break it down—what does the CTA mean for you as a board member, and how can you manage it without losing more sleep?

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA), part of a bigger plan to prevent money laundering, requires businesses (yes, that includes co-ops and condos) to report who really owns or controls the property by January 1, 2025. This means you, as board members and anyone controlling more than 25% of the coop or condo, need to disclose your personal information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

Now, I know what you're thinking— “Seriously? I’ve lived here for 20 years, and now they think I might be laundering money?” It does seem a little far-fetched for co-op and condo boards that are often long-term owners. But the law is the law, and like it or not, the CTA applies to some of our buildings.

How Does the Corporate Transparency Act Impact NYC Co-ops and Condos?

If you’re already having trouble getting volunteers to join the board, the CTA isn't going to make that any easier. Some board members might feel uncomfortable handing over their personal details or might see this as yet another hassle on top of everything else. And with volunteer board positions already tough to fill, adding privacy concerns into the mix could make it even harder.

Still, compliance with the CTA is crucial. The last thing you need is to face fines or legal trouble for overlooking this requirement.

1. Who is Affected?

   Co-ops and condos are classified as legal entities and therefore fall under the CTA. Beneficial owners are those that control more than 25% of the corporation, meaning board members and possible sponsors or other large owners. It does not affect single-unit apartment owners. Not every building will need to comply, but it's important to know if yours does.

2. Who is Exempt?

   As can be expected, there are exemptions. Large companies with more than twenty full-time employees and more than $5 million on gross receipts from sources inside the US are exempt. So, if you’re in a large condo or coop that meet these criteria, you are exempt for the CTA reporting requirements. Please consult with your attorney to confirm before sighing out.

3. Reporting Requirements

   If your building is subject to the law, you’ll need to report detailed information about each board member (a decision maker), including their name, date of birth, address, and either a passport or photo ID.

4. Fines for Non-Compliance

   Non-compliance is not an option as it comes with Civil penalties of $500 per day and Criminal penalties of $10,000 or imprisonment.

    

Steps Co-op and Condo Boards Should Take for Compliance

To stay on top of co-op and condo board regulations under the Corporate Transparency Act, there are a few simple steps you can take:

• Assess Your Reporting Obligations

  First things first—figure out if your building needs to comply. Your building’s property manager can help clarify if the CTA applies to your co-op or condo.

• Organize Beneficial Ownership Data

  If you need to comply, make sure your records are organized and up to date. You’ll need accurate information on who really controls the building—meaning the board members themselves. This is important to avoid mistakes in your reporting. For managed buildings, your property manager can assist with this.

• Engage Compliance and Legal Experts

  Let’s face it, most boards don’t have the expertise to handle complex compliance laws like this one. Don’t be afraid to bring in the pros—legal and compliance experts who specialize in Corporate Transparency Act for co-ops and condo board regulations can help you avoid costly mistakes.

What Happens If You Don’t Comply?

Failing to comply with the Corporate Transparency Act can lead to some serious problems. Penalties include fines and possibly legal action against your board. You could also expose your building to fraud or other liabilities if the reporting isn’t done correctly.

It’s clear that getting ahead of this law is essential, even if it feels like just another task in your already busy role as a board member.

The Corporate Transparency Act and NYC Real Estate: What’s Next?

The CTA is only one piece of a larger trend toward more transparency in NYC’s real estate landscape. Anti-money laundering efforts and other co-op and condo board regulations are becoming more common, so this likely won’t be the last new rule you’ll need to follow. But by being proactive, engaging with experts, and using the right tools, you can navigate these changes smoothly.

With the January 1, 2025, deadline looming, now is the time to act. Navigating the Corporate Transparency Act for co-ops and condo board regulations may feel like yet another burden, but with the right preparation, you can tackle it head-on. Review your records, talk to the experts, and make sure your board is ready to meet these new requirements. Don’t wait for the last minute—getting ahead of this will save your building from potential fines and keep you compliant well beyond the deadline.