Over the past few years, much has been made of the Corporate Transparency Act (CTA) and its impact on Condominium Associations. Some view it as a substantial invasion of privacy, others view it as a significant inconvenience and operational complication, still others have been sounding alarm bells, priming board members to expect to be carted off in hand-cuffs. It is fair to say that no one has been all that happy about having to comply with it. Efforts have been undertaken at the legislative and regulatory level to exempt associations from its coverage. Lawsuits have been filed seeking injunctions against its enforcement and declarations regarding its applicability to condominium associations. To date, none of these efforts has been entirely successful in securing the clarity we all seek. This e-news blast constitutes yet another update, containing conditional assessments and recommendations, but not the definitive direction that we all had hoped to obtain before January 1, 2025. While this update reflects our office’s thinking, based on what we know and recognizing what we do not yet know, we expect that it can also put things in perspective. We hope that the frequency of the communications you receive about this issue, from this office and other offices, does not artificially elevate the relative importance of the CTA and its impact on condominiums. We know that many people are extremely sensitive about sharing any personal information, and we understand the reason those with such heightened concerns would be more comfortable being relieved from the disclosures imposed by the CTA. However, at its most invasive, CTA allows a filing party to satisfy its filing requirements with name, date of birth, residential address, and an identifying number from a governmental issued identification card, including a driver’s license number, and a copy of the identification. The process will take the typical filer about five minutes. Therefore, while it is our primary desire to share what information we have on the subject, and we recognize there are fundamental principles at play, and that everyone’s tolerances are different, we hope and trust that this communication will not add to any sense of dread or alarm that has arisen around the CTA. We hope only to inform, but not inflame.

With that being said, on November 22, 2024, the U.S. District Court for the District of Massachusetts issued an order dismissing the Complaint of the Trustees of the Lewis Wharf Condominium Trust, which had sought, among other things: (1) a declaration that the Lewis Wharf Condominium Trust and all similarly situated and created condominium entities are not subject to the CTA’s reporting requirements as they are statutorily created entities governed by G.L. c. 183A; and (2) injunctive relief enjoining the federal government from enforcing the CTA against the Lewis Wharf Condominium Trust. In its decision, the Court granted the federal government’s motion to dismiss the Complaint on the basis that the Lewis Wharf Condominium Trust had not alleged facts that would render enforcement of the CTA as to the Lewis Wharf Condominium Trust anything other than “hypothetical” or “conjectural.” In other words, as the federal government has not sought to enforce the CTA against the Lewis Wharf Condominium Trust, the case is not yet ripe. A copy of the order is available here.

Based on the foregoing, and in light of the fact that the filing obligations are relatively minimal, it remains our office’s position that the most conservative approach is for condominium trusts and unincorporated condominium associations to file beneficial ownership information in accordance with the requirements of the CTA.

As reflected in the order, the federal government took the position in the case that the CTA does not apply to the Lewis Wharf Condominium Trust as: a “domestic company is only required to report beneficial ownership information to FinCEN under the CTA if it is created by the filing of a document with a state secretary of state or similar office”; “[n]o condominium governing documents, include the declaration of trust, created under M.G.L. c. 183A are filed with the Secretary of State’s office”; and the Lewis Wharf Condominium Trust had “not alleged facts that would place their organization within the scope of the CTA’s reporting requirements.” To be sure, the position taken by the government in the case as to the inapplicability of the CTA provide clarity and are wholly consistent with this office’s interpretation of the CTA from its inception.

Notwithstanding the foregoing, as the Lewis Wharf case was dismissed and did not result in a judgment declaring that the CTA does not apply to condominium trusts and unincorporated condominium associations, the case fails to provide the definitive answer that the industry was hoping for. While the position taken by the government in the case provides reasonable comfort that it will not enforce the reporting obligations contained in the CTA against condominium trusts or unincorporated condominium associations, it is unlikely in this context that principles of judicial estoppel (which prevents a party from contradicting a previous position taken during an earlier proceeding if such change in position would affect the proceeding or constitute a fraud on the court) could be invoked against the government in a manner that prevents it from arguing that a statute must be applied in accordance with its terms. That is, when it comes to interpreting the language of a statute, the government can change its position, and it is quite possible that, in a subsequent enforcement action, it could take the exact opposite position and claim that the CTA is applicable to condominium trusts and unincorporated condominium associations.

Based on the foregoing, and in light of the fact that the filing obligations are relatively minimal, it remains our office’s position that the most conservative approach is for condominium trusts and unincorporated condominium associations to file beneficial ownership information in accordance with the requirements of the CTA. We understand that some have concerns as to the dissemination of the requested information and that those persons may err on the side of not submitting information, particularly in light of the position that the government has taken in the Lewis Wharf case. While we view such approach as reasonable and defensible, there is no guarantee that the government will not take enforcement action.

It is worth noting that the discussion herein concerns condominium trusts and unincorporated condominium associations – not incorporated condominium associations, which are formed by the filing of documents with the Secretary of State’s office. As to incorporated condominium associations, they should continue to plan to file beneficial ownership information.

Our office will continue to monitor the CTA and its application to condominium trusts and unincorporated condominium associations and provide timely and important updates.