Are Homeowner and Condominium Associations in Michigan Required to File FinCEN BOI Disclosure Notices?

Are Homeowner and Condominium Associations in Michigan Required to File FinCEN BOI Disclosure Notices?

The Corporate Transparency Act (CTA) has introduced new reporting requirements for homeowner and condominium associations, mandating most to file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN). While individual homeowners typically don’t meet the reporting threshold, association board members and others with substantial control over the association are generally required to be disclosed as beneficial owners.

Reporting Requirements

Under the Corporate Transparency Act, most associations are considered “reporting companies” if they were created by filing a document with a secretary of state or similar office. These HOAs must submit BOI reports to FinCEN. Key deadlines include:

► Existing HOAs (created before January 1, 2024): Must file initial BOI reports by December 31, 2024

► Newly formed HOAs (between January 1, 2024 and December 31, 2024): Must file within 90 days of formation

► Newly formed HOAs (on or after January 1, 2025): Must file within 30 days of formation

After the initial report, any changes to beneficial ownership information must be reported within 30 days. This requirement may necessitate frequent filings, especially when board members or officers change.

Exemptions for Associations

Certain associations may qualify for exemptions from BOI reporting requirements. Specifically, associations designated as 501(c)(4) social welfare organizations or organized as 501(c)(3) tax-exempt entities are exempt from filing. However, these exemptions are rare, as most associations do not qualify for tax-exempt status under the Internal Revenue Code.

Identifying Beneficial Owners

A beneficial owner in an HOA or condo association is an individual who has significant control over the association’s operations or decisions, such as board members and senior officers, regardless of their ownership percentage. This typically encompasses board members, senior officers (e.g., president, CEO, CFO), and key decision-makers. These individuals are considered beneficial owners even if they don’t meet the 25% ownership threshold. Property managers generally aren’t considered beneficial owners of associations unless they hold significant control or ownership stake. Individual homeowners, despite being technical members, usually don’t meet the reporting criteria as it’s rare for one person to own 25% or more of the units in a community.

Non-Compliance Penalties

Failure to comply with BOI reporting requirements can result in severe penalties. Individuals who willfully violate these requirements may face civil penalties as well as criminal penalties of up to two years imprisonment and a fine of up to $10,000. These potential violations include willfully failing to file a report, filing false information, or failing to correct or update previously reported information. Given the significant consequences, associations are advised to carefully assess their reporting obligations and ensure timely and accurate submission of required information to FinCEN.

Protect your homeowner or condo association and yourself by ensuring compliance with the new CTA regulations.  Association members can find out more information about the CTA and its filing requirements on the FinCEN website including a 50-page publication titled “Small Entity Compliance Guide” that is available for download.  Clients may request legal assistance from our office including determining whether their association must file a report, analysis of filing requirements specific to their association, and help with filing reports.

Attorneys Paul Schultz and Richard Zmijewski contributed to this article.



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