Corporate Transparency Act Update: Court Ruling Impacts NYC Co-Op and Condo Board Compliance

On December 3, 2024, a significant legal development occurred that affects cooperative and condominium boards across New York City, Brooklyn, and Queens.

The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, suspending enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements.

This ruling has created uncertainty regarding compliance deadlines, particularly the January 1, 2025 deadline for existing entities to file BOI reports.

Woods Lonergan PLLC’s New York condominium and cooperative attorneys currently serve as general counsel to the boards of directors and managers of numerous cooperatives, condominiums and homeowners associations throughout the New York metropolitan area.

This depth of experience allows us to navigate complex regulatory landscapes and advise on best practices in board governance, addressing requirements that significantly impact our clients’ governance structures and operational procedures.

For personalized guidance on CTA compliance or any other matters related to cooperative and condominium law, please reach us online or call our cooperative condominium practice group at (212) 684-2500.

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Key Points for New York Cooperative and Condo Boards:

Temporary Suspension: The court’s ruling halts enforcement of the CTA nationwide, including the January 1, 2025 deadline for filing Beneficial Ownership Information Reports (BOIRs). The court found that the CTA likely exceeds Congress’s constitutional authority under both the Commerce Clause and the Necessary and Proper Clause, marking it as a potential overreach of federal power.
Nationwide Effect: Unlike prior rulings that applied only to specific plaintiffs, this injunction applies to all reporting companies across the country. This means that all domestic entities created by filing with a secretary of state and non-U.S. entities registered to do business in the United States are currently not required to file BOI reports, regardless of their specific corporate structure. This ruling impacts approximately 32.6 million business entities nationwide, including our cooperative and condo board clients in New York City, Brooklyn and Queens, which are now temporarily relieved of their BOIR filing obligations.
Ongoing Legal Process: The U.S. Department of Justice, on behalf of the Treasury Department and FinCEN, is expected to appeal this decision to the Fifth Circuit Court of Appeals. If overturned, compliance deadlines could be reinstated with little notice. Given the constitutional significance of this case, it may ultimately reach the Supreme Court. Boards should be prepared for a potential reinstatement of reporting requirements on short notice.
Continued Preparation Advised: While the court’s ruling temporarily suspends the January 1, 2025 compliance deadline, co-op and condo boards should continue gathering necessary information to ensure readiness if reporting requirements are reinstated. Boards should focus on identifying individuals who qualify as beneficial owners—those who either (1) exercise substantial control over the entity or (2) own or control at least 25% of its ownership interests. The 25% threshold is a specific requirement under the CTA for ownership interests; however, “substantial control” includes senior officers or other key decision-makers regardless of ownership percentage. Given the complexities involved—such as tracking changes in board membership and updating reports within 30 days—proactive preparation now can save time and prevent penalties later. Woods Lonergan PLLC is here to assist your board with identifying reportable individuals, staying ahead of legal developments, and ensuring compliance readiness if obligations are reinstated.
Monitoring Developments: The court emphasized that enforcing the CTA could cause “irreparable harm” to entities due to privacy concerns and compliance burdens. We are actively monitoring this case and will provide timely updates on any changes or new rulings that may affect your condo coop board’s obligations. Our goal is to keep you informed so your board can act quickly if necessary.

Looking Forward:

Constitutional Concerns: The court ruled that regulation of corporate formation traditionally falls under state jurisdiction rather than federal authority. It also raised privacy issues under the First and Fourth Amendments due to potential disclosure of sensitive ownership information.
Impact on Deadlines: For companies formed prior to 2024, this ruling suspends their obligation to submit initial BOI reports by January 1, 2025. Entities formed in 2024 or later are similarly relieved from their respective 90- or 30-day reporting deadlines until further notice.
Potential Appeal Outcomes: If the injunction is lifted on appeal, reporting entities may face tight deadlines for compliance. Boards should remain vigilant and prepared to act swiftly if filing obligations are reinstated.

While this ruling provides temporary relief from CTA compliance, it is not a final determination on the law’s constitutionality. Woods Lonergan PLLC will continue to monitor developments closely and provide you with timely updates and actionable insights to help your board navigate this evolving legal landscape with confidence.

Woods Lonergan PLLC’s New York condominium and cooperative attorneys currently serve as general counsel to boards of directors and managers of numerous cooperatives, condominiums, and homeowners associations throughout New York City, Brooklyn and Queens.

This depth of experience allows us to navigate complex regulatory landscapes and advise on best practices in board governance.

The Corporate Transparency Act introduces a new layer of regulatory compliance for co-op, condo, and HOA boards in New York. While these requirements may seem daunting, proactive preparation combined with expert legal guidance can ensure smooth compliance while protecting your community from potential penalties.

For personalized guidance on CTA compliance or any other matters related to cooperative and condominium law, please contact us online or call our cooperative condominium practice group at (212) 684-2500.

About the Author

Annie E. Causey, a Partner at Woods Lonergan PLLC, specializes in high-stakes complex civil litigation across various business industries and sectors. With extensive courtroom experience in New York state and federal courts, she represents clients in cases involving breach of contract, fiduciary duty, fraud, and business torts. Annie also provides general counsel to businesses and individuals, advising on the formation, negotiation, and protection of commercial interests in joint ventures, LLCs, partnerships, and closely held corporations. She has deep expertise across various industries, including retail, real estate, technology, and finance, and excels in handling board governance and complex litigation scenarios involving domestic and international businesses, ranging from small businesses to mid-size companies and publicly held corporations. Recognized by Super Lawyers from 2016 to 2024, Annie holds a J.D. from New York Law School and a B.A., magna cum laude, from the University of North Carolina at Charlotte. She is admitted to practice in New York and various federal courts, including the U.S. District Courts for the Southern and Eastern Districts of New York and the U.S. Court of Appeals for the Second Circuit.