rembaumlaw | Rembaum's Association Roundup

June 12, 2025June 12, 2025

Accusations Of Racial Discrimination by the HOA

Admittedly there are always two sides to every story. This is why we have the American judicial system to get to the resolution of a matter as decided by the “trier of fact,” be it the judge or jury, after hearing from both the accuser and the accused (or in civil terms, hearing from the plaintiff and defendant). In most civil cases a plaintiff only needs to prove that a particular event was more likely than not to have occurred. This is referred to as a “preponderance of the evidence” standard of proof, meaning that a majority of the evidence favors the plaintiff’s position. But, before the parties can get to that stage, the plaintiff first must sufficiently allege a cause of action against the defendant. If not, then the plaintiff’s lawsuit is subject to being dismissed. Well, that is exactly what happened in the recent federal appellate case of Watts v. Joggers Run Property Owners Association, Inc., 133 F.4th 1032 (11th Cir. 2025), in which the plaintiff, Watts, appealed the dismissal of her case in its entirety by the lower court, the U.S. District Court for the Southern District of Florida.

In the underlying action, Watts alleged Joggers Run of taking unlawful actions against her, her family, and her guests due to their race and brought claims against Joggers Run under both the Fair Housing Act and the Civil Rights Act. Watts accused Joggers Run of selectively enforcing its rules pertaining to parking, pets, yard sales, and penalty fees against her and her family but not against non-Black residents. She accused the association’s president of referring to Black people as “monkeys” and another director of using derogatory, race-based comments. She alleged that she was limited to three minutes when addressing the board, but other non-Black owners were not so limited; and when she complained about this, somehow the board stripped her of her board membership without any notice to her. She alleged that the association denied her children use of the basketball courts because a director complained about there being noisy Black kids and “too many people of color” using the basketball courts. She alleged that the association accused her Black guest of trespassing and vandalizing cars. Other discriminatory practices were alleged in the lawsuit as well.

Joggers Run moved to dismiss the entire complaint for failure to raise any cognizable claim under both the Fair Housing Act and the Civil Rights Act. The lower district court granted that motion. While the lower court found that the alleged conduct of Joggers Run was reprehensible, it nevertheless ruled that none of Watts’s allegations could support her statutory claims and dismissed the lawsuit. Watts then appealed the dismissal to the U.S. Court of Appeals of the Eleventh Circuit, which ultimately reversed the lower court’s dismissal and remanded the parties back to the lower court for further
proceedings.

The standard of review employed by the Appellate Court is, in this instance, de novo, meaning the Appellate Court reviews the matter as if it were being considered for the first time, allowing for a new analysis of the facts and law involved. The Appellate Court noted that to withstand a motion to dismiss for failure to state a claim, the plaintiff’s complaint must include enough facts to state a claim for relief that is plausible on its face. The plaintiff must allege more than mere conclusions and formulaic recitations of the elements of a cause of action. But, however, in Fair Housing Act discrimination cases, the Appellate Court recognized that it can be difficult to define the precise formulation of a required prima facie case before the process of discovery has an opportunity to unearth all the relevant facts and evidence. That said, the allegations in the complaint should be judged by the required statutory elements.

The Appellate Court began its discussion with a brief history and the importance of the Fair Housing Act. As found by a bipartisan committee appointed by President Lyndon B. Johnson, national fair housing laws were necessary to end evident and profoundly divisive housing discrimination. In response, Congress passed the Fair Housing Act in 1968 to provide for fair housing within the United States; and in Sections 1981 and 1982 of the Civil Rights Act, Congress provided that all Americans, regardless of race, are entitled to equal contract and property rights.

While the Fair Housing Act makes it unlawful to discriminate against any person in the terms, conditions, or privileges of the sale or rental of a dwelling or in the provision of services or facilities in connection therewith because of race, color, religion, sex, familial status, or national origin, Congress did not provide a list as to what these “terms, conditions, and privileges” actually are. Later, through adoption of regulations by U.S. Department of Housing and Urban Development under the Fair Housing Act, we learn that access to communal spaces is within the scope of “terms, conditions, and privileges” of the sale or rental of a dwelling and that limiting the use of such privileges because of race would be a violation of the Fair Housing Act. In other words, when a person enters into an enforceable agreement for the purchase of property that includes a mandatory obligation to be a member of a homeowners’ association, then discrimination is prohibited as related to any of the privileges, services, and facilities afforded by membership in the homeowners’ association. The Appellate Court found that Watt’s complaint sufficiently alleged that she was denied equal access and treatment because of her race by Joggers Run.

In examining whether Watts had sufficient allegations to withstand the motion to dismiss regarding the Civil Rights Act, the Appellate Court found that it only needed to “initially identify an impaired contractual relationship under which Watts had rights.” The Appellate Court found, “The HOA rules created an enforceable contract that governed the residence rights and responsibilities and benefits of membership.” Because Watts alleged that the HOA violated its own rules and regulations by allowing non-Black residents to violate the rules and regulations while enforcing the rules and regulations against her and her family due to their race, Watts plausibly alleged that the contractual relationship was violated by Joggers Run in contravention of its own rules and regulations, which was sufficient to bring such a lawsuit. In fact, the United States Supreme Court broadly construes the Civil Rights Act to protect not merely the enforceability of property interest acquired by Black citizens but also their right to use property on an equal basis with White citizens.

Watts alleged that the Joggers Run created a dual property system where White owners could fully enjoy the amenities’ common areas and services while Watts, as a Black resident, could not. In conclusion the Appellate Court found that Watts’s complaint presented plausible claims for relief under the Fair Housing Act and under the relevant sections of the Civil Rights Act. Therefore, the case was reinstated and remanded back to the lower court for further proceedings.

Given that the facts of the case have yet to be tried in court, whether racial discrimination occurred against Watts remains to be heard and determined by the trier of fact. All that we know for the time being is that Watts has sufficiently stated her complaint to make a primary showing of discrimination, but whether it actually occurred or not will have to be decided later after all relevant evidence and testimony is reviewed by the trier of fact.

Reviewing the alleged facts in a light most favorable to and as presented by Watts, it certainly seems as though discrimination may have occurred. However, could Joggers Run have accomplished the car towing, the closing of the basketball court, and its other actions in a lawful, non-discriminatory manner? The short answer is, “likely so,” if it had equally enforced its rules and regulations against all owners and followed the required procedures. Had Joggers Run equally enforced its rules and regulations and followed the required procedures, then Watts’s claims could have failed.

Regardless of equal enforcement, making disparaging comments regarding any member’s race, color, religion, sex, familial status, or national origin is not only fundamentally wrong but also sets the stage for all the board members’ acts to be judged with those racially charged comments in mind. To make such comments as a board member could be, if proven true, fatal to the association’s position. Had the Joggers Run board members not made racially motivated comments, if it did as alleged by Watts, and had they engaged the association’s attorney to provide important and necessary guidance, then in all likelihood this entire fiasco could have been avoided.

May 22, 2025May 27, 2025

Board Member Fiduciary Duties Owed to the Association

What is the standard of care that a community association officer and board member owe to their association? The Homeowners’ Association Act (Ch. 720 Fla. Stat.) provides in §720.303, “The officers and directors of an association are subject to §617.0830 and have a fiduciary relationship to the members who are served by the association.” The Condominium Act (Ch. 718 Fla. Stat.) in §718.111 similarly provides, “The officers and directors of the association have a fiduciary relationship to the owners.” Still, though, there is no express definition of the term “fiduciary relationship” set out in either piece of legislation.

With that in mind, let’s take a look at some of the more common definitions of the term “fiduciary,” including the following:

- - A fiduciary relationship is a relation between two parties wherein one party (fiduciary) has the duty to act in the best interest of the other party (beneficiary or principal).
  - A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person.
  - A fiduciary duty is a relationship in which one party places special trust, confidence, and reliance in and is influenced by another who has a fiduciary duty to act for the benefit of the party.
  - Most importantly, and germane to this discussion, a fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust.

From all of this we can glean that a good community association board member puts the interest of their association well above their own personal interests. Not only are homeowners’ associations subject to Chapter 720, Florida Statutes, and condominium associations subject to Chapter 718, Florida Statutes, but both are subject to Florida’s Not-For-Profit Corporation Act, Chapter 617, Florida Statutes. Section 617.0830, Fla. Stat., provides a mechanism that will shield a director from breach of fiduciary duty claims so long as they follow the requirements set forth in this ever-important piece of legislation.

Section 617.0830, Fla. Stat., provides,

A director shall discharge his or her duties as a director, including his or her duties as a member of a committee, In good faith;

With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and

In a manner he or she reasonably believes to be in the best interests of the corporation.

In discharging his or her duties, a director may rely on information, opinions, or reports, including financial statements and other financial data, if prepared or presented by the following:

One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;

Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the persons’ professional or expert competence; or

A committee of the board of directors of which he or she is not a member if the director reasonably believes the committee merits confidence.

A director is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by i, ii, and iii immediately above unwarranted. (In plain English and for example, this means if you have reason to know that you should not rely on such professional advice because say the expert was impaired, then relying on his or her advice will not provide the statutory protection.)

A director is not liable for any action taken as a director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with all of the aforementioned.

Therefore, for example, should the association’s legal counsel or other selected expert in a particular field provide advice to the association’s board and then the board member decides to act in a contrary manner, then such board member would not have the aforesaid statutory protection and, in fact, could be accused of acting in bad faith should they act in a manner contrary to the advice or instruction of the expert.

Condominium association directors should be aware that pursuant to §781.112, Fla. Stat., a willful and knowing failure to complete the structural integrity reserve study and/ or the milestone inspection when required to do so is considered to be an automatic breach of such officer’s and director’s fiduciary relationship to the unit owners. Yikes!

Additionally, the “business judgment rule” protects board members from their decision making so long as the board member acted in such a manner as would any other reasonably prudent person under similar circumstances. Generally, the decisions of directors are not subject to successful attack unless there is a showing of fraud, criminal activity, self-dealing, dishonesty, or incompetency. In fact, in the often-cited seminal case Sonny Boy, L.L.C. v. Asnani, 879 So. 2d 25, 28 (Fla. 5th DCA 2004), the court held that the directors of a condominium association were not personally liable for failing to maintain and repair common elements where the accusation was that rental revenue was lost as a result thereof because there was no showing of fraud, self-dealing, or unjust enrichment.

The Sonny Boy court went even further when it wrote in its opinion that “it is well established in Florida that absent fraud, self-dealing and betrayal of trust, directors of condominium associations are not personally liable for the decisions they make in their capacity as directors of condominium associations.” See, e.g., Perlow v. Goldberg, 700 So.2d 148 (Fla. 3d DCA 1997) (finding directors of condominium associations not individually liable for actions and governance of condominium association); Taylor v. Wellington Station Condominium Association, Inc., 633 So.2d 43 (Fla. 5th DCA 1994) (finding that in general, corporate directors and officers cannot be personally liable for corporate acts absent actual wrongdoing in the form of fraud, self-dealing, or unjust enrichment to trigger individual liability); Munder v. Circle One Condominium, Inc., 596 So.2d 144 (Fla. 4th DCA 1992) (reversing lower court’s finding of individual liability by condominium developer). Similarly, §617.0834(1), Florida Statutes (2002), and §607.0831(1), Florida Statutes (2002),[2] provide insulation for condominium association directors from liability in their individual capacities absent fraud, criminal activity, self-dealing, or unjust enrichment. Perlow, 700 So.2d at 149.”

In Grand Harbour Community Association, Inc. v. G.H. Vero Beach Development, LLC., Case No. 4D2023-1191, (Fla. 4th DCA Oct. 2, 2024), the trial court had found that the developer and the developer-appointed directors were entitled to summary judgment on the breach of fiduciary duty claim because no evidence existed that the developer-appointed directors had acted in bad faith in failing to fund the reserves or in undercharging the developer for its deficit funding obligation, and therefore there was no basis to hold the developer vicariously liable for the acts of its appointed directors. Then, on appeal, the 4th District Court of Appeal affirmed the trial court ruling because “the community association declaration provided that the board members shall not be liable for any mistake of judgment, negligent or otherwise, except for their own individual willful misfeasance, malfeasance, misconduct, or bad faith.””

The appealate court continued, “Under Florida law, the ‘business judgment rule’ protects directors of non-profit corporations, from personal liability for any actions undertaken as directors ‘absent a showing of bad faith, self-dealing, or a violation of criminal law,’” citing New Horizons Condo. Master Ass’n. v. Harding, 336 So. 3d 796, 799 (Fla. 3d DCA 2022).

In yet another case, Miller v. Homeland Prop. Owners Association, Inc., 284 So. 3d 534, 537 (Fla. 4th DCA 2019), the court held that deference to community associations’ decisions must be given when i) the association had the contractual or statutory authority to perform the relevant acts; and ii) the board acted reasonably and not in an arbitrary, capricious manner or in bad faith.

So, while Florida Statutes and relevant case law provide a strong level of protection in favor of officer and board member decision making, such decisions should be rendered reasonably, in reliance on expert opinions (when relevant), and not decided in bad faith or in an arbitrary and capricious manner or in a manner that suggests self-dealing or unjust enrichment, etc. in favor of the officer and director(s).

April 15, 2025May 27, 2025

Not all Expenditures Can Be Collected from Delinquent Owners as Part of the Collection/Foreclosure Process – Why Not?

It is clear that Florida’s community association collection/foreclosure legislation allows associations to foreclose an owner’s home for nonpayment of assessments. However, not all of the monies expended by an association fit into the definition of an assessment. For example, let’s say that an association has a right to correct a deficiency on an owner’s lot, but the declaration of covenants at issue does not support converting the money spent into an assessment. In that event, the monies expended by the association would have to be recovered as part of a breach of contract action rather than as part of an assessment/foreclosure action. Sometimes, however, the declaration will provide that the monies expended can be treated as an assessment. If that is the case, then before those expenditures can be included as a part of the collection/foreclosure process, the board would need to convert the expenditure into an assessment against the noncomplying owner. (As to how that is done, you can discuss it with your community association’s attorney.) Florida’s collection/foreclosure legislation also provides for recovery of certain costs incidental to the collection/foreclosure process, but recovery of such cost must be rooted in a statute or by contract (i.e., the declaration of covenants).

Let’s look at the fee charged by a management company for sending the notice of late assessment letter, often referred as a NOLA letter, as required by Florida Statute, and determine whether it is a recoverable cost in an association’s collection/foreclosure action and whether including the NOLA fee as a part of the association’s collection/foreclosure proceedings violates the Federal Fair Debt Collection Practices Act (the Act).

The Act was passed into law because of abundant evidence of the use of abusive, deceptive, and unfair debt collection practices. It does not matter whether a debt collector used their best efforts to comply with the Act. Only strict compliance matters when it comes to the enforceability of the Act against a debt collector. Clearly, the association is not considered a “debt collector” pursuant to the Act and, for the most part, neither are management companies, with this caveat: the pendulum may swing in the future to the notion that management companies are, in fact, debt collectors. It seems that at least for the time being they are shielded from the Act. However, what is patently clear is that an attorney who provides collection/foreclosure services to assist their association clients with delinquent assessments is certainly considered a “debt collector.” Therefore, the attorney must be vigilant when reviewing the delinquent owner’s account ledger to ensure that the items set out in the ledger can lawfully be included in the association’s collection/foreclosure action. A recent case reminds us of this fact.

On February 4, 2025, in Glover v. Ocwen Loan Servicing, Case no. 23-12578 & 12579 (11th Cir. Fla. 2025), the 11th Circuit of the Federal Court of Appeals found that Ocwen as a debt collector violated the Fair Debt Collection Practices Act when it charged consumers an optional fee when making expedited mortgage payments because the loan servicer charged an amount that was not expressly authorized by the agreement creating the debt or permitted by law. The takeaway from this case is that a debt collector can only collect debts that are authorized by law or by contract with the debtor.

It was only several years ago that the Florida legislature enacted into law the requirement that an association assessment debtor must be provided the NOLA correspondence from the association providing the debtor a final opportunity to pay their delinquent assessment debt prior to turning the matter over to the association’s legal counsel to commence collection/foreclosure proceedings where fees and costs accrue against the debtor. See S. 718.121 and S. 720.3085, Fla. Stat.

Management companies are typically tasked with preparing and sending the NOLA letter on behalf of the associations they manage before turning the file over for collections to the association’s attorney. In this regard, a management company that is charging such a fee but has not amended its contract with the association to provide for charging the fee for the notice of late assessment would be wise to consider amending its contract with the association they represent to provide for this charge. Doing so would ensure that the management company, even though it may not be considered a “debt collector,” would have a solid basis for charging the fee because it would be based on a contractual obligation charged to the association. This is important because the NOLA, as mandated by Florida Statutes, does not at all provide for the recovery of a fee in regard to sending such a letter. So, while management companies may not be considered a “debt collector” today, this could change in any new case at any time. Why take the chance?

Now, let’s analyze whether the attorney who is collecting the past due assessment debts for the association can include the management company’s NOLA fee paid by the association to the management company in the collection/foreclosure action against a delinquent owner. Keep in mind, as we go through the analysis, that the “debt collector” (in this case, the attorney) can only collect debts authorized by contract or by law, and also remember that the relevant laws governing the NOLA letter do not provide for a specific cost recovery for the management company sending of the notice of late assessment letter. Thus, at a minimum, there should at least be a contractual obligation that the association pay the management company for sending the NOLA letter. But that may not always be the case even though it is the better practice.

Part and parcel with the collection/foreclosure process is the recording of an association assessment lien. To be valid, such a claim of lien must state the description of the parcel, the name of the record owner, the name and address of the association, the assessment amount due, and the due date. The claim of lien secures all unpaid assessments that are due and that may accrue subsequent to the recording of the claim of lien and before entry of a certificate of title, as well as interest, late charges, and reasonable costs and attorneys’ fees incurred by the association incident to the collection process.

So, while the relevant statutes do not provide for the association to be able to recover a fee for the sending of the NOLA letter, it certainly should be considered a “reasonable cost incurred by the association incident to the collection process,” most especially when the fee charged for sending the NOLA letter is a contractual obligation between the association and the management company.

There even exists an argument that, even if the management contract between the association and the management company does not provide that the association is responsible to pay the management company for the preparation and sending of the notice of late assessment, it is still considered a “reasonable cost”; but when you plug in the holding of the aforementioned case, the collection of the cost associated with the NOLA letter by the debt collector (i.e., the attorney representing the association), the better practice is to ensure that the contract between the management company and the association contains a provision that the association is responsible to pay the management company a reasonable fee for each such notice of late assessment letter sent.

Perhaps now you have a better understanding of why, at times, the association’s collection/foreclosure attorney cannot include a particular line item on the delinquent owner’s account ledger in the collection/foreclosure action. If you have any questions regarding the collection/foreclosure process, most especially which charges can and cannot be included, please be sure to discuss them with your association’s attorney.

March 19, 2025March 19, 2025

Are Changes to Association Landscaping a Material Alteration That Requires a Vote of the Owners?

If you live in a community association, especially if you serve on the board, you may already be familiar with the term “material alteration.” In Sterling Village Condominium Association, Inc., v. Breitenbach, 261 So. 2d 685, 687 (Fla. 4th DCA 1971), the Court defined the term material alteration as follows:

[T]o palpably or perceptively vary or change the form, shape, elements, or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance.

Generally, an association’s declaration provides the manner in which material alterations to the common elements and common areas are to be accomplished and the necessary percentage of the unit owners required to approve material alterations, if any. In a homeowners’ association such decisions are left to the discretion of the board of directors unless the governing documents provide otherwise. As to condominium associations, absent a provision in the association’s declaration providing otherwise, section 718.113(2)(a), Florida Statutes, provides in relevant part that 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced.

Appellate courts have even carved out exceptions to situations where a material alteration requires a vote of the membership when the material alteration and resulting special assessment are necessary for life safety reasons. In fact, courts often provide boards of directors great deference due to the operation of the business judgment rule. For example, in Tiffany Plaza Condominium Association, Inc. v. Spencer 455 So. 2d 454 (Fla. 2nd DCA 1982), without the required vote of the owners, when it was otherwise required, the board of directors opted to construct a rock revetment wall in the sand between the condominium’s seawall and the mean high tide line. The area in question was part of the association’s common elements since it owned the land from west to east all the way to the mean high tide line. Owners who were unhappy with the association’s unauthorized assessment sued the association. The association defended itself on the basis that the rock revetment was not an alteration or improvement of a common element but rather was part of the maintenance, repair, and replacement of a common element that the association had responsibility for under several provisions of the declaration, its bylaws, and statutes. While the trial court agreed with the plaintiff owners, the Second District Court of Appeal reversed the trial court decisions and held that:

If in the good business judgment of the association, alteration or improvement of the beachfront by addition of a rock revetment would protect the beach from damage and the necessity of subsequent repair or replacement then that cost should also be borne equally by all unit owners.

With the foregoing in mind, let’s examine landscaping alterations and whether making landscaping changes to a condominium’s common elements constitutes a material alteration requiring a vote of the unit owners. The Florida Division of Condominiums, Timeshares & Mobile Homes (the “Division”) has published arbitration decisions from which we can glean an answer. (It is important to note that these arbitration decisions only provide limited guidance. Such decisions do not create precedent in any way, not even for the Division and certainly not for any appellate court. But, they do provide guidance. It is also important to note that when examining issues of community association law, when there is not a developed law on a particular issue, both condominium associations and homeowners’ associations tend to rely on each other’s body of law.)

In Girsch v. Whisper Walk Section E Association, Inc. (Arb. Case No. 97-0305), an owner challenged the board’s decision to replace a hibiscus hedge with a ficus hedge on the basis that a material alteration resulted. The arbitrator ruled that the foregoing was not a material alteration and stated, in pertinent part, that:

Board decisions regarding what shrubbery to plant or how to replace existing shrubs particularly implicate the business judgment decision of the board and rarely grow to the dimensions necessary to implicate the provisions of the documents or statute regarding material alterations to the common element… Moreover, changes apparent in a garden setting are not interchangeable with the types of decisions typically regarded as requiring compliance with section 718.113(2), Florida Statutes…Changes to foliage may appear dramatic to the observer, but rarely would the function and use of that portion of the common elements be appreciably altered to an extent deemed material. These considerations, combined with the realization that there is less of a legitimate expectation of the status quo in the area of landscaping, which may be transient in a given case, suggests that this area is one particularly ill-suited for material alteration analysis.

As another example, in Katchen V. Braemer Isle Condominium Association, Inc. (Arb. Case No. 98-5485), an owner challenged the board’s decision to make certain landscaping changes which affected the owner’s patio and view. The arbitrator stated, in pertinent part, that:

[I]t is not shown that the contemplated landscaping changes constitute an alteration or betterment within the meaning of the documents…The area in question will not change in function or essential nature; it will still be a landscaped garden area with flowers, bushes, and trees, similar in function to the parcel when petitioners first purchased their unit.

In yet another example, Tilney v. Association of the Fountains, Inc. (ARB. Case No. 02-5651), the owner alleged that the board materially altered the common elements without a vote of the owners as required by the documents and statute due to the addition of trees, landscaping rocks, an irrigation system, and parking spaces upon a previously undeveloped parcel of the property. Again the arbitrator ruled that the foregoing were not material alterations and stated, in pertinent part, that:

The essential character of the property has not changed in a material sense. Some change in appearance is inevitable where landscaping details are altered…but does not compel the conclusion that all changes are material…Even if a material change existed, the degree of maintenance chosen by the board is entitled to a presumption of correctness through operation of the business judgment rule.

Based upon the foregoing arbitration decisions, landscaping decisions such as what shrubbery to plant or how to replace existing shrubs are left to the reasonable business judgment of the board and do not rise to the level of being a material alteration subject to a vote of the unit owners. However, does that mean that all changes to landscaping do not rise to the level of being a material alteration? That answer, like many legal answers: it depends. Sometimes landscaping may be so dramatically changed, or there may be landscaping that is so significant, that changing such landscaping may rise to the level of being considered a material alteration to the common elements (or common areas as to homeowners’ associations).

Such was the situation in Trio Englewood, Inc. v. Fantasy Island Condominium Association, Inc. (ARB. Case No. 98-4670). Here, an owner challenged the board’s decision to remove two trees. However, the two trees in controversy were Norfolk Island pine trees, and the arbitrator was unwilling to rule without the benefit of additional fact finding that removal of such trees could not be considered a material alteration. The arbitrator concluded, in pertinent part, that:

[T]wo very tall, conical trees, [that] are, in setting and type, distinct from the other landscaping, and thus may be sufficiently significant features of the landscape that their removal would constitute a material alteration of the common elements.

However, because the arbitrator requested additional fact-finding, we do not know how the situation fully resolved itself. But, this decision indicates that not all landscape changes are exempt from being considered a material alteration.

Accordingly, the next time your association is contemplating changes to its landscaping, and although many changes to landscaping are left to the reasonable business judgment of the board and do not rise to the level of a material alteration requiring a vote of the unit owners, the board would be wise to consult with the association’s legal counsel to weigh in prior to making such changes.

March 4, 2025March 4, 2025

U.S. Treasury Department Announces Suspension of Enforcement of the CTA

U.S. Treasury Department Announces the Suspension of Enforcement of the Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies

Keeping up with the “on again, off again” requirements of the Corporate Transparency Act is like watching a basketball bounce up and down. Finally, however, it appears as though the point guard took the shot and the basket is made.

On March 2, 2025, The Treasury Department announced that, with respect to the Corporate Transparency Act, not only will it NOT enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further NOT enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.

The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.

“This is a victory for common sense,” said U.S. Secretary of the Treasury Scott Bessent. “Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.”

You can view the official Press Release HERE.

It was also rumored that the Executive branch made an announcement that the United States Treasury will be suspending all future enforcement of the Corporate Transparency Act on American businesses and is working towards an emergency rule for codification of the new enforcement policy in furtherance of its goals toward less governmental regulation.

As new information is obtained we will share it with you, our readers.

February 17, 2025February 17, 2025

Thinking of Filing a New Lawsuit?

The Florida Supreme Court approved multiple substantial amendments to the Florida Rules of Civil Procedure that went into effect on January 1, 2025. While these changes are significant, they do not appear to be terribly overwhelming. This article is not intended to provide a comprehensive review of these changes but rather to point out some of the more interesting changes. It is important to note that these new procedural amendments to the Florida Rules of Civil Procedure only apply to lawsuits filed on or after January 1, 2025. In speaking with several litigators about these new rules, their takeaway is that a plaintiff best be ready for trial when filing your lawsuit. They say this because of the new discovery rules that fast track the process.

Courts now have the authority to extend deadlines for responding to motions either with or without a formal motion and with or without notice. This increased flexibility should streamline procedural timelines and reduce delays. Litigants may find that the court is not as willing to grant such motions as it was in days gone by.

Newly filed cases must be assigned to one of three tracks: complex, general, or stream-lined within 120 days of the filing date. Each of the three tracks has their own unique deadlines for filing and service of motions, etc., ensuring that the cases are managed according to their complexity.

Deadlines outlined in case management orders, which must be issued by the relevant court within 120 days of the commencement of action, will be strictly enforced unless modified by a court order. Obtaining extensions for these deadlines will be more challenging and limited to extraordinary circumstances only.

Courts can schedule case management conferences either on their own initiative or upon proper notice by a party. When a party requests such a conference, it must outline all specific issues to be addressed and provide a list of all pending motions. Failure to include unresolved motions may result in those motions never being heard by the court, highlighting the importance of thorough preparation.

Interestingly, motions for summary judgment and motions requiring an evidence hearing may be heard at case management conferences upon agreement of the parties. Attorneys are now expected to enter the courtroom prepared to make decisions and enter binding agreements regarding motions, issues, and scheduling. The excuse “I need to check with my client” does not seem as though it will suffice any longer.

Failure to attend a case management conference can lead to serious consequences, including the dismissal of the action, striking of pleadings, or limitations on witness testimonies.

When filing a motion that is not dispositive of the case (a dispositive motion is a motion to dismiss or motion for summary judgment), the moving party must file a statement with the court certifying that they conferred with the opposing party and whether the opposing party agrees on a resolution of the motion or not.

Certain discovery disclosures must be made within a 60-day window after service of the complaint is completed, and discovery cannot commence before these initial disclosure obligations are satisfied unless otherwise provided for by court order.

Objections to interrogatories must be stated with specificity including the actual reasons for objecting, and if done incorrectly such objections can be considered waived. The same goes for production of documents required by subpoena.

Motions to continue the trial date are now disfavored and should be rarely granted except upon a showing of good cause.

The deadline to respond to a motion for summary judgment is 40 days after service of the motion. A hearing on the motion must be scheduled at least 10 days after the response deadline. Due to previously congested court calendars, it has been nearly impossible to schedule hearings promptly. Hopefully this will no longer be the case.

The Florida Supreme Court hopes that the adoption of these changes to the Florida Rules of Civil Procedure will streamline cases to help avoid backlogs, to provide for more timely hearing of motions, and most importantly to keep the case on track for the intended trial date unless the case is settled sooner.

Only time will determine whether these procedural changes achieve their intended effects. The legal community will no doubt closely monitor the implementation and impact of these amendments on the efficiency and effectiveness of Florida’s civil litigation process.

What is the takeaway from all of the above information? Well, those in the know say that the plaintiff in any newly filed a litigation better have all of their ducks in a row before they file their lawsuit. Failure to be prepared in this fashion could be disastrous. Stay tuned for further updates and analyses as these rules take effect and are applied in practice. Of course, your association’s attorney can also explain these procedural changes to you as they may relate to your association’s litigation.

Written by Jeffrey Rembaum, Esq. Reprinted with permission as it appears in the February 2025 issue of the Florida Community Association Journal.

January 7, 2025January 11, 2025

The Consequences of Failing to Maintain The Official Records

The Consequences of Failing to Maintain the Official Records

The following scenario happens all too often. A member makes a written records request to inspect the official records of the association and proceeds to provide a laundry list of documents that the member wants to inspect. In response, the association may arrange to have the member come to the property management office to inspect the records or, if the laundry list is not extensive, provide the requested records to the member by making copies or providing them electronically. Sometimes, however, associations do not always maintain official records in accordance with the requirements of Chapters 718 and 720, Fla. Stat., and an association may argue that it gave the member what it could, so that is all that really matters, right? Wrong! If your association operates this way, you are in for a surprise.

In the case of William Pecchia and Kathleen Porter v. Wayside Estates Home Owners Association, Inc., 388 So. 2d 1136 (Fla. 5th DCA 2024), litigation initially arose between the homeowners (Pecchia and Porter) and the association due to the belief by Pecchia that the association was failing to maintain the common area and that the association was not enforcing violations. Pecchia observed that over the years the association lowered annual assessments and seemed to spend less money on maintenance despite observable deteriorating conditions to the property.

Accordingly, Pecchia requested to inspect the association’s records including copies of several years’ worth of insurance policies and certain records relating to the association’s upkeep of lots and common areas, including financial statements, canceled checks, and bank statements. The association did not respond to Pecchia’s records request in the statutory timeframe of 10 working days, and when it finally did respond, only copies of some of the requested records were provided. Eventually Pecchia submitted a renewed request for records, and then the parties negotiated for several months to no avail. Finally Pecchia filed for injunctive relief against the association. Initially Pecchia was unsuccessful in convincing the trial court that the association failed to maintain and produce requested records and was unsuccessful in obtaining an injunction against the association mandating that the requested records be provided. She appealed.

However, on appeal the Appellate Court found the following:

1. 1. The association did not sufficiently comply with the requirements of section 720.303, Fla. Stat., (which pertains to HOA official records requests); and
  2. The association did not sufficiently comply with its obligations to maintain its common area and properly enforce violations of the governing documents.

During the trial court proceedings, in regard to whether the association sufficiently complied with section 720.303, Fla. Stat., the trial court found that the association did not provide copies of requested insurance policies but that the association was not statutorily required to provide requested bank statements and canceled checks because section 720.303(4), Fla. Stat., only requires that an association maintain “accounting records.” Despite the lack of the association providing all of the records requested by Pecchia, the trial court found that the association had provided “sufficient documents in response to the Plaintiff’s request.” Further, while the trial court found that while the requested records were not provided within the statutory timeline, the association was not in violation because “sufficient” documents were eventually provided to Pecchia’s request. The appellate court disagreed!

On appeal, the appellate court found that the trial court misinterpreted section 720.303(4)-(5), Fla. Stat., when it held that the association had sufficiently complied with the statute. In short the appellate court found that the use of the word “shall” in the foregoing sections meant that there was no flexibility in the association’s obligation to maintain records provided for in section 720.303(4) and to permit inspection in accordance with section 720.303(5). The appellate court went on to discuss the meaning of the word “shall” (i.e., being mandatory) and the meaning of the word “may” (i.e., being permissive).

Additionally, the appellate court discussed that pursuant to other subsections of section 720.303, Fla. Stat., financial penalties are provided for beginning on the 11th business day in which an association does not make records available. In the aforementioned case, although the association ended up providing (or making available for inspection) some of Pecchia’s requested records, it did not provide access to all of Pecchia’s requested records, including insurance records, bank statements, and canceled checks, all of which the appellate court held would be “included in the financial and accounting records which a homeowners’ association is required to maintain.” Additionally, the records provided were provided after the statutory deadline. As stated by the appellate court,

“[S]ections 720.303(4) and (5) do not provide for substantial compliance. Rather, the language of the statute clearly provides that a homeowners’ association “shall” (1) maintain all items enumerated in 720.303(4) and (2) make them available to the homeowners within ten business days upon request [for inspection or by providing the records requested]. This language is mandatory.”

In regard to finding that the association did not maintain the common areas, there is scant mention as to why the appellate court found this to be the case.

Those involved with homeowners’ associations should also be aware of some recent legislative changes that became effective and pertain to official records and are incorporated into the most recent revision to section 720.303, Fla. Stat. For example, by January 1, 2025, an association with 100 or more parcels is required to post many, but not all, of its official records on its website or make such documents available through an application that can be downloaded on a mobile device. Additionally, homeowners’ associations are now required to maintain most of their official records for a period of seven years unless the governing documents of the association provide for a longer period of time. Also, homeowners’ associations must adopt written rules governing the method or policy by which the official records of the association are to be retained and the time period such records must be retained.

For those involved with condominium associations, there are also some recent legislative changes pertaining to official records that became effective and are incorporated into the most recent revision to section 718.111, Fla. Stat. For example, by January 1, 2026, an association managing a condominium with 25 or more units—which does not contain timeshare units—shall post copies of its official records on its website or app. If official records are posted on the association’s website or app, the association may direct the unit owner or their authorized representative to the website or app (at this time HOAs may not do similarly). Clarification is provided that email addresses and fax numbers are only accessible to unit owners if such owner has consented to receive their official notices by electronic transmission or has personally indicated that such personal information may be shared with other unit owners. Official records now include all invoices, transaction receipts, or deposit slips that substantiate any receipt or expenditure of funds by the association, copies of building permits, and all satisfactorily completed board member educational certificates. Additionally, official records must now be maintained in an organized manner that facilitates inspection by a unit owner. A condominium association must now provide a checklist of all records made available for inspection and copying along with records that were not made available to the requester. The condominium association must retain the checklist provided to every requesting member for at least seven years. If a director, board member, or manager knowingly, willfully, and repeatedly (i.e., two or more times in a 12-month period) fails to provide official records, such person commits a misdemeanor of the second degree. Finally, if a person willfully and knowingly refuses to release official records with the intent to avoid or escape detection, arrest, trial, or punishment, then it is the equivalent of a felony of the third degree.

To conclude, all community associations should be diligent, prompt, and thorough in responding to official records requests. While associations are not required to “cherry pick” and provide specific records that a member demands to inspect, associations have the obligation to maintain the official records and provide an opportunity for members to inspect the official records. If you are unsure of which records must be posted to the association’s website, or if you are in doubt as to your association’s responsibility in regard to official records and official record requests, then be sure to consult with your association counsel regarding these important responsibilities.

Reprinted with permission as it appears in the January 2025 issue of the Florida Community Association Journal.

December 26, 2024December 26, 2024

The Corporate Transparency Act Strikes Back

CORPORATE TRANSPARENCY ACT STRIKES BACK!

In the never ending saga regarding the applicability of the Corporate Transparency Act, there is yet another twist in that the judge in the Texas litigation, which we wrote about to you on December 14 and who issued the nationwide injunction, reversed course on December 23, when he lifted the court’s previously enacted injunction making the Corporate Transparency Act’s registration requirements applicable once again. However, FinCen, in light of the short notice, has extended the deadline in which to register to January 13, 2025 absent other deadline extensions.

As reported in our prior article, a recent update from the United States Department of Treasury, Financial Crimes Enforcement Network (FinCen) provides an extension of time to comply with the requirements of the Corporate Transparency Act for the initial reporting deadlines, but there are strict requirements regarding the applicability of the extension as discussed below.

FinCen, on October 29, 2024, extended the initial reporting deadlines to June 30, 2025, for associations in counties affected by Hurricane Milton where:

(1) Federal Emergency Management Agency (FEMA) assistance is available for individual or public assistance; and

(2) IRS tax filing deadlines have been extended.

Associations in the following counties appear to be subject to the extension:

Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putman, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union, and Volusia.

Of course, to be absolutely certain, please check with your association’s attorney.

The December 23, 2024 email communication received from the Financial Crimes Enforcement Network as reported on above follows:

Updates to Beneficial Ownership Information Reporting Deadlines – Beneficial Ownership Information Reporting Requirements Now in Effect, with Deadline Extensions

In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:

- Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025)
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
- As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.

On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction. On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction enjoining the Corporate Transparency Act (CTA) entered in the case of Texas Top Cop Shop, Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. Texas Top Cop Shop is only one of several cases that have challenged the CTA pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal with the district court and the U.S. Court of Appeals for the Fifth Circuit.

Rembaum’s Association Roundup’s prior article, published December 11th, regarding the nationwide injunction, can be found HERE.

December 13, 2024December 26, 2024

Disability Discrimination Under the Fair Housing Act

The Lesser Known Yet Equally Important “Reasonable Modification” Request

Guest Columnist: Danielle M. Brennan, Esq. B.C.S. [Kaye Bender Rembaum]

As directors and managers of community associations, it is likely that you are very familiar with disability-related requests for reasonable accommodations under the Fair Housing Act, particularly requests for accommodation to pet restrictions so that a disabled person may have an assistance animal within the community. However, the failure to grant reasonable accommodations is not the only form of disability discrimination under the Fair Housing Act.

The Fair Housing Act also makes it unlawful for a housing provider to refuse to permit, at the expense of the disabled person, reasonable modifications of existing premises occupied or to be occupied by such person if such modifications may be necessary to afford such person full enjoyment of the premises. For example, reasonable modifications may include widening doorways to make rooms more accessible for persons in wheelchairs, installing grab bars in bathrooms, lowering kitchen cabinets to a height suitable for persons in wheelchairs, adding a ramp to make a primary entrance accessible for persons in wheelchairs, or altering a walkway to provide access to a common use area.

In order for an individual to be entitled to a reasonable modification under the Fair Housing Act, the individual must first make a request for a reasonable modification. An individual makes a reasonable modification request whenever he/she makes clear to the association that he/she is requesting permission to make a structural change to the premises because of his/her disability. Although the association may adopt and use specified forms and procedures for processing modification requests, the association cannot refuse a request because the individual does not use the specified form or follow the established procedures. All the individual needs to do is make the request, orally or in writing, in a manner that a reasonable person would understand to be a request for permission to make a structural change because of a disability.

As part of the request, the individual must (i) establish that he/she is disabled (i.e., the person has a physical or mental impairment that substantially limits one or more major life activities) if the disability is not already known to the association or readily apparent; (ii) describe the type of modification requested; and (iii) explain the relationship, or nexus, between the requested modification and the individual’s disability.

The association is required to provide a prompt response to a reasonable modification request. An undue delay in responding to a reasonable modification request may be deemed a failure to permit a reasonable modification. There is no clarity as to what constitutes a “prompt response” or “undue delay” for a reasonable modification. However, if we are to borrow from guidance from the U.S. Department of Housing and Urban Development regarding reasonable accommodations under the Fair Housing Act, then a response should be issued within ten days.

The failure to permit a person with a disability to make a reasonable modification or the failure to promptly respond to a request for a reasonable modification is deemed discrimination under the Fair Housing Act. If discrimination is found to have occurred, the association may be subject to an injunction, forcing the association to permit the requested modification, and an award for damages, which may include punitive damages. In addition, violations of the Fair Housing Act are one of the few instances in which individual board members may be held personally liable for such violations. Given the potential for liability and the many factors which must be considered upon receiving such a request, the board must carefully evaluate a request for a reasonable modification in a timely manner and on a case-by-case basis.

The association cannot condition its approval of the requested modification upon the payment of a security deposit or the purchase of additional insurance and cannot insist that a particular contractor do the work. However, the association can require that the unit owner obtain any building permits needed to make the modification and that the work be performed in a workmanlike manner. From a practical perspective, there will need to be coordination between the association and the unit owner, for example, to obtain whatever permits may be required and to schedule the work, given that the modification may be made to the common areas owned by the homeowners’ association or the common elements controlled by the condominium association.

As to the modification itself, the disabled person is responsible for determining the type of modification and for payment of the costs of the modification. Generally, the association cannot insist on an alternative modification, particularly if the requested modification is to the interior of the unit. However, if the requested modification is to the common area or common elements, the association can propose an alternative modification (e.g., different type of modification, different placement, different design, etc.). However, if the association’s proposed alternative modification costs more than the modification requested by the disabled person, the association will be required to pay the difference.

Once the modification is installed, whether the disabled person or the association will be responsible for the upkeep and maintenance of the modification will depend upon where the modification is located and who is able to use the modification. As to modifications made to the common areas or common elements, if the modification is used exclusively by the disabled person, such person is responsible for the upkeep and maintenance of the modification. However, if the modification is installed on the common areas or common elements which are normally maintained by the association and may be used by others, the association is responsible for the upkeep and maintenance of such modification under the Fair Housing Act.

Although some modifications to the interior of the unit must be restored if requested by the association when the disabled person vacates the unit, the association cannot require the disabled person to have a modification made to the common areas or the common elements removed and area restored.

Additionally, the Fair Housing Act controls over the provisions of the governing documents of the association and any requirements of Chapter 718, Florida Statutes. For example, even if the modification is a material alteration or substantial addition to the common elements or association property subject to membership approval under a community association’s governing documents and/or section 718.113(2)(a), Florida Statutes, such membership approval would not be required for a reasonable modification under the Fair Housing Act. However, the board still must approve the requested modification at a properly noticed board meeting, and the minutes of such meeting must reflect the board’s approval of same.

Regarding property insurance for modifications to a condominium’s common elements, section 718.111(11)(f), Florida Statutes, requires that the condominium association carry adequate property insurance for primary coverage of all portions of the condominium property, only excluding from such coverage the following which is the responsibility of the unit owner: 1) all personal property within the unit or limited common elements and 2) floor, wall, and ceiling coverings; electrical fixtures; appliances; water heaters; water filters; built-in cabinets and countertops; and window treatments (including curtains, drapes, blinds, hardware, and similar window treatment components); or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Therefore, if modifications are not within the unit or the limited common elements serving the unit, the condominium association is responsible to carry property insurance for the modification and will be responsible for the reconstruction, repair, or replacement of the modification if it is damaged by an insurable event.

Finally and importantly, because there are so many ways for a board to create legal liability when handling reasonable modification and/or reasonable accommodation requests, the board and manager should absolutely involve the association’s attorney, particularly if the board is going to request additional information or deny the request. Simply asking the wrong question can create legal liability for an association, such as asking for additional information regarding a person’s disability when the disability is readily apparent. Because there are so many ways to misstep in this arena, significant caution is advised.

Reprinted with permission as it appears in the December 2024 issue of the Florida Community Association Journal.

December 11, 2024December 26, 2024

Corporate Transparency Act – Alert

ALERT!!

CORPORATE TRANSPARENCY ACT

Mandatory Registration Temporarily Stayed

Below is an update direct from the Federal Government’s Financial Crimes Enforcement Network (FinCen)

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.

On December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction that: (1) enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically, (2) stays all deadlines to comply with the CTA’s reporting requirements. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.

Texas Top Cop Shop is only one of several cases in which plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional.

While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.