Do Homeowners Associations Need to File a BOI Report?

The Corporate Transparency Act (CTA), which took effect on January 1, 2024, requires most U.S. companies to report details about their owners and founders to the Financial Crimes Enforcement Network (FinCEN). This law affects various entities, including homeowners associations (HOAs). The key question is: Do HOAs need to file a Beneficial Ownership Information (BOI) report?

Most HOAs Will Need to File BOI Reports

In most cases, homeowners associations will be required to file BOI reports, with a few exceptions:

• HOAs organized as 501(c)(3) tax-exempt organizations are exempt from BOI reporting requirements.
• HOAs that were not created by filing a document with a secretary of state or similar office are also exempt.

However, since most HOAs operate as non-profit corporations but do not qualify as charitable organizations under the Tax Code, they will likely be considered reporting companies and must comply with BOI reporting requirements.

Who are the Beneficial Owners of an HOA?

If an HOA meets the reporting company definition and does not qualify for any exemptions, it must report its beneficial owners. A beneficial owner is any individual who:

• Directly or indirectly exercises substantial control over the HOA
• Owns or controls at least 25% of the ownership interests of the HOA

In some cases, an HOA may not have any individuals who own 25% or more. However, FinCEN expects that at least one individual exercises substantial control over the HOA. 

This could include:

• Senior officers
• Individuals with authority to appoint or remove certain officers or directors
• Important decision-makers
• Any other form of substantial control

Key Deadlines for BOI Reporting

HOAs must be aware of the following deadlines for submitting BOI reports:

• HOAs established before January 1, 2024: Submit initial reports by January 1, 2025
• HOAs formed on or after January 1, 2024: File initial reports within 90 days of establishment

HOAs and their property managers must also update their BOI reports within 30 days of any changes in information, such as new addresses, DBA names, or changes to beneficial owners’ details.

Penalties for Non-Compliance

Failure to file a BOI report can result in significant penalties, including:

• Civil fines of up to $500 per day, with a maximum penalty of $10,000
• Criminal penalties of up to two years in prison for willful violations

Preparing for BOI Reporting for HOAs

HOAs should take steps to educate their potential beneficial owners and company applicants about FinCEN’s reporting requirements. Consulting with legal or financial professionals can help ensure compliance with the new regulations.In summary, most homeowners associations will need to file BOI reports under the Corporate Transparency Act, unless they are organized as 501(c)(3) tax-exempt organizations or were not created by filing a document with a state office.

HOAs should be prepared to identify their beneficial owners and comply with the reporting deadlines to avoid penalties.