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BLOG / 03.11.24 /Kenneth R. Jacobs

Congress Likely to Kick “Corporate Transparency Act” Compliance Down the Road

As reported in our January E-Blast, the Corporate Transparency Act (“CTA”) disclosure requirements went into effect on January 1, 2024, compelling most corporations to report personal information about Board members to the Treasury Department. [See E-BlastHere.] Most co-op and HOA attorneys are advising their clients to delay compliance with the CTA until later in the year while community associations lobby their federal representatives to exclude them from the Act.

The House has passed, and the Senate is considering H.R. 5119, which would delay the deadline for compliance with the CTA for an additional year, until January 1, 2026. While this is hardly a panacea, it does give co-ops and HOA’s more breathing room to seek an exemption. The Legislative Action Committee for the New York chapter of Community Associations Institute (the national education and advocacy organization for condos, co-ops and HOA’s) has written to Senators Schumer and Gillibrand requesting that they support such an exemption. [See letterHere.] Surprisingly, CAI’s national liaisons have advised us that they are meeting resistance from elected representatives to approve an exemption. Apparently Congress is concerned that adding exemptions at this stage would invite additional “interest groups” to request exemptions for their members as well.

This should not prevent associations from reaching out to your elected representatives, particularly since Senator Schumer is (currently) the majority leader and owns a co-op himself. Please feel free to crib from the CAI letter and add your own thoughts as voters! In the meantime, we reiterate our prior advice to shelve compliance questions until later in the year, and hopefully into 2025 as well.

NY State Publishes “Property Condition Disclosure Act” Forms For Single-Family Homeowners – Or, Aren’t You Glad You Live In A Co-Op Or Condo?

 The New York Department of State has published the new disclosure forms intended to comply with the changes to the Property Condition Disclosure Act (“PCDA”), RPL §462(2).  The new form, a 7-page  marathon, is availableHere.

Single-family homeowners are required to provide a completed disclosure form before a contract is signed. The new form includes additional disclosure regarding flood risks (Questions 11-17) in addition to the extensive environmental and building condition disclosures already required. Note that homeowners can no longer offer a $500 credit in lieu of providing the form (under the prior statute). No lawyer we know of had ever recommended that their clients actually fill out the prior form, but attention must now be paid.

The form requires owners to “represent” building conditions “to their actual knowledge.” Thus owners have potential liability if they know of a condition that they fail to disclose. As in the prior version, the form is rife with questions without time limits, such as “Are there or have there ever been fuel storage tanks…” or “Has the water been tested…” However, you are allowed to check off “Unknown.” Thus there is a strong temptation simply to check “Unk” for anything that actually requires research or speculation as to past events.

Brokers also may need to tread carefully before presenting the forms to purchasers, as brokers have been held liable for failing to disclose conditions about which they have knowledge, even if their clients do not (or have instructed them not to reveal). Some brokers have records going back to prior owners as well as the current seller.

Co-op and condo unit owners do not have to furnish this onerous form when they sell, but they still have to provide flood plain disclosure information. For further details, see our November 2023 E-BlastHere.