Nicole Miller

Most Commercial Property-Owning Entities and HOAs Must Now Report Ownership Information to the Federal Government Under the Corporate Transparency Act

By Nicole D. Miller and Melanie J. Scroble

Most entities that own commercial property, as well as homeowner and condominium associations (“Community Associations”), are among the over 36 million other American businesses and organizations that must now provide the federal government with detailed information about their ownership and controlling interests. 

That is because the Corporate Transparency Act (CTA), which became effective on January 1, 2024, mandates that all “Reporting Companies” covered by the law disclose “Beneficial Ownership Information” (BOI) to the Financial Crimes Enforcement Network (FinCEN) division of the U.S. Treasury Department.

With an effective date of January 1, 2024, and with mandatory reporting deadlines approaching, commercial property owners and Community Associations need to understand what obligations, if any, they have under the CTA, whether they are a covered “Reporting Company,” and what information they need to provide FinCEN by the applicable deadline.

What Is the Corporate Transparency Act?

Signed into law in 2021, the CTA is part of an expansive federal government effort to crack down on illegal money laundering and “the use of shell and front companies by illicit actors who use them to obfuscate their identities and launder ill-gotten gains through the United States.” Unlike most federal regulatory schemes that primarily apply to larger companies, the CTA targets “smaller, more lightly regulated entities,” according to FinCEN. This focus on small entities is one reason FinCEN estimated that 90% of businesses and organizations in the U.S. are subject to the CTA’s disclosure requirements. 

Almost All Property Owning-Entities and HOAs Are Covered “Reporting Companies”

Subject to significant exceptions, as discussed below, a “Reporting Company” that must comply with the CTA is any corporation, limited liability company, or any other entity created by filing a document (e.g., Articles of Incorporation) with a secretary of state or equivalent agency. Entities like general partnerships or sole proprietorships that can be established without such filings are not subject to the CTA’s disclosure and reporting requirements.

Accordingly, individuals and general partnerships that own commercial property have no obligations under the act. But, unless they fall within one of the listed exceptions, all other property-owning entities will need to provide their BOI to FinCEN.

Most Community Associations are “Reporting Companies” under the act since they are usually organized by filing articles of incorporation with a secretary of state. Their tax-exempt status under Section 528 of the Internal Revenue Code does not spare Community Associations from their reporting obligations. While the CTA specifically exempts 501(c) non-profit organizations from reporting requirements, it does not exempt Section 528 organizations.

Entities Excluded From the CTA’s Reporting Requirements

Most entities excluded from the CTA’s reporting requirements are already subject to beneficial ownership reporting and disclosure obligations under other laws, so filing such disclosures under the CTA would be redundant. 

As stated in Section(a)(11)(B) of the CTA, these entities do not have to comply with the CTA’s BOI reporting requirements:

  • Banks.
  • Bank holding companies.
  • Credit unions.
  • Insurance companies.
  • Issuers of securities registered under Section 12 of the Securities Exchange Act of 1934 or that must file supplementary and periodic information under Section 15(d) of the 1934 Act.
  • Brokers, dealers, and any other entities registered with the SEC under the 1934 Act.
  • Registered investment advisors under the Investment Advisers Act of 1940.
  • Public accounting firms.
  • Companies employing more than 20 people full-time in the U.S. or that filed a federal income tax return in the prior year showing more than $5 million in gross sales or receipts and have an operating presence in the U.S.
  • Any entity that:
    • Has existed for over one year.
    • Has not sent or received funds over $1,000 or experienced an ownership change in the previous 12 months.
    • Is not actively engaged in business.
    • Is not owned by a foreign individual.

and

  • Does not otherwise hold any assets, including ownership interests, in any corporation, limited liability company, or other entity.

Disclosures Required About “Company Applicants” and “Beneficial Owners”

In addition to basic corporate information such as name, address, and tax ID number, Reporting Companies must provide FinCEN with BOI about two groups of individuals: “Company Applicants” and “Beneficial Owners.” 

As defined in the Final Rule, a “company applicant” is “the individual who directly files the document that first creates the domestic reporting company” and “the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.” Effectively, the person who filed the documents required to create the entity will be considered the “Company Applicant,” whose BOI must be reported. 

Notably, the reporting of applicant information only applies to Reporting Companies created from and after January 1, 2024. Such new Reporting Companies need not provide FinCEN with updates regarding Company Applicant information after their initial disclosure.

“Beneficial Owner” = 25% Ownership OR “Substantial Control” Over Entity

All Reporting Companies must disclose information about their “Beneficial Owners.” As defined in the Final Rule, a “Beneficial Owner” is any person who, directly or indirectly, either:

  • Owns or controls at least 25% of a reporting company’s ownership interests; or
  • Exercises substantial control over a reporting company.

Importantly, ownership interests through intermediary entities qualify as ownership of a Reporting Company. As specified in the Final Rule, a person may be deemed a beneficial owner “through ownership or control of one or more intermediary entities, or ownership or control of the ownership interests of any such entities, that separately or collectively own or control ownership interests of the reporting company.”

“Substantial Control”

Determining whether a person exercises “substantial control” over an entity so they are considered a “Beneficial Owner” involves an analysis of the person’s actual authority and the actions they are empowered to take on behalf of an entity. Under the Final Rule, an individual has “Substantial Control” over an entity if they: 

  • Serve as a senior officer of the entity.
  • Have authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body) of the entity or
  • Direct, determine, or have substantial influence over important decisions made by the entity, such as:
    • Entry into and termination of contracts.
    • Acquisition, sale, or lease of the company’s principal assets.
    • Reorganization, dissolution, or merger.
    • Selection or termination of business lines or venture.
    • Amendment of any governance documents of the reporting company.

For Community Associations, this means that the voluntary members of the board of directors or board of trustees will be considered individuals with “substantial control” over the covered entity, i.e. the association.

Information That Must Be Reported to FinCEN

Non-exempt Reporting Companies must provide FinCEN with the following information regarding individuals who qualify as Company Applicants or Beneficial Owners:

  • Full legal name.
  • Date of birth.
  • Street addresses (identified as a current residential or business street address).
  • Non-expired state identification document or passport.

Reporting Deadlines

As noted, the CTA’s compliance deadlines largely depend on when the “Reporting Company” was formed. 

  • Entities Formed in Calendar Year 2024: Covered Reporting Companies created or registered on or after January 1, 2024, and before January 1, 2025, must submit their BOI report within 90 days after the date of the entity’s formation (i.e., the filing date of its Articles or Certificate).
  • Entities Formed Before January 1, 2024: Covered Reporting Companies formed before 2024 must report their BOI on or before January 1, 2025.
  • Entities Formed on or After January 1, 2025: Covered Reporting Companies formed after 2024 must file their BOI within 30 days after its date of formation.

Penalties for Non-Compliance 

Commercial property owners and Community Associations that fail to comply with the CTA’s reporting requirements face significant penalties. Any entity or person that “willfully provides, or attempts to provide, false or fraudulent information or willfully fails to report when required” faces civil penalties of $500 per day, criminal fines of up to $250,000, and a maximum of five years in federal prison.

Given the complexities in determining an entity’s beneficial ownership and non-compliance consequences, property-owning entities and Community Associations should consult with experienced counsel to ensure they satisfy any reporting obligations under the CTA. For further information and assistance with your entity’s CTA compliance, please contact one of the attorneys in Ansell Grimm & Aaron’s Commercial Real Estate or Community Association practice groups.

New Jersey Enacts Stringent New Inspection, Evaluation, and Maintenance Requirements for Condominium and Co-Op Buildings

By Elysa D. Bergenfeld and Nicole D. Miller

On January 8, 2024, New Jersey’s already-stringent building codes for residential construction became even more so when Gov. Phil Murphy signed S2760/A4384 into law. The sweeping legislation establishes additional requirements for the regular inspection, evaluation, and maintenance of certain types of condominiums and cooperative apartments in the state.

The new law was enacted in the wake of the 2021 condominium tragedy in Surfside, Florida, where 98 lives were lost due to structural issues that were not addressed. Accordingly, much of the law focuses on early detection of potential structural flaws and deficiencies.

Owners of property covered by the law must now ensure their buildings undergo routine structural inspections to ensure the safety and stability of the building. These inspections must be performed by licensed engineers and architects and adhere to industry best practices and standards. The law requires periodic reserve studies and allows for a ten-year “catch up” for reserves.

As outlined in the law, its requirements apply to any residential condominium or cooperative building with a primary load-bearing system comprised of a concrete, masonry, steel, or hybrid structure including, but not limited to, heavy timber and a building with podium decks, but not including an “excluded structure” as defined in the law.

All condo and co-op boards in New Jersey should consult with experienced community association counsel to determine whether the new law applies to their buildings and what to do to ensure compliance. If you have questions or concerns, please contact one of the attorneys in Ansell Grimm & Aaron’s Community Association Law practice group.

Early Endgames: What Is the Difference Between a Motion To Dismiss and a Motion for Summary Judgment in New Jersey Litigation?

By Nicole D. Miller

There is a big difference between a lawsuit and a trial. While tens of thousands of lawsuits are filed every year in state and federal courts here in New Jersey and across the country, only a small percentage of those cases ever reach the point where the parties present all their evidence and testimony in person before a judge or jury, ending in a judgment. While many cases end before trial because the litigants have reached a negotiated settlement, others conclude with a pretrial ruling by a judge. In New Jersey, most of these rulings come after one of the parties files either a motion to dismiss or a motion for summary judgment.

A judge granting either motion effectively ends a case – at least temporarily. That is why they are both called dispositive motions — the movant requests that the judge dispose of the case in their favor before trial. In state court, these motions follow the same 28-day schedule for filing moving papers, opposition, and reply, which was a recent amendment to N.J. Ct. R. 4:6-2, the rule governing motions to dismiss.  But there are significant differences between a dismissal and summary judgment in terms of what the movant is asking the court to do, when such motions are filed, and the basis for granting or denying the motion. 

Motion To Dismiss

No matter the subject – a commercial dispute, a personal injury case, or a divorce – all civil litigation begins with the plaintiff filing a complaint against a defendant. The primary purpose of a complaint is to inform the defendant – and the court – of three things:

  • The factual allegations that support the plaintiff’s legal claims against the defendant;
  • What those legal claims are; and
  • What the plaintiff is asking for in damages or other relief.

Every defendant served with a complaint must file a timely response with the court. That response can be an answer in which the defendant admits or denies the specific factual allegations in the complaint. But if the complaint doesn’t include essential elements of a valid legal claim – even if all the facts alleged are taken as true – a defendant can file a motion to dismiss for failure to state a claim upon which relief can be granted. As noted, motions to dismiss for failure to state a claim in New Jersey state court are governed by N.J. Ct. R. 4:6-2, while Fed. R Civ. P. 12(b)(6) forms the basis for such motions in federal court. Both rules are essentially the same, as is the analysis of a complaint’s legal sufficiency.

Motions to dismiss are usually filed early in the case as the defendant’s initial response to the complaint. That means the parties have yet to engage in discovery or develop evidence to either support or refute the plaintiff’s allegations. It also means a judge considering a motion to dismiss will only look at the allegations contained in the complaint when making their determination as to the complaint’s sufficiency. And to decide whether the complaint sets forth a cognizable legal claim, the judge will assume that each factual allegation is true. In the event the defendant includes facts or documents outside the complaint, the court is required to convert the motion to a motion for summary judgment.

A judge will grant a motion to dismiss if those facts don’t or couldn’t form the basis of a legal action, even if the complaint’s allegations were true. In effect, the judge looks at all the allegations and concludes, “So what?”

A dismissal can be either with or without prejudice. A dismissal without prejudice means the plaintiff may be able to fix the shortcomings of the initial complaint by filing an amended complaint, and the court is giving the plaintiff the chance to do just that. In most cases where a motion to dismiss is granted, the judge will grant it without prejudice. In entering a dismissal with prejudice, a judge has determined that the complaint’s flaws are insurmountable and conclusively dismisses the case with no opportunity for the plaintiff to refile.

Motion for Summary Judgment

While a motion to dismiss focuses on allegations, a motion for summary judgment is all about evidence. While a motion for summary judgment can be filed earlier, most often it is filed after the conclusion of discovery (when the parties produce and exchange documents, take depositions, and develop other evidence). A motion for summary judgment asks the court to look at the evidence and conclude there is no issue of material fact in dispute. In other words, the moving party argues there is no point in the case going to trial because all the relevant facts of the case, as reflected in the evidence, are undisputed. Since trials involve ascertaining the truth behind the parties’ claims and defenses, a trial is unnecessary if the truth is already apparent.

According to N.J. Ct. R. 4:46-2, a judge will grant summary judgment “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law.” Importantly, the rule requires the moving party to submit a statement of facts as to which there is no genuine dispute. Each fact in this statement must be supported by citation to the record, i.e., documents produced, deposition transcripts, written discovery responses, etc.

An issue of fact is genuine only if “the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact.”

The entry of summary judgment in favor of the moving party conclusively ends the case at the trial court level. There is no second chance or do-over for the non-moving party as there often is when a court grants a motion to dismiss. However, in certain instances, a party may file a motion for reconsideration if the party believes the court overlooked something or erred, or requests that the court invoke its discretion in the interest of justice pursuant to R. 4:49-2 or R. 4:42-2(b). Nonetheless, motions for reconsideration are rarely granted.

When appropriate, filing a motion to dismiss or for summary judgment offers the movant the chance for an early resolution of a case without the cost, disruption, and risk of going to trial. Conversely, the party on the receiving end of such a motion faces the prospect of their lawsuit being thrown out or shut down without being given the opportunity to present their case at trial. Accordingly, these two motions are enormously consequential in New Jersey litigation. 

 If you have any questions about motions to dismiss or motions for summary judgment in New Jersey, please contact Nicole Miller.

Six Ansell Grimm & Aaron PC attorneys named Super Lawyers

We are pleased to announce that six attorneys from the firm have been selected to the 2022 New Jersey Super Lawyers and Rising Stars lists.*

Selected as Super Lawyers again this year are Allison Ansell, Mitchell J.  Ansell, and Andrea B. White.

Named as Rising Stars this year are Alfred M. Caso,  Ashley V. Whitney, and Nicole D. Miller. This is Caso’s first selection, Whitney’s second, and Miller’s fourth consecutive selection as a Rising Star.

Each year, no more than 5% of lawyers in the state are selected to the Super Lawyers list, and no more than 2.5% are selected to the Rising Stars list.

The list of New Jersey Super Lawyers is based on surveys of more than 35,000 lawyers across the state who have been licensed to practice for five years or more.

 

*No aspect of this advertisement has been approved by the Supreme Court.

Come see us at the CAI Expo on Oct. 21

AGA’s Community Association Practice Group will be exhibiting at the New Jersey Community Associations 2021 Annual Conference & Expo on October 21st, 2021.

The 2021 CAI Conference & Expo will be held from 8:30 a.m. to 3 p.m. at The Event Center @ iPlay America located at 110 Schanck Road, Freehold, NJ.

CAI’s Annual Conference & Expo provides learning and networking opportunities for homeowners, managers and business partners. Registration is free for all homeowners and community association managers and includes complimentary breakfast and lunch, educational programs, and multiple chances to win $1,000 during the show (must be present to win).

When you are at the expo, please visit us at Booth #823. You can also contact David J. Byrne, Esq., if you wish to set up a meeting with one of our attorneys while you are at the conference. Mr. Byrne can be reached at djb@62q.f7d.myftpupload.com or by calling 609-751-5551.

An Association Need Not Accommodate Every “Emotional Support” Animal-Related Accommodation Request

The following update from Ansell Grimm & Aaron’s Community Association Practice regarding “emotional support” animals may be of interest. On behalf of one of our clients, we secured a New Jersey Judge ruling that an alleged disabled resident, with an alleged emotional support animal, is not entitled to either proceed summarily or obtain early victory. Instead, the owner must show that the claim of an emotional support animal is not a pretext to avoid an association’s dog-related weight limit

Read More

Visit AGA CAP Group at the CAI 2016 Annual Conference and Expo

AGA’s Community Association Practice Group Attorneys David J. ByrneRichard B. Linderman, Mark M. Wiechnik, and Nicole D. Miller will be exhibiting at the Community Associations Institute 2016 Annual Conference and Expo . The Expo will take place on Thursday, April 14 at the Pennsylvania Convention Center, Grand Hall, 12th and Arch Streets, Philadelphia, Pennsylvania. The Expo provides learning and networking opportunities for attendees which include property managers and board members of residential condominium, cooperative, and homeowner associations, and the professionals and suppliers who serve them.

If you are planning on attending the Expo, please visit the AGA Community Association Practice Group at Booth Number 307 or contact David J. Byrne if you wish to set up a meeting with one of our attorneys while you are at the conference. Mr. Byrne can be reached at djb@62q.f7d.myftpupload.com or by calling 609-751-5551.

 

Attorney Nicole D. Miller joins AGA’s CAP Group as it Celebrates its 1st Anniversary with the Firm

Nicole D. Miller has joined Ansell, Grimm & Aaron, PC’s (“AGA”) Community Association Practice Group. Ms. Miller concentrates her practice in the representation of condominiums and homeowners associations and will be working out of the Princeton office. She advises community association boards and property managers on matters including daily operations, drafting of contracts, the creation and enforcement of rules and regulations, alternate dispute resolution (“ADR”), developer transition, fair housing compliance and litigation arising from construction defects, contractor service agreements, delinquent assessments and common charge recovery, governance, and the fiduciary duties of board members.

Prior to joining the firm, Ms. Miller practiced commercial and other civil litigation representing banks, limited liability companies, partnerships and franchises in both Pennsylvania and New Jersey. Ms. Miller is a graduate of the College of New Jersey and received her law degree from Rutgers University School of Law, both Cum Laude.

“Nicole is a great addition to our expanded office,” said David J. Byrne, the Chair of AGA’s Community Association Group. “We also welcomed a new paralegal to the group and have recently added a new legal assistant to support the additional professional staff. Celebrating our first anniversary with AGA and with our recent move to a permanent office in Carnegie Center, we look forward to continuing to add staff to give personal attention to all of our clients.”

AGA’s Community Association Group has more than 50 years of combined experience in the industry representing associations throughout the northeast. AGA’s clients are afforded a full range of legal services, covering all the legal issues and needs of any homeowners association, condominium or cooperative.

In its more than 85 years AGA, has grown to represent clients throughout the tristate area via offices in Ocean, NJ, Woodland Park, NJ, White Plains, NY, Princeton, NJ and Newtown, Pa. AGA attorneys are dedicated to providing excellent legal representation by providing zealous advocacy and skilled legal advise to our diverse clientele. AGA attorneys all practice with a common philosophy, Commitment to Excellence and Commitment to People.

For more information on AGA’s legal services to homeowners association, condominium or cooperative, contact David J. Byrne at 609-557-1031 or djb@62q.f7d.myftpupload.com.