Should Homeowners Associations Pay Attention to The Corporate Transparency Act? Yes!

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In a noteworthy development, homeowners associations are now obligated to comply with reporting regulations outlined in the Corporate Transparency Act. Individuals with significant control or substantial ownership in the company must submit their initial beneficial ownership information reports by January 1, 2025.

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To read the correspondence between Paul Mengert and Senator Budd concerning the Corporate Transparency Act, please check out AMG CEO’s Emails To and From Senator Ted Budd About the Corporate Transparency Act.

AMG CEO's Emails To and From Senator Ted Budd About the Corporate Transparency Act

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Dear Senator Budd, 

 I am writing to you regarding the Corporate Transparency Act (CTA) and the unintended impact  on the 350,000 homeowners associations, condo associations, and housing coops in the U.S. 

I am asking as a constituent that you SUPPORT H.R. 5119 – Protect Small Business and Prevent Illicit Financial Activity Act, which passed the House on 12/12/23. Over 80 Senators and Representatives sent a letter to FINCEN urging a 1-year delay of all CTA reporting requirements; I need you to help protect constituents like me from federal regulations which shouldn’t be applied to us. 

Community associations (HOAs, condo associations, and housing coops) are usually organized in states as non-profit corporations. They usually do not have a non-profit tax determination by the IRS, but they do file taxes as a non-profit corporation using the 1120-H U.S. Income Tax Return for Homeowners Associations.     

The intent of the Anti-Money Laundering and Corporate Transparency Act was to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist finance, to facilitate tracking money that has been sourced through criminal or terrorist activity to safeguard the national security and the financial system of the U.S.    

It seems clear this Act was not intended to apply to volunteer-driven nonprofit corporations that are locally based with the sole purpose of providing municipal-like services to residents.

As your constituent, I am very concerned about the following: 

  1. A volunteer board of directors’ compliance with the Beneficial Ownership Information (BOI).  

  2. Filing personal information that will be accessible to many institutions and organizations of volunteers.  

  3. The extreme civil and criminal penalties for non-compliance.  

Community associations will have to hire professionals to ensure CTA compliance, which will lead to higher living costs. Volunteers will decline service on their boards of directors due to the exposure to liability. Please help your constituents by supporting H.R. 5119 in the Senate.

Sincerely,

Paul K. Mengert, CEO ASSOCIATION MANAGEMENT GROUP

Dear Mr. Mengert,

Thank you for contacting me about new reporting requirements under the Corporate Transparency Act. It is an honor to represent the people of North Carolina and I appreciate the opportunity to hear from you on this issue.

As you know, the Corporate Transparency Act (CTA) requires corporations, limited liability companies, and other entities registered to do business in the United States to regularly report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). While this provision was intended to target shell companies engaged in illicit financial transactions, the law requires most companies with 20 or fewer employees and less than $5 million in revenue to make this disclosure. This dramatically increases the compliance burden on nearly every small business in America, and places steep penalties on any business that fails to report.

Over the past several months I have heard from many North Carolina small businesses who were unaware of this change in the law, and a study from the National Federation of Independent Business found that 90% of respondents were entirely unfamiliar with these new requirements.

Given this lack of awareness, on December 18, 2023 I joined a bipartisan, bicameral letter to the Department of Treasury and FinCEN requesting that implementation of this provision be delayed beyond the initial January 1, 2024 start date. Legitimate small businesses should not be caught in the crossfire between regulators and illicit actors, and both Treasury and FinCEN must work harder to educate small businesses before implementing this new regulation.

If you are interested in learning more about what is going on in Congress and my work in Washington D.C. for North Carolinians, you may visit my website at budd.senate.gov. If you need assistance with issues related to Social Security, Medicare, veteran benefits, visas, or other items involving a federal agency, you may call my office at 202-224-3154.

 Sincerely,
                                                                  
Ted Budd
United States Senator

Budget Ratification: Understanding the Ghost of Budgets PAST When Preparing for the Future

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Annually, community associations tackle the responsibility of crafting a budget for the upcoming year, mandated by the North Carolina Planned Community Act and the North Carolina Condominium Act. Boards of Directors are required to formulate, adopt, and present the proposed annual budget to the membership for ratification. This article outlines the distinctions between community associations and a step-by-step process for budget ratification.

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Happy Homeowners: Speak Up Before Laws Are Reformed

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It’s time for happy homeowners to speak up about their community association experiences. A legislative committee in North Carolina has been examining the need for potential reform to community association laws. With 67% of residents expressing satisfaction and an additional 22% rating their association experience as neutral, there is strong support for the current system. Click the link below for more information.

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Corporate Transparency Act – HOAs and Condominiums Need to Prepare for New Federal Reporting Requirements

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In response to scandals in 2021 exposing the misuse of shell companies for asset concealment, Congress enacted the Corporate Transparency Act (CTA). Effective January 1, 2024, the CTA has imposed new reporting requirements on all LLCs, corporations, and nonprofit corporations, such as HOAs and condominium associations. Click the link below to learn more about the reporting requirements and how this process will affect your community.

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CAUTION: WHEN NC HOA LAWS CHANGE, PROPERTY VALUES AND MORE ARE AT STAKE

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During the 2023 state legislative session, both Democrats and Republicans introduced three bills aimed at enhancing oversight of HOAs in North Carolina, with the primary objective of restricting their authority to foreclose on homeowners. It is anticipated that significant statutory alterations may result in unintended repercussions, potentially causing adverse effects on property values, associations and individual homeowners. Click the link below for additional information.

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DON’T FORGET! NORTH CAROLINA ANNUAL ASSOCIATION ACTION ITEMS

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In times of unforeseen challenges, it is beneficial to receive prompts for tackling recurring tasks that might be overlooked. As we navigate through obstacles, prioritize addressing these tasks at the start of the year. Consider this your nudge to revisit North Carolina's annual obligations, allowing you to proactively address them and avoid overlooking crucial steps.

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FLORIDA’S ONGOING PROPERTY INSURANCE CRISIS LEADING TO SPIKES IN HOA FEES

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Residents of Baldwin Park, Florida, are voicing concern over a substantial increase in property insurance costs within their HOA, which have tripled from $109 to over $400 per month. Taken aback by the sudden changes, one resident highlights the significant financial impact, noting she is now paying close to $6,000 for townhome insurance alone. What are your thoughts on the rise of property-related costs? Click the link below to read the whole story.

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Navigating Rising Property Casualty Insurance Rates in 2023: Best Practices for Condominium and Homeowner Associations

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As a professional condominium or HOA manager or community leader, it's essential to stay informed about the latest trends and challenges that impact your community. One significant concern that has emerged in 2023 is the rising property casualty insurance rates. In this blog post, we will explore the reasons behind these increases, discuss the extent to which rates are rising, and provide best practices to help your association mitigate the impact. We strongly advise relying on a qualified insurance professionals for specific guidance tailored to your association's unique circumstances.

Understanding the Reasons for Increasing Rates:

Several factors contribute to the upward trajectory of property casualty insurance rates in 2023. These include:

1. Natural Disasters: Climate change has intensified the frequency and severity of natural disasters, leading to an increase in insurance claims related to property damage. Severe storms, wildfires, and flooding events strain insurance providers, prompting them to adjust rates to maintain financial stability.

2. Inflation and Rising Construction Costs: Inflationary pressures and escalating construction costs have significantly impacted insurance premiums. The costs associated with repairing or rebuilding damaged properties have surged, consequently driving insurance rates upward.

3. Legal and Liability Concerns: The legal landscape surrounding liability claims has become increasingly complex. Growing litigation trends and higher settlements have elevated insurers' risks, leading to higher premiums for policyholders.

The Extent of Rate Increases:

The magnitude of rate increases can vary depending on various factors such as location, property type, claims history, and coverage limits. However, it is not uncommon for property casualty insurance rates to rise by double-digit percentages in 2023. Some associations, even with no recent claims, have reported premium increases of 20% or more during policy renewals. These significant jumps can strain association budgets and require proactive measures to minimize the financial impact.

Best Practices to Mitigate Higher Rates:

While it may be challenging to avoid rising property casualty insurance rates entirely, there are several best practices your association can implement to minimize the impact:

1. Risk Management and Loss Prevention: Prioritize proactive risk management practices to reduce the likelihood of claims and property damage. Implement preventive maintenance programs, enforce safety protocols, and engage with insurance professionals to conduct regular risk assessments.

2. Review and Update Insurance Policies: Work closely with insurance professionals to review your association's insurance policies annually. Ensure your coverage adequately reflects the current value of your property and aligns with your risk profile. Consider higher deductibles or alternative risk transfer mechanisms, such as captive insurance or self-insurance, if appropriate for your association's financial position. Also, consult your attorney to make sure the association understands its duty based on governing documents and laws related to insurance. 

3. Seek Competitive Bids: Regularly solicit competitive bids from multiple insurance providers to ensure you are obtaining the most favorable rates and terms available in the market. Engage insurance brokers or agents who specialize in community association insurance to navigate complex policy options effectively.

4. Loss History Management: Develop a comprehensive loss history report and demonstrate your association's commitment to risk management. Highlight steps taken to address any previous claims or property damage and show insurers that your association is proactive in mitigating future risks.

5. Engage with Insurance Professionals: Establish a collaborative relationship with insurance professionals who specialize in community association insurance. Their expertise and guidance can help navigate policy complexities, negotiate favorable terms, and identify risk mitigation strategies specific to your association's needs.

The rising property casualty insurance rates in 2023 pose a significant challenge for condominium associations. Understanding the underlying reasons for these increases, monitoring the extent of rate jumps, and implementing best practices can help associations mitigate the impact on their budgets. Remember, seeking guidance from insurance professionals tailored to your association's unique circumstances is crucial for making informed decisions and safeguarding your community's financial well-being.

Emotional support animal rights run amok? Condo resident balks at service dogs poolside

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When a condo or apartment has a no pet policy, we all understand that support animals are accepted anyways. However, emotional support animals are a grey area. Working service animals are accepted everywhere, but with lots of people qualifying for an ESA (emtional support animal), should these animals be accepted into public areas such as community pools and areas?

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AMG Honors Five Students with College Scholarships

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Association Management Group (AMG) recently awarded $1000 scholarships to five students in the company’s service area of North Carolina and South Carolina. The program, which grew from four to five scholarships this year and memorializes the lives and contributions of exceptional AMG individuals, provides education funds to outstanding scholars who are on the brink of their academic journeys and are committed to strong communities. 

Open to the families of residents and vendors of AMG properties, as well as AMG employees, the fourth annual AMG College Scholarship Program selected the honorees based on short videos the students produced highlighting what community means to them.“We are so proud of this year’s applicants, and all those who came before them,” said AMG Vice-President and Scholarship Program Chair May Gayle Mengert. “Our company’s mission is to help create safe, harmonious, attractive communities through effective homeowner association governance. A big part of our work is empowering volunteer association boards–community people–with smart tools and strategies for ensuring their neighborhoods feel like home. It is gratifying and inspiring to hear why their communities matter to our youth, and how they are dedicated to strengthening them.”

 The 2023-2024 AMG College Scholarship Program winners are:

Alexa Fields was awarded the Corey Flynt Scholarship. Corey was the son of AMG’s President Dacy Cavicchia and brother to both AMG’s Charlotte Director of Operations, Danielle Rudisill and Special Projects Coordinator, Cassie Kutay.

Carlyn Whitehead received the Tommy Badgett Scholarship, named in memory of a long-term AMG employee and friend who passed away in January 2021.

Sydney Pugh was honored with the Billie Butler Scholarship, which celebrates Butler’s twenty-plus years of service to AMG clients in the Charlotte area.                                                                  

Joey Chaney was awarded the Ron Erickson Scholarship, to honor the life and accomplishments of the late world-class financial planning professional and role model.

Kritika Sharma won the Rea Tinsley Scholarship, The People’s Choice Award, with 192 Likes.  Tinsley, who passed away in March 2022, was a cherished member of the AMG family and Director of Operations in Greenville, SC.

About AMG:  AMG is a professional community association management company dedicated to building effective community associations. AMG guides and assists executive boards to help protect the association's interests, enhance the lives of community members, and improve the property values in the community. With offices throughout the Carolinas in Greensboro, Winston-Salem, Charlotte, and Raleigh, NC, and Greenville and Aiken, SC, AMG is a knowledgeable partner in enforcing community governing documents with a proven set of processes and techniques, and supporting communities with a broad range of services which can be tailored to individual community needs. Association Management Group, Inc. is a locally Accredited Business by the BBB and is a nationally Accredited Association Management Company (AAMC) by the Community Associations Institute. For more about AMG, visit www.amgworld.com

The Role of an HOA Management Company: A Comprehensive Guide

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Teamwork in HOA community

Many Americans live in common-interest communities, such as homeowner’s associations (HOAs) and condominium associations. In fact, in 2022, about 26% of Americans lived in HOAs alone. That means thousands of communities nationwide designed to govern themselves and enhance home value for their residents.  

While most associations have a Board of volunteers that govern the community, sometimes those Boards are not enough. Your community may need an HOA management company to reach its full potential.  

But what are HOA management companies, and what do they do?  

In the rest of this guide, we will answer those important questions. So, let’s get started talking about the role of an HOA management company.  

What is an HOA Management Company?

HOA management companies specialize in providing management and administrative services to HOAs. They act as an objective third party, which helps them in their management role. HOA managers assist the HOA Board in running the community by managing various aspects of its day-to-day operations, communication, and financial management.  

There are a lot of benefits to collaborating with an HOA management company. These include the following.  

  • Expertise: HOA management companies are staffed with professionals with the experience and expertise to bring the most value to an HOA community. They will also understand the industry standards and local regulations, which will help them ensure that the community remains well-managed and compliant.

  • Savings: An HOA management company can save the Board valuable time and resources, allowing them to focus on strategic decision-making and long-term planning.

  • Community improvement: Efficiently managing the community and implementing improvements allows HOA managers to enhance the overall quality of life and maintain or even raise property values.

What does an HOA Management Company do?

Most HOA management companies offer a range of services, including the following.  

  • Administrative support: HOA managers can take on the responsibility of completing the many day-to-day administrative tasks that often bog down a Board. Organizing meetings, corresponding with residents, and much more are all administrative tasks provided by an HOA management company.

  • Financial management: Financial management is another important task that HOA management companies can complete. Most companies will have a dedicated financial department with experts who can guide a Board in creating budgets and managing expenses.

  • Property maintenance: Keeping a community maintained and looking nice is essential to a community association’s Board responsibilities. An HOA management company can help you maintain all communal property in your community. For life style communities and lake communities, this service is especially helpful.

  • Rules enforcement: HOA Boards are tasked with determining the rules that govern their communities. An HOA management company can help you enforce these rules.

  • Vendor management: Vendors keep a community running. From lawn maintenance to contractors, vendors perform many work-intensive tasks that keep an HOA looking nice. An HOA management company will hire and manage all vendors, handling this time-consuming and often frustrating task for your Board.

If your HOA is located in North or South Carolina, and you are looking for an excellent HOA management company, try Association Management Group (AMG). We provide property management services to HOAs, condominium associations, townhome HOAs, life style communities, common interest commercial properties, and more. Contact us today to learn how our dedication can help build a happier community.

How HOAs Should Prepare for Hurricane Season

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As hurricane seasons become increasingly intense and unpredictable, it is crucial for homeowners associations (HOAs) to take proactive measures to protect their communities and residents. The Atlantic hurricane season, which typically runs from June to November, poses significant risks to coastal and inland areas alike. This blog post will provide valuable insights and recommendations on how HOAs can effectively prepare for the Atlantic hurricane season.

Develop an Emergency Preparedness Plan

One of the first steps for HOAs in hurricane preparation is to develop a comprehensive emergency preparedness plan. This plan should outline procedures for evacuation, communication, and coordination with local authorities. Identify evacuation routes, establish a safe meeting point for residents, and designate a communication system to keep residents informed before, during, and after a hurricane. Regularly review and update the plan to ensure its relevance and effectiveness.

Conduct a Risk Assessment

HOAs should conduct a thorough risk assessment to identify vulnerable areas and potential hazards within the community. Assess the structural integrity of buildings, roofs, windows, and doors, and take necessary steps to reinforce them if needed. Identify trees and branches that may pose a risk of falling during high winds and arrange for regular maintenance and trimming. Additionally, review the drainage systems and make necessary improvements to prevent flooding.

Secure Outdoor Items

Outdoor items such as patio furniture, grills, and trash cans can become dangerous projectiles during a hurricane. Create guidelines for residents to secure or remove these items before a storm approaches. Encourage residents to store such items in a secure location or bring them indoors. Reinforce the importance of adhering to these guidelines to prevent damage to property and minimize potential hazards.

Communicate and Educate Residents

Open and consistent communication is key to ensuring residents are well-informed and prepared for the hurricane season. Utilize multiple channels such as email, social media, community bulletin boards, and newsletters to disseminate important information, emergency protocols, and evacuation plans. Encourage residents to sign up for emergency alerts from local authorities and share resources like hurricane preparedness guides. Consider hosting educational workshops or inviting experts to discuss hurricane safety measures.

Coordinate with Local Authorities

HOAs should establish strong relationships with local emergency management agencies and stay connected with their latest updates and guidelines. Collaborate with these authorities to understand evacuation procedures, emergency shelters, and other essential services available in the community. This collaboration will help ensure a coordinated response and enable quick action in times of crisis.

Establish Emergency Contacts

Maintain an updated list of emergency contacts for residents, including local authorities, utility companies, insurance providers, and community volunteers. Share this information with all residents and emphasize the importance of keeping it easily accessible. Encourage residents to create personal emergency kits containing essential supplies such as water, non-perishable food, flashlights, batteries, and first aid items.

Conduct Regular Drills and Training

Practicing emergency drills and conducting training sessions can significantly enhance residents' preparedness and response during a hurricane. Organize mock evacuation drills, familiarize residents with emergency routes, and provide guidance on essential tasks such as shutting off utilities and securing properties. These drills help residents become more confident and efficient in executing emergency plans when the need arises.

Conclusion

Preparing for the Atlantic hurricane season is a responsibility that falls on both HOAs and residents. By following these recommended steps, HOAs can significantly enhance their communities' readiness and resilience in the face of hurricanes. Remember, early preparation and proactive measures are the key to minimizing damage, ensuring safety, and promoting the overall well-being of residents during hurricane events. Stay informed, communicate effectively, and work together with local authorities to protect your community.