Selling off board’s condo unit requires vote of owners
Q. I live in a large condo association. As long as I have lived here, the association has used a studio condo unit as an office owned by the association. For the majority of that time, we had a full-time property manager who worked out of that office. About two years ago, the board decided to use an off-site manager and have retained the studio condo office for storage, board meetings and contractors. Some members of the board want to now sell the studio condo/office. Since the office is held in common by the unit owners, does the board have to get approval of the unit owners to sell the office? What would be the next steps for the board to sell the office?
A. If the condo in question was properly established as an individual condo unit (has its own PIN, percentage of ownership and real estate taxes), and is not part of the common elements, the sale of a unit owned by the association requires approval of at least two-thirds of the entire percentage of ownership. The vote on the approval takes place at a special owners’ meeting; owners would be able to vote in person or by proxy.
However, if the studio/condo unit was originally included in the common elements or was since properly converted into common elements, the process is much different. In order to sell this common element unit, the unit needs to be converted from a common element to an individual unit. This requires an amendment to the Declaration (to show the unit on the plat of survey and to give the unit a percentage of ownership. The amendment process would create a new unit, and it would be given a PIN by the county. The biggest obstacle is that such an amendment requires approval of 100% of the owners.
Q. Considering the ongoing legal battle with the Corporate Transparency Act (CTA), the importance of this law to condominium associations and the constant changes in the status, can you provide a brief update?
A: On Thursday Jan. 23, the U.S. Supreme Court allowed the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to continue enforcing the Corporate Transparency Act (CTA) in the “Texas Top Cop Shop” case. The Supreme Court’s decision lifted an injunction that had temporarily blocked enforcement of the CTA. This new ruling permits the government to proceed with enforcement of the CTA while legal challenges continue in the U.S. Court of Appeals for the Fifth Circuit where oral arguments are scheduled for late March.
Subsequently, on Friday, Jan. 24, FinCEN issued the following statement on their website: “On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in the “Texas Top Cop Shop” case. However, as a separate nationwide order issued by a different federal judge in Texas (the “Smith” case) still remains in place, reporting companies are not currently required to file beneficial ownership information form with FinCEN notwithstanding the Supreme Court’s recent action in the “Texas Top Cop Shop” case. Reporting companies also are not subject to liability if they fail to file this information while the “Smith” order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
Amid all the legal whiplash around the Corporate Transparency Act, it’s crucial for community association board members to remain vigilant and adaptable as this legal situation continues to evolve. You can follow the developments on our firm’s free blog at ksnlaw.com.
Board members who have not yet filed their initial beneficial owner information (BOI) reports, as well as those with changes to report since their initial filing, should continue gathering the necessary information and be prepared to file promptly if required. If voluntarily complying with the CTA at this time does not impose an undue burden, we recommend that board members voluntarily file their BOI reports (on their own or with the assistance of the association’s counsel or management) as soon as possible to avoid further delays.
• Matthew Moodhe is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.