September 2024

• The Corporate Transparency Act is new legislation that was passed by Congress to combat money laundering and terrorist finance. 
• By December 31, 2024, many entities will need to file a Beneficial Ownership Information Report (BOIR).
• If you are unfamiliar or need help, please contact us and we will guide you through the process.

At the beginning of the year, there was a lot of hoopla and frustrating about the Corporate Transparency Act (CTA) – including in this blog. Since then, though, it seems like the CTA has slipped a lot of people’s minds. 

As you probably recall, the CTA is a significant piece of legislation aimed at combating financial crimes like money laundering and terrorist financing. This act, signed into law in January 2022, mandates that certain types of corporations file an initial report with the Financial Crimes Enforcement Network (FinCEN) within a specific timeframe. Well guess what? That deadline is coming fast. So let’s talk about it.

What is the Corporate Transparency Act?

At its core, the CTA requires “beneficial ownership information” to be reported for corporations, limited liability companies (LLCs), and certain other entities. “Beneficial ownership” specifically refers to individuals who ultimately control a company, even if they don’t hold a formal title. This information is intended to shed light on the true owners of businesses, allegedly making it more difficult for criminals to use corporations as fronts for illicit activities.

Who is Affected by the CTA?

The CTA applies to a wide range of entities, including:

• Corporations formed under U.S. law
• Limited liability companies (LLCs) formed under U.S. law
• Certain foreign corporations operating within the United States

However, there are some exemptions, such as nonprofit organizations, banks, and credit unions. Basically entities that already are required to report this information to the government are exempt from this act.

What Information is Required?

The initial report required by the CTA includes the following information for each beneficial owner:

• Legal name
• Date of birth
• Residential address
• Country of citizenship or residence
• Picture of driver’s license or other form of identification

One tip – if you have a number of entities for which you are a beneficial owner, it will be easier if you get a FinCEN ID. This is relatively easy to do and then, when filing your BOIR, instead of uploading all of the information again, you only need to enter your identification number.

When is the Deadline?

The deadline for filing the initial report under the CTA depends on when the entity was formed or registered:

• Entities formed or registered before January 1, 2024: The deadline is December 31, 2024.
• Entities formed or registered on or after January 1, 2024: The deadline is 14 days after formation or registration.

As you can see, therefore, the deadlines are coming up fast.

Potential Penalties for Non-Compliance

Failure to comply with the CTA can result in significant penalties. The Act authorizes fines of up to $10,000 per day for non-compliance, and these fines can accumulate over time. Additionally, individuals who knowingly provide false or misleading information can face criminal penalties, including imprisonment.

What Steps Should Businesses Take?

As the deadline for CTA compliance approaches, businesses should take proactive steps to ensure they are in full compliance. This may involve:

• Identifying beneficial owners
• Collecting necessary information
• Preparing and filing the required report
• Developing procedures for ongoing compliance

It can also make a lot of sense to talk to a lawyer to understand their specific obligations under the CTA and to develop a compliance strategy.

The Corporate Transparency Act represents a significant step forward in the fight against financial crime. By requiring the disclosure of beneficial ownership information, the CTA aims to make it more difficult for criminals to exploit corporations for illicit purposes. As the deadline for compliance draws near, businesses should be aware of their obligations and take appropriate measures to ensure they are in full compliance with the law.

We are doing this for both us and ourselves. So if you have any questions or need help, please do not hesitate to reach out.

• Multifamily rents appear to be on the rise across the US.
• In Texas, however, rents are down year over year.
• While this is good for tenants now, that trend is not likely to last in the long-term. 

I like to keep a close eye on real estate market fluctuations. I mean, obviously. Its my job.  Lately, I’ve read a bit about a national trend that’s caught my attention: multifamily rents are on the rise. According to some reports, rents across the country have begun a steady climb after a significant dip during the pandemic. This uptick is likely due to a confluence of factors, including increased demand due to a growing job market and a limited supply of new rental units.

But here in Texas, things are a little different. While the national market rebounds, rents in the Lone Star State, particularly in major cities like Austin, seem to be defying the trend and continuing their downward trajectory. This unique situation presents a sigh of relief for Texas tenants, but it also raises some interesting questions for landlords and investors and developers. So what is causing this? Let’s talk about it.

Why is Texas Different?

That’s probably an offensive question to Texans. EVERYTHING IS DIFFERENT IN TEXAS. We are Texas, dammit. Having said that, there are several reasons why Texas might be bucking the national multifamily rent trend. Here are a few key factors:

• Overbuilt multifamily – There are a lot of multifamily units that have come online in the last five years in Texas. It traditionally has been a very attractive and active market. As a result, the supply of units has at least met, if not overtaken the demand. As a result, rents have come down.
• Growth has slowed – For a while now, Texas has been one of the fastest growing states in the country. And Dallas, Austin, San Antonio – all of them have been near the top of city growth. And while there is still positive growth in the area, it has slowed some.
• Pro-Growth City Strategies – I have written about this many times, but the Austin City Council, for example, has recently enacted a lot of pro-growth strategies that make it easier to bring more units online. As a result, this has also increased the supply.

These are not the only reasons rents remain stable in Texas. But it gives a good background and starting point.

What Does This Mean for Tenants?

For Texas tenants, the current situation presents a rare opportunity. Rents are down, and with continued economic uncertainty, they might stay that way for a while. This is a good time to negotiate lease renewals or explore new rental options.

A Word of Caution

While the current market favors tenants, it’s important to remember that this might not be a permanent trend. The Texas economy is cyclical, and new multifamily development has crawled almost to a stop. That likely means – with the continued population growth – that demand will outstrip supply again in the near future. Additionally, the tech sector’s presence in Austin remains significant, and a new wave of companies could always arrive, driving demand back up. Tenants should enjoy the current market conditions but also be prepared for the possibility of future rent increases.

Adapting to the Market

For landlords and investors, the Texas rental market presents a unique challenge. They need to adapt their strategies to the current economic realities. Here are a few suggestions:

• Focus on Value: Landlords might need to consider offering concessions or amenities to attract and retain tenants.
• Consider Short-Term Rentals: The short-term rental market, through platforms like Airbnb, might offer higher yields in the current market compared to traditional long-term leases. However, local regulations regarding short-term rentals should be carefully considered.
• Invest in Different Markets: Investors with a long-term view might consider diversifying their portfolios by looking at rental properties outside of Texas, in markets experiencing a stronger rebound.

The Bottom Line

The Texas rental market is currently defying the national trend. While this is good news for tenants, it presents challenges for landlords and investors. As a Texas real estate lawyer, I advise all parties involved to stay informed about market trends and adapt their strategies accordingly. The Texas housing market is dynamic, and navigating its complexities requires a keen understanding of the unique economic and legal landscape.

• Last week, I was fortunate enough to spend some time with my family in Ireland.
• I spent most of my time in Dublin – a fun, vibrant city with very friendly people.
• I recommend a trip to Ireland and look forward to the time when I can return.

What kind of title is that? One that makes me laugh. I was trying to think of the dumbest, most stereotypical American thing to say about Ireland. And that’s what I came up with. 

Why Ireland? Well because this week’s blog entry is a little different. I went with my family to Dublin, Ireland last week. And I wanted to talk about it a bit in this blog. A little bit on why Ireland is cool and why you should go there if you have not yet. And I’ll try to add in some real estate because this is nominally a commercial real estate blog. So let’s talk about it.

City of a Thousand Welcomes

This was my first time in Dublin. If you have not been there before, I highly recommend it. It’s a very fun city with a lot of history. We had a pretty large group, which was the best part. My mom was one of ten children. As a result, I have … a lot of cousins. And so, a number of those cousins, along with my sister and her husband and my brother and his wife, went to find our roots. 

Unfortunately, I could only stay for five days – I had to leave early to head to Ann Arbor to see my beloved Michigan Wolverines take it on the chin from the dastardly Texas Longhorns.

As a result, my time was spent mostly in Dublin. I did not get to see some of the beautiful rolling hills and castles of rural Ireland. My brother and his wife did, however, as they travelled throughout the country. That is something I would definitely do if and when I return to Ireland. 

Dublin itself is a very fun and scenic city with a lot of history. It is built a lot like London (and other European cities) where there are not a lot of tall buildings. But there are beautiful, old stone buildings that are four or five stories high. 

It is also a city with a lot of culture. And not all of that involves drinking. Though I have to say – drinking is certainly a big part. There are A LOT of pubs in Dublin. It seems like there is one about every ten feet. And as far as I can tell from my short time there, they all seem to be full all the time. Of course, to understand that, I had to spend a little time in those pubs myself. One benefit of those pubs – a lot of them have live music. 

But, of course, its not all drinking. There are a lot of great tours and tourist attractions. Some of them that we visited – The Little Museum of Dublin, the Guinness tour, Trinity College, and a Literary Pub Crawl – where two local actors took us to a number of pubs around town and regaled us with stories of Irish literary heroes. And I realize that two of those four tourist events including drinking. But hey … when in Ireland…

So that’s what I did on my summer vacation. If you have not been to Dublin, I recommend it. It’s a very nice city with very friendly people who sort of speak English. I look forward to the day when I will return.