Compliance Update: NCUA says CUSO Can Act as a Landlord

Federal credit unions that own a building where their home office, branch, or other offices are located may form their own credit union service organization (CUSO), sell the building to that CUSO, and proceed to rent part of the building out to their credit union, under certain circumstances.

The National Credit Union Administration (NCUA) stated in a legal opinion letter that this practice is permissible under NCUA regulations as long as the majority of the building is leased out to a credit union and credit union-affiliated members.

The letter also noted that CUSO leasing arrangements “should not be used as a means for [a credit union] to circumvent the fixed-assets rule.” The NCUA’s fixed-assets rule states that federal credit unions with $1 million or more in assets cannot invest in fixed assets if the investment would cause the aggregate of all that credit union’s fixed assets to exceed five percent of its shares and retained earnings.

Click here for the full NCUA legal opinion letter.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, Federal, NCUA.