By Danielle L. Vaughn, Board Certified Real Estate Attorney
The Financial Crimes Enforcement Network (FinCEN) has implemented new reporting requirements aimed at combating money laundering in residential real estate transactions. These rules primarily apply to certain non-financed transfers of residential real property involving legal entities or trusts.
Under the rule, a reportable transfer of residential real property occurs when an ownership interest in residential real estate is transferred without financing to a transferee entity or transferee trust. A transfer includes any sale, gift, or other conveyance of ownership documented by a deed or similar instrument. If a deed lists a legal entity or trust as the transferee, the transaction may fall within FinCEN’s reporting requirements.
The rule also identifies who is responsible for filing the report. FinCEN places the obligation on a “reporting person,” which follows a reporting cascade. In many residential transactions, this is the settlement agent, title company, attorney, or other professional conducting the closing and preparing the settlement statement. If no settlement agent is involved, responsibility may shift to the person preparing the deed or otherwise facilitating the transfer. Only one reporting person is required for each reportable transaction.
However, several types of transfers are not reportable. Transfers involving the grant, transfer, or revocation of an easement are excluded. Transfers resulting from the death of an individual, including transfers through a will, trust, intestate succession, survivorship rights, or transfer-on-death deeds, are also exempt.
Additional exemptions include transfers incident to divorce or dissolution of a marriage, transfers to a bankruptcy estate, and transfers supervised by a U.S. court. A transfer made without consideration by an individual to a trust created by that individual or their spouse is also excluded. Transfers to a qualified intermediary for a Section 1031 like-kind exchange and transactions where no reporting person exists likewise do not require reporting.
FinCEN emphasizes that reporting persons must review the specific facts of each transaction to determine whether reporting is required.
If you are buying, selling or transferring a home, there may be additional requirements or costs at closing due to these federal reporting obligations. Let Vaughn Law handle your transaction or the transfer of your property to ensure any required FinCEN filings are properly completed and handled.
Vaughn Law, PLLC
350 Corey Ave.
St Pete Beach, FL 33706
(727) 223-6080
www.dvaughnlaw.com