2021 has been a shakeup year for the real estate industry, with showings moving virtually and home prices soaring in hot markets like South Florida and Texas. It’s not unusual to see bidders offering 20 or 30 percent over asking prices and all-cash offers to beat out their competitors. Now, the luxury real estate industry faces another challenge as the Financial Crimes Enforcement Network (FinCEN) announced they will be reissuing its Geographic Targeting Orders (GTO) as of April 2021.
The GTOs, originally instituted back in 2016, require title insurance companies to disclose the identities of individuals purchasing real estate with cash offers over $300,000 USD in hyper-specific markets. These orders originally only presided over Miami and Manhattan; two markets where properties were frequently being purchased through cash transactions under a company name. However with these orders in place, the buyer is no longer able to maintain anonymity through their business. The aim for these rules was to bring more transparency to the real estate industry and prevent money laundering and tax evasion.
The reissue of the GTOs has expanded the jurisdiction to several new hot markets including “Bexar, Tarrant and Dallas counties in Texas; Miami-Dade, Broward and Palm Beach counties in Florida; all boroughs of New York City; San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara counties in California; the city and county of Honolulu; Clark County in Nevada; King County in Washington; Suffolk and Middlesex counties in Massachusetts; and Cook County in Illinois” reports the American Bankers Association.
Many in the legal field, including JDSupra, anticipate that the government’s reason for the ever-expanding regulations is to aggregate and use “the data not only for initiating and assisting investigations [into money laundering], but presumably also to build a case for permanent regulations applicable to the real estate industry”.
As many of our clients are deeply involved in the luxury real estate industry in several of these cities, Padula Law will continue to monitor all developments to the FinCEN GTOs. If you have any questions regarding recent or upcoming cash transactions you’ve made for properties in these markets, set up a consultation with our team to ensure proper reporting is being done and your assets are protected.
