Episode Transcript
[00:00:00] Speaker A: Foreign welcome to the Bottom Line Me podcast, where we like to dive into industry trends, practical tips and conversations that help you to navigate the world of real estate. I'm your host, Ann Allard, and today we'll be discussing FinCEN's new residential real estate reporting rule, a topic that's quietly gaining momentum but will soon have a major impact on our industry.
If you're a title professional, an escrow agent, attorney, or anyone who's involved in closings, this is something you really need to know about.
Starting December 1, 2025, certain cash and we'll define cash during our conversation, residential transactions will trigger a new federal reporting requirement, and many of us are just starting to wrap our heads around what this really means.
Joining me today is Brad Hessian, Vice President at Old Republic National Title Insurance Company and the North Central Division Agency Manager and Underwriting Counsel to join us and talk about this conversation.
Brad has been speaking to audiences across the country about this very issue and is here to help us understand what FinCEN is, why this rule matters, and what we can do now to prepare. Whether you're hearing about this for the first time or already knee deep in compliance planning, this episode is for you. Brad, welcome back to the Bottom Line Repodcast.
[00:01:39] Speaker B: Hey Ann, thanks for having me back. Nice to see you again.
[00:01:42] Speaker A: It's great to have you. Let's take a minute. For those that might not have had an opportunity to hear your first podcast episode, tell our audience a little bit about yourself, what you do at Old Republic.
[00:01:55] Speaker B: Title so I manage Old Republic's agency operations in the upper Midwest, Minnesota, North Dakota, South Dakota and Wisconsin. I started with the company almost 10 years ago as Wisconsin State Manager and Underwriting counsel. Before that I spent about 15 years in private practice, and before that I was a journalist for about 10 years.
[00:02:17] Speaker A: Great. Well, again, it's great to have you back, particularly for this conversation, which all of us are really wrestling with and trying to understand.
[00:02:26] Speaker B: So yeah, there's a lot to talk about for sure.
[00:02:29] Speaker A: I'm sure. I'm sure. Well, let's start simple.
What is FinCEN and why is it interested in real estate transactions?
[00:02:39] Speaker B: Well, you know, I wish that were a simple question.
It is a little more complicated than it sounds. So FinCet is the financial Crimes Enforcement Network. It is a division of the US Department of Treasury, and its job is to investigate financial crimes.
For decades, FinCEN has received reports from banks when banks see suspicious transfers of money coming in and out or suspicious movement of money. And the result is that FinCEN required banks starting round about 50 years ago to make reports so that it could try and track down individuals who were laundering illegal money in the United States.
Banks got really good at it. And so the criminals, like all good criminals, looked for another way to launder money, and they turned to residential real estate. And so in 2016, FinCEN created geographic targeting orders, which were counties throughout the country that were required to report on cash transactions of residential real estate, where the buyer is an entity or trust. And as you mentioned, we'll define what cash is and residential is. But so for about 10 years, some counties in the country have had to make reports.
They started with Manhattan, because that's where they saw the first of these really sort of oligarchs or folks involved in organized crime or in the illegal drug trade showing up with giant briefcases full of money to purchase expensive condominiums. And, you know, the problem that FinCEN saw is that someone might see a condo for sale in Manhattan for $18 million, but they would pay $25 million for it because the illegal money was not useful to them unless it was laundered. So the more money they could get into a transaction to get it laundered, the more valuable it was for them.
So that oligarch or criminal who was laundering money in Manhattan would hold on to that condo for two to four years, and then when they sold it, it was impossible to trace the money back to the illegal crime.
[00:04:47] Speaker C: Right.
[00:04:47] Speaker B: It was laundered so they could use that money for legitimate business purposes in the United States or in other parts of the world.
So the thing is, though, they paid $25 million for this condo that was worth 18.
Now they try and sell it for 25, but if they got 20, that was cool. If they got 18, that was cool. They'd even take 15, because 15 million clean dollars is more valuable to them than 25 million illegal dollars.
[00:05:16] Speaker C: Right.
[00:05:17] Speaker B: And they were interested in condos because they didn't want to be involved in maintenance. They didn't want to update things. They literally let it sit empty for their ownership, period. And then they would turn around and sell it for whatever funds they could get out of it. FinCEN became really concerned because what that does is it heats up the market artificially. Andrea Gackey is the director of FinCEN, and when she testified before Congress asking to require title insurance agencies to make these reports, she said, look, they're using illegal money, and as a result, it's increasing the value of real estate, which is keeping ordinary Americans out of homeownership. And I don't think there's any question but that that's true. And so FinCEN started in Manhattan and Miami. Those were the first two geographic targeting orders. And since 2016, a total of 69 counties have had to report. So we've been doing that in those 69 counties. But the one big difference between what happens in the GTOs and what happens starting December 1st is that there was a basement under which we did not have to report cash transactions. So, for instance, there are seven counties in Texas that have to report, but you don't have to report anything under $300,000. So starting December 1st, we have to report at $0, not $1 0.
So if I own a property in my own name and I transfer it to an LLC that I own by myself and with someone else, that's a reportable transaction, even though no money changed hands. So it is a big change from what we saw in those 69 counties. If you don't mind, I want to say one more thing about that, which is the reason fincent went nationwide with this is because these regulations have worked.
So in those 69 counties, out of all of the geographic targeting order reports, 40% of those and correlated to bank suspicious activity reports.
That's an astounding number over the course of 10 years. And 7% of all of the individuals mentioned in geographic targeting reports were already the subject of ongoing FBI investigations.
So the regulations are working. There's no doubt about it. It's just now the net is being cast so broad that it is really a significant change and a significant burden for what are largely small businesses throughout the country.
[00:07:48] Speaker A: Wow. It's really so interesting to hear what's behind all of this, too. So thanks for sharing that.
[00:07:55] Speaker B: You're welcome.
[00:07:56] Speaker A: Yeah.
[00:07:57] Speaker B: Can I give you one more piece of background real quick that I think is important?
So FinCEN has actually had two sets of regulations that were set to come out in 2025. The first one was supposed to go into effect on January 1st of 2025. And that's where everyone in the country who owned an interest in an LLC or a partnership or a corporation, was a member of a board of directors of a corporation, had to report their beneficial ownership information.
Those regulations were very on again and off again. There was a court in Texas that enjoined them from taking place. Ultimately, the Trump administration decided to narrow those regulations such that you only have to report if you're not a U.S. citizen.
One of the issues we're having in title insurance is our agents are saying to us, oh, we don't have to worry about that anymore.
[00:08:45] Speaker C: Right.
[00:08:45] Speaker B: That went away when the Trump administration changed those regulations. I wish FinCEN had two separate names for the one that was supposed to go into effect on January 1st and the one that goes into effect on December 1st, but it didn't. What I want people to know is the regulations for title insurance companies are still a go on December 1st. I can't promise there won't be some sort of delay or change, but the ones that went away are not title insurance. That's the important thing to know.
[00:09:13] Speaker A: Yeah, great. Thanks for sharing that.
So let's. Let's talk a little bit about the requirement. Can you explain the new real estate report requirements and what types of transactions it applies to specifically?
[00:09:29] Speaker B: Sure. Yes.
So there are three components. If we have a cash transaction or residential real estate where the buyer is an entity or trust, then it is a reportable transaction. Okay.
And once the buyer makes it reportable, the seller also has to report.
So one of the things we're wrestling with is currently there aren't any contracts that require require the seller to participate in this reporting. And I think we're at the top of a slippery slope where cash is no longer king.
[00:10:05] Speaker C: Right.
[00:10:06] Speaker B: Where sellers are going to be like, wait a minute, if I take a cash offer, I have to tell them my home address, my Social Security number, my date of birth, and my full legal name. And if I'm not a US Citizen, I need to give them more information than that. I think there are sellers who are not going to be interested in that.
And that's why in many states, they're working on changes to the standard contracts to make sure that the seller knows they have to participate.
[00:10:32] Speaker C: Right.
[00:10:33] Speaker B: So cash transaction for residential property where the buyer is an entity or trust, a report has to be made for both the buyer and the seller.
[00:10:43] Speaker A: Okay, great.
So let's talk a little bit more about how significant is this change in reporting.
[00:10:51] Speaker B: So you and I have been around this business for a while. You remember Trid, right?
[00:10:55] Speaker A: I sure do.
[00:10:56] Speaker B: And man, we had a lot of work to do with trid and there was a lot of education to do with trid. In my view, this is bigger than trid. And the reason this is bigger than TRID is because when TRID came, it was the bankers and the title insurance folks who had to work together to make sure we were meeting deadlines and giving notices at the right time.
So even though it was a big change, it was always for people whose jobs it was to make sure closings happened the way they were supposed to.
Now the information we need to gather has to come from the buyers and the sellers. And I suspect you also know, like I do, that realtors are not interested in having non public information about their, their customers.
[00:11:39] Speaker C: Right.
[00:11:40] Speaker B: So they are not going to want to be involved in gathering Social Security numbers and dates of birth and that sort of thing.
So the title agent is going to have to work directly with buyers and sellers to gather information on deadlines that buyers and sellers don't care about.
So I think that's really sort of how you know how important this is. And you have to remember that buyers and sellers that are entities and trusts form those entities and trusts for purposes of anonymity. I mean, many cases people form entities so that people don't know who they are.
[00:12:17] Speaker C: Right.
[00:12:17] Speaker B: They don't want public records to show who they are. And now we're telling them, yes, you formed this for purposes of anonymity, but you still need to provide this information to the title agent so that we can give that information to the federal government.
And let me just say I think sellers are going to be a problem in that I have no doubt that, that there are individuals who are laundering money in places outside of those 69 counties.
[00:12:43] Speaker C: Right.
[00:12:44] Speaker B: So if I intentionally came here to Hennepin county in Minneapolis where I am, to launder money to avoid those reporting requirements in the 69 counties, why would I sell to someone that makes me reports?
[00:12:57] Speaker C: Right.
[00:12:58] Speaker B: There's no reason. I came here specifically to launder money and hide it from the government. So I'm not now going to sell to someone who's going to make me report to the government I came here to hide from from. So I, I do think it's going to create issues about whether or not cash is an attractive way to purchase property anymore.
[00:13:15] Speaker A: Wow. Wow. Interesting. Because in the past it was a very attractive way.
[00:13:20] Speaker B: It's not absolutely there. There's no doubt about it, right. Everybody wanted cash.
And the fact is we were seeing a lot of offers that had loans on them, a lot of contracts that had loans on them, but they were offering cash such that they had to close whether or not they got their loan.
And so I think now there are going to be lots of issues about how we deal with that and whether or not sellers still want it.
[00:13:43] Speaker A: So Brad, is this reporting entirely new to the title insurance industry?
[00:13:49] Speaker B: So it's not in those 69 counties where they currently report, however, the information that has to be reported is changing and the way they report is changing. So right now in those 69 counties. You upload a PDF to FinCEN and that's the form that gets submitted.
Because we're going from thousands of submissions to millions of submissions. FinCEN is creating a portal and so the information will go directly into a database through the portal. It is one of the things that has many of us concerned about whether or not this can happen by December 1st. The portal's not ready.
Um, so FinCEN provided us with a draft of the form that will be in the portal on November 12th of 2024.
We were to have a 60 day comment period, but as you can imagine, we had a lot of opinions about that form. And so the comment period was extended till July 8. FinCEN was supposed to have 30 days to complete the final form with the Office of Management and Budget after comments closed. But we knew on July 8 that they would not have it ready in time. I spoke with FinCEN on July 16th and we said, so, hey, when's the form going to be ready? And they wouldn't give us a date. We said, how about October 1st? And they said, we can't tell you. And we said, how about October 2nd? And they said, we can't tell you.
What they told us was they are as anxious as we are to get the form out. I don't think that's true. I think we're more anxious.
But nonetheless, it is my, is my guess right, my sort of finger to the wind that this will come out sometime in October, probably around the middle of October.
It is important to note that there are two pieces of litigation pending.
One of them is pending in Jacksonville, Florida, where the plaintiff is Fidelity National Title Insurance Company. And Fidelity has made a motion to delay the start date because the form is not available yet.
So that it is possible there could be a delay. I think there are some issues with that request for a delay, including that about eight weeks ago, the U.S. supreme Court said a federal district court can't issue a nationwide injunction anymore. And so I'm not sure how the court in Jacksonville, Florida could issue a nationwide injunction that would affect everyone that has to file December 1st for.
[00:16:14] Speaker A: Mine's greater than mine.
[00:16:16] Speaker B: Yes. So, I mean, there are, there, there is still a chance that this doesn't happen. And I have to tell you, If I give 100 of these speeches and then it doesn't happen, I feel like I wasted a lot of my time.
But, you know, there is a possibility still that this wouldn't be effective on December 1st.
[00:16:34] Speaker A: Well, let's assume that it does go forward.
What?
[00:16:39] Speaker B: That's the Correct assumption.
[00:16:40] Speaker A: Yeah, you know, I mean, I think that's the be prepared, right?
[00:16:43] Speaker B: Yes.
[00:16:44] Speaker A: What type of information has to be gathered and how is it going to be gathered?
[00:16:49] Speaker B: Sure.
So Ulta has put together a collection form, a buyer side collection form and a seller side collection form.
It is not mandatory, but I can't imagine why any agent would want to recreate the wheel.
Ulta had really some terrific minds working on this, including different companies colleague Sherry Hippenbecker at Nightbury Title in Milwaukee who was one of the drafters of those forms. And they really did terrific work in putting together the form. Now the form is currently just in PDF so it will have to be changed to be a fillable form.
Some folks have talked about could it be a docusign form? I think that's possible because there is a certification where the parties say, hey, title agent, I'm guaranteeing you that all this information is correct and if I lied, I indemnify you. So we want to make sure we have a valid signature signature on that form.
But the, the collection form, Ann, is nine pages long. Oh, we information has to be filled out on eight of those pages. One page's instructions. So we're going to be getting a lot of information.
And I think one of the things that could be an issue for us is, you know, there's some one person can fill it out for all members of an LLC or for all members of the board of directors of a corporation.
[00:18:03] Speaker C: Right.
[00:18:04] Speaker B: But if I'm a member of an LLC with three other people, and I don't know that, they're not my family, they're just my business partners, I'm not sure I want to make that certification on behalf of people I don't know. I don't know that I want to certify that their Social Security number is correct and their date of birth is correct. So instead of getting a nine page form, we might get 36 pages.
[00:18:24] Speaker C: Right.
[00:18:25] Speaker B: Because we might have all four people submitting it to us. And if that's done for a board of directors of a corporation, I, you know, they often have 9, 11, 13 members. So we're talking about lots and lots of information that needs to be gathered.
The specific information for the See, we have to get to a human. So you got an llc, a partnership, a corporation, a trust. You got to get to a human from the human. We need their name, their home address, their Social Security number, their date of birth. And if they're not a US citizen, we need the identifying number of the country where they are a citizen.
So the thing is that for members of an llc, we don't even ask for their names. All we care about is that the person who's signing on behalf of the LLC is authorized.
But so just asking them for their name, let alone their home address, Social Security number and date of birth, is new, and it's, I think, in many cases, not going to be well received.
[00:19:23] Speaker A: All right, let's talk a little bit more about the title agent who's responsible for filing these reports. Are title agents and settlement professionals on the hook here?
[00:19:33] Speaker B: Yeah. So what's interesting is FinCEN has created a waterfall of seven people who have to report.
And so the first person who has to report is the settlement agent on the settlement statement. That's almost always going to be a title insurance agent.
[00:19:50] Speaker C: Right.
[00:19:51] Speaker B: But there are times when the title insurance agent doesn't close the transaction, so they're not the settlement agent. Right. So, for instance, the bank is closing their own.
So the second person in the waterfall, if there's not a settlement agent on the settlement statement, is the person who drafted the settlement statement. So when the title agent drafts the settlement statement for the bank to close its own transaction, that still makes us the reporting party.
If neither of those two is present, then the third option is the person who records the deed.
So I want you to understand how dramatic that is. I think that means there will be no more courtesy recording in title insurance.
[00:20:29] Speaker C: Right.
[00:20:30] Speaker B: So right now you have a finance, and you show up a refinance of your house, and you show up and say, hey, after the refinance, I want to transfer this to my llc. I've decided I want my LLC to my house. Well, and you used to just be able to give the title company a check for the recording fee, and they do it for no extra charge.
[00:20:46] Speaker C: Right.
[00:20:47] Speaker B: Now, if they take that deed and record it, they have a reporting requirement to FinCET. So they're either going to say no, which I think is what they're going to say, or they're going to say, that'll be $500, because I have to gather information for you in order to file this with FinCEN.
So where I think that one is actually going to hit is where we have attorneys who've drafted deeds as a result of someone transferring their property to a trust or family members transferring to a family member llc.
[00:21:17] Speaker C: Right.
[00:21:18] Speaker B: So there's no closing. Right. There's no one who handled a settlement statement or drafted a settlement statement.
So the attorney who had that deed recorded from their office, they're now the reporting entity, the fourth choice, and is the underwriter for the title insurance policy. So I hope you look good in Orange, because if Old Republic gets on the hook for this, we're going to. We're going to say Ann Allard is responsible for all of that reporting.
So you know what the problem is with that, though, right? So reporting has to be done within 30 days of the closing. But how quickly do we find out from our agents that they've closed a transaction? Our contract says they have to tell us in 60 days, but often it's 90 days. So by the time we hear that the transaction has been closed, the deadline to report it has passed.
So it's problematic. And underwriters are thinking about what their role is going to be in the transaction because of that potential reporting requirement.
So then the fifth choice is the person who disperses the greatest amount of funds.
So if there are two title agents involved in the transaction, whoever disperses more money is the one who has to file. I think this again falls to attorneys who are handling family transactions through their trust account.
I think that's likely where this one falls. The sixth choice is the title examiner.
I hate this one. Because the title examiner simply examines the file and then has no idea if it ever actually closes.
[00:22:54] Speaker C: Right.
[00:22:54] Speaker B: They are the smartest people in the title agency, and they sit in the back room with no windows and they read all day, but they have no involvement in the closing. Yet now they have a potential responsibility to report.
And then the last person who has a responsibility to report is the person who drafted the deed.
So again, I think courtesy drafting goes away. If you go to the title agent and say, hey, we'd like you to draft a deed to transfer this into our llc. I think the title agent is likely to decline because otherwise they would have to file with FinCet. Again, I think this is going to hit attorneys who draft trusts or who draft other documents, who spend lots of time drafting complicated trust documents or corporation documents, and then draft the deed as kind of a throwaway. Paralegal drafts the deed but puts the attorney's name on it. Now suddenly, just by being listed as the drafter, they have an obligation to file the report.
[00:23:47] Speaker A: That said, you know, I was going to ask you how this is going to change the closing process for title professionals.
And wow, you know, well, let's talk.
[00:23:59] Speaker B: About that, because I think it does make a couple of changes that we haven't talked about yet.
One is we need to figure out if we're going to close transactions. If we don't have this information.
My recommendation is that we don't. So here's the thing. We have 30 days after closing to file this form with FinCEN. Which means we could use that 30 days to gather this information from buyers and sellers. But how cooperative are buyers and sellers after a closing?
[00:24:25] Speaker C: Right.
[00:24:26] Speaker B: They're gone. The seller has left with their proceeds, and they're not going to be responsive to us.
So I think it's going to make sense for us to require that we get this information prior to closing. But, Ann, how often, two days before closing does someone say, hey, I know the contract says I should take this in my own name, but I've decided to put it in my llc.
Now the title agent has to decide, am I going to close or am I going to stop the closing and say, I need to get this information from you? So the thing is, if we end up not getting information, title agents are required to file a suspicious activity report with Vincennes that says this transaction was specific. But we don't want to do that because the realtors are our customers.
[00:25:11] Speaker C: Right.
[00:25:12] Speaker B: So when someone gets a call from the FBI that says the title agent said your transaction was suspicious, the first person that party is going to call is their realtor and complain. How come this was reported as a suspicious activity?
[00:25:26] Speaker C: Right.
[00:25:27] Speaker B: So we, I think, are going to want to gather this information prior to closing. My suggestion is to require that that buyer and seller collection form be returned 10 to 14 days prior to closing, because we have to review it and make sure we've gotten all of the information we need.
So I think it does have a significant impact on closing. Let me say one more thing we are concerned about when we tell people this and they say, never mind, I'll take it in my own name and I'll just transfer it in a deed next week. Right.
FinCEN told us on our call on July 16 that that's a suspicious activity.
So even though we don't know if they're actually going to do it, and I will tell you, when people get annoyed, they say lots of things that they're never actually going to do right now by virtue of them saying, never mind, I'll just transfer it in a deed after the closing. That's a suspicious transfer and we would have to report it to Benson. I don't like that.
[00:26:24] Speaker A: Oh.
[00:26:27] Speaker B: So there. Those are the changes to closing it.
[00:26:30] Speaker A: Yeah. Well. And that's why it's so important to be paying attention to all of this right now. But wow.
So let's talk about non Compliance a little bit. What are the risks and how serious are the penalties?
[00:26:47] Speaker B: Yeah, so I wasn't joking about the orange jumpsuit.
[00:26:50] Speaker C: Right.
[00:26:50] Speaker B: So there are criminal penalties available.
They are up to a quarter of a million dollars and five years in prison per violation. Now, per violation. Now, let me say this.
My understanding is that those criminal penalties are largely going to be reserved for individuals who are conspiring with someone to not report.
[00:27:18] Speaker C: Right.
[00:27:18] Speaker B: Conspiring with the criminal to avoid reporting.
But there are also significant civil penalties, and they are the amount of the transaction up to $100,000 or $25,000 per violation per day the violation continues. So let's say on December 1st, we closed four transactions, and on January 2nd, we realized that we forgot to do the filing. So we file on January 5th.
That's $25,000 per transaction, which is $100,000. Times five days late is half a million dollars.
Now, again, it is not my expectation that FinCEN is going to pursue the maximum penalties. Since 2016, the penalties they've pursued have been significantly less than the maximum. But nonetheless, the maximum is available. And FinCEN does appear to be interested in escalating penalties for repeat violators.
You know, so the risk here is significant.
[00:28:22] Speaker A: Well, and who wants that hanging over their head? Right.
[00:28:25] Speaker B: Which is especially when the definitions of cash and residential can be difficult for us to understand.
Yeah.
[00:28:33] Speaker A: Wow. All right, well, let's talk about preparation and action steps a little bit. What should title professionals be doing now?
Prepare for this deadline.
[00:28:45] Speaker B: Yeah. So the big thing is that you can go on FinCEN's website and you can actually register the person at your company who is to be the primary contact for filings. We recommend that entities do this. Now. It doesn't take a ton of time. About a half hour.
And then once filing begins, you can register other people at your company to be the filer. But setting up the company's account with the primary contact is something that can be done now, and we do recommend that agents work on that now.
[00:29:20] Speaker A: Anything else?
[00:29:22] Speaker B: You know, then the other thing is I think they should figure out whether or not they want to do the filing themselves or whether or not they want to contract with someone else to do the filing. We know there are software providers who are. Who are working on programs to do the filing for the agent.
So folks need to be aware that there's going to be a cost to that, and the agent will likely also charge a cost for having to gather the information. So I do think there's likely to be a substantial fee a few Hundred dollars for these types of transactions.
So I think, you know, starting to figure out now who's going to be responsible for that, who's going to gather the information. And then do you want to work with an outside provider or are you going to try and do this yourself?
I will say too, that FinCEN has, I think, a good rule, but a rather complicated rule about delegating to someone else. And so I want to talk about that real quickly.
So we talked about that waterfall. The seven people who can.
Who. Who need to file.
You are allowed to delegate within that waterfall for someone else to file for that transaction. And when you delegate, the person who receives the delegation is now responsible for doing it correctly, and that they are the ones who get in trouble if there's a problem.
You may also use an outside provider to do the filing for you, but you cannot delegate to them your liability, which means that if they make a mistake in their filing, the agent is still the one who's on the hook.
[00:30:57] Speaker A: For the penalty, lands back on their feet.
[00:31:00] Speaker B: Yes.
[00:31:01] Speaker A: Yeah, that's an important point, I think.
[00:31:03] Speaker B: But it is, it is.
[00:31:05] Speaker A: Before we get to the bottom line, are there any other tools, trainings or resources that you would recommend to help people stay ahead of this?
[00:31:13] Speaker B: Yeah, so I do want to do those definitions of cash and residential real quick, before we're finished.
In terms of resources, I mean, here's what I would say.
Our conversation Today is my 71st speech on Finsen.
There are lots of underwriters who are providing education. As you know, Agency University just had a presentation on September 11th.
I did another webinar today specifically on how to fill out the collection forms. So lots of folks. We're not the only under. I think we're doing it best, but we're not the only underwriter who's doing it. So you can reach out to an underwriter to see what education they are providing.
Old Republic has put together a FinCEN landing page where agents can go and get information on questions. I think that debuts sometime in the next couple of weeks, but our marketing department has done a terrific job on that, and other underwriters have those as well. Stuart has a very good page on FinCEN information.
So there are lots of resources and tools out there.
And then we would encourage agents, if they don't want to do the filing on their own, to start reaching out to software providers. The software providers tend to be the ones who are looking to do that filing for others.
Let's get to the definitions real quick because I just want to make sure Folks sort of understand the breadth of that.
So cash is someone who brings in a bundle of cash, right? So I have a lot of agents in southwest Wisconsin where there's a large Amish community. So a couple of times a month, couple literally rolls in on a horse and buggy with a beautifully handcrafted crate full of $100 bills. That is cash. It's reportable. Cash has always been reportable over $10,000, but it is reportable.
But we also have to report where we receive any other payments, right? So we have to, if someone sends us a wire, we have to report the bank it came from. We have to report the account number, the routing number and the holder of the account where the money came from. So we're going to be paying attention to that. If we receive a cashier's check, we have to report where the money came from that funded the cashier's check, not the check itself.
Where did you get the money that you used to fund the check then? In terms of what is paying cash, it is cash. It is also wiring in money or bringing a cashier's check without a loan. But and the big issue is it is any loan that is made by someone who is not an anti money laundering reporting entity.
Anti money laundering reporters are state and federally chartered banks, credit unions and mortgage banks.
So any hard money lenders, those are not anti money laundering reporters and so it's considered cash for purposes of reporting. Farm credit service agencies, which are big lenders in states like the ones I work in, where there's agricultural property, those are considered cash because they don't have an anti money laundering reporting requirement. If you take out a loan from your ira, that's considered cash. If you take out a loan on your primary residence to purchase a second home, that's cash because there's no mortgage going on the second home.
If you purchase through contract for deed or land contract, that term is different from one state to another, that's considered cash.
So you know, I had agents who ran reports who's like, oh well only 10% of our transactions don't have a loan on them. So that's not so bad. I'm like, remember there are lots of loans that are going to qualify as cash because the money doesn't come from anti money laundering reporting entities.
So that's the important thing to remember about cash. Residential is what you think it is. It is what, one to four family dwellings. It's also condominiums, but it's a lot more. It's mixed use properties, right So I gave this speech about a month or so ago in Menominee, Wisconsin, and I don't know if you've been to Menominee am, but you cannot spit without hitting a bar that has two apartments upstairs.
[00:35:17] Speaker C: Right.
[00:35:18] Speaker B: So that's mixed use anything that has some sort of corporate, business component, commercial component, and a residential component that constitutes residential property. So as title agents, we might see the order come in as commercial, but we need to look for any clues as to whether or not it might have a residential component in it. Because there are lots of those buildings, especially in either urban centers, you know, kind of the old main streets, or in smaller towns where the downtown has, you know, the grocery store or the bar or the insurance agency, and upstairs there are two or three apartments those are residential. The other thing that's residential is vacant land that is zoned or permitted for residential use.
So this is mostly going to be lots in the subdivision. Right, because they're going to be zoned for residential use.
So those are going to have to be reported. Now, FinCEN's rule is that the buyer has to intend to build upon the property.
Our issue is we don't know what intend means. Does it mean within six months, within two years, within five years, within 10 years? Because I get subdivisions, right? They intend to build on those. But remember I said it's vacant land that's zoned or permitted. And in the vast majority of states you are permitted to build a house on agricultural property.
And so if you're buying a 40 in Wisconsin, for instance, where you can build a house on any parcel of agricultural property, I need to know, do you intend to put a property, a house there? But I don't know what intent means. Do you intend to do it in six months or do you intend to do it in 10 years? So we're going to err on the side of caution, which is unless you can prove to us in some definitive way that there's not a plan to put a residence on it, we're going to assume that it's going to have a residential purpose and we're going to require a report.
Yeah, yeah, it's a lot. It's a lot that I've only given you 37 minutes of it. This is normally a 90 minute speech.
[00:37:24] Speaker A: Well. But really summed a lot of this up really well. I mean, I learned so much just in these 37 minutes. Is there anything else you want to share with us before we get to our bottom line? I know I already asked you that.
[00:37:37] Speaker B: But I feel like I think I've given you. I think I've given you really the important nuggets. I mean, I guess what I would say is, you know, as an agent, watching this and learning that this is just the tip of the iceberg that, you know, thank you for tuning in. But now you really need some detailed education on what's going to happen, how we're going to make this work, who is going to handle the forms, all of those sorts of things.
[00:38:04] Speaker A: Great.
All right. Well, I guess my bottom line to you then is what's the one thing that every title professional should walk away remembering from our conversation today?
[00:38:16] Speaker B: That there's a big change coming. December 1st, and December 1st is coming faster than you think, because we are going to see contracts for property with a closing of December 1st sometime between October 1st and October 15th.
So my bottom line is you got to get to work now because it's coming and there's no way to avoid it.
[00:38:43] Speaker A: Well, we might have to have you back after the poem comes out just to talk a little bit more about.
[00:38:48] Speaker B: That, Brad, but, you know, you always seem to find me.
[00:38:51] Speaker A: ANNE well, I do.
Well, just want to thank you so much for taking the time to explain this to all of us today. As I said, I've learned a lot.
There's an awful lot here for all of us to digest and then figure out what we need to do to make sure that we are prepared. Whether the December 1st deadline is extended or it isn't. It's always best, you know, like the old scout things, be prepared. Right.
[00:39:22] Speaker B: You know, those regulations that were supposed to go on January 1st, literally millions of people filed because they believed it was I filed and then they didn't happen. And I do not regret filing because I would rather be in compliance with something that doesn't happen than run the risk of not being compliant.
[00:39:42] Speaker A: That's a good bottom line, too, Brad, I have to say so. Well, again, thanks so much for taking some time out of your day today to share this information with us and certainly to our audience. I hope you found this helpful.
Certainly reach out to any of us at Old Republic. Title, you have questions. As Brad said, there's lots of resources available here at Old Republic. Title. Certainly take advantage of them. Till we meet again. Let's all keep learning, growing and prospering. Thank you very much for your time today.
