Be Alert: Three Common Situations That Could Cause FinCEN to Delay Your Closing

At John Bethell Title, we often adapt to last-minute changes and still ensure your closing occurs on time. Beginning March 1, complying with new FinCEN anti-money laundering requirements may make some previously routine last-minute changes delay closings.

Under the FinCEN rules, a reportable transaction is a cash sale in which the buyer is an entity, such as an LLC or trust, and the property is a one to four-family residence or lot. Transfers involving individuals as buyers or other property types are exempt. Complying with the reporting requirements takes time—and all information must be collected before closing.

Here are three common last-minute changes we encounter—often at the closing table—that you will want to anticipate to avoid delays.

#1: You represent a client as a cash buyer in their own name — an exempt transfer—who decides shortly before closing to take title in an LLC or a trust, creating a reportable transfer. When this occurs, both buyer and seller must furnish identity, beneficial ownership, and financial information. Consider proactively addressing this possibility earlier in the transaction timeline rather than waiting until the last moment.

#2: Your client is an entity buyer (e.g., an LLC) that you expected to finance the purchase with a traditional lender—an exempt transfer—but at the last minute decides to pay cash, creating a reportable transfer. We often see professional investors choose to pay cash if the loan process is delayed. Again, reportable transfers require both buyer and seller to furnish information for FinCEN. Stay up to date with your buyer about their financing plans.

#3: Your client is the seller, and either scenario above occurs, leaving your seller unprepared to comply. In reportable transactions, every type of seller must furnish information to FinCEN. For sellers, status does not matter. Whether an individual, corporate entity, or trust, every seller must supply information in a reportable transaction. Communication with the buyer’s agent about this possibility early in the transaction timeline will avoid a last-minute fire drill for your client.

These are examples of common last-minute changes we often encounter—except now, they can cause a transaction to become reportable to FinCEN. As a result, both buyer and seller will be required to furnish information we have not previously collected.

Want to know more? Reach out to us at 812-339-8434 or customerservice@johnbtitle.com. We are happy to help you understand the FinCEN rule and stay informed.