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Authored By: Ryan A. Featherstone, Esq. rfeatherstone@dunlapmoran.com
Just a few short months ago settlement agents in Florida became obligated by the Florida government to obtain an affidavit from each and every Buyer we work with attesting to the fact that he/she is not a foreign principal of a certain seven (7) listed countries, and if a Buyer is such a foreign principal, additional analysis applies to determine if the transaction can even proceed. This has proven to be a large burden on settlement agents and Realtors. The hope was that this would be the last change in the closing industry for some time related to required due diligence involving the parties to a transaction. However, as of October 22, 2023, we have yet additional red tape to deal with, this time coming from the Federal government.
Effective October 22, 2023, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury issued a new Geographic Targeting Order (GTO) that incorporates certain real estate transactions for properties located in Sarasota and Manatee Counties. For the applicable transactions, new reporting requirements through FinCEN’s online portal will need to be followed after the transaction closes, with certain information about the transaction and the buyer(s) required to be uploaded.
Transactions that meet ALL the following parameters are now subject to the GTO, resulting in additional reporting requirements to FinCEN:
1) Purchase of residential property (1-to-4 family), including condominiums and co-ops; and
2) Purchase completed between November 21, 2023 through April 18, 2024 (NOTE: the GTO will likely be extended); and
3) Purchase price of $300,000 or more; and
4) Buyer is a legal business entity (e.g. LLC, corporation, partnership) EXCEPT for (1) a business listed on a securities exchange regulated by the Securities Exchange Commission (SEC); or (2) a self-regulatory organization registered with the SEC, or an entity solely owned by such a business; and
5) Purchase is made without a bank loan or other similar form of institutional financing (i.e. cash deals); and
6) Buyer essentially uses any conventional form of funding of the transaction (e.g. wire, certified check, cashier’s check, etc.).
Settlement agents are also required to store this information themselves for five (5) years from the last day that the GTO is effective (including any renewals thereof), however as stated above, the renewals will likely continue indefinitely.
Therefore, we have yet another burden imposed upon settlement agents for both the collection and storage of the required information, as well as the correct reporting of the information to FinCEN, along with any responses from FinCEN that will have to be dealt with. As this plays out, it is possible that settlement agents handling affected transactions may charge some additional fees at closing due to the extra time involved in dealing with this governmental red tape.
If you happen to be working on any transactions that may be subject to the new GTO, be sure that you and your clients speak with a Florida licensed real estate attorney.
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