A federal court in East Texas has vacated FinCEN’s residential real estate reporting rule, creating immediate questions for title companies, Realtors, and settlement professionals who had already begun building processes around it.
The March 19 ruling in Flowers Title Company v. Bessent held that the rule was unlawful and ordered it vacated, even though it took effect on March 1.
At first glance, that sounds simple. If the rule has been vacated, reporting stops.
But the bigger issue is what happens next.
Two other district courts, one in North Texas and one in Florida, have reached different conclusions on FinCEN’s authority, and have said that FinCEN’s Residential Real Estate Reporting Rule is lawful and is enforceable. That split makes an appeal likely, even if the timing is unclear.
Parallels can be drawn to the Corporate Transparency Act (CTA) litigation in 2024 and 2025, as a reminder that things can change quickly. In that case, the same East Texas court found the CTA unconstitutional, but a higher court stepped in and put it back into effect while the case continued. That happened within weeks.
For title companies, the parralles to the CTA create a real operational challenge. Many have already built processes to identify reportable transactions, collect information, and prepare for reporting. If they stop now, they may have to restart quickly. If they keep those processes in place, they may be continuing work that is not currently required.
That is why this is becoming less of a simple legal update and more of a risk assessment decision.
Some companies may decide to stop collecting and reporting unless and until FinCEN or a higher court says otherwise. Others may choose to continue collecting and reporting pursuant to FinCEN’s Residential Real Estate Reporting Rule until further guidance is received from FinCEN.
For Realtors, the impact is indirect but still important. Changes in title company compliance procedures can affect transaction timelines, documentation, and client communication, especially in deals involving non-financed acquisitions by non-exempt entity or trust buyers.
From TTIC’s perspective, this is a fluid situation that deserves close attention rather than a rushed conclusion. Our underwriting counsel team is actively monitoring the courts, the appeal process, and any guidance that may follow, and we will provide updates and direction in a timely manner as developments unfold. If you have immediate questions or concerns about how this may affect your transactions or reporting processes, please contact your TTIC underwriting counsel team.
For now, the clearest takeaway is this: the rule has been vacated, but the situation could change quickly. Title companies should stay closely aligned with their underwriters and legal counsel in determining how to proceed.
