Title insurance companies who have recently been charged by the US governement to reveal the identity of anonymous buyers of luxury real estate are now asking for limits to the disclosure requirements before the program takes effect in March this year.
The American Land Title Association (ALTA), a group composed of more than 5,500 title companies nationwide, asked officials of the Treasury in a letter dated January 13 to restrict the transparency program to specific residential deals and sought exemption in cases where a third party holds part of the money involved in the transaction.
"In some instances a minimal amount of the purchase price may be held by a third party... in these situations, a title insurer could be unaware that a specific transaction is covered by the order," wrote ALTA CEO Michelle Korsmo in the letter addressed to the director of the Treasury's Financial Crimes Enforcement Network (FinCEN). "We urge FinCEN to use a resonable and good-faith test for determining insurers' compliance."
To track criminals investing illegally-obtained money into luxury properties especially high-end apartments in New York and Miami, the Treasury mandated last January 13 that title insurance companies should track down and fully disclose the identities of cash buyers who purchase properties through limited liability corporations and shell companies. The program will apply to sales in New York and Miami that are above $3 million.
Because purchasing title insurance is a common practice in real estate, title insurance companies will bear the load of the Treasury's new program.
Title insurance is a $14 billion industry in the US. All buyers of properties, whether of luxury apartments or a starter home, buy title insurance to protect themselves from losses that can be caused by defects in the title. In New York alone, $830 million worth of premiums were purchased in the first nine months of 2015.
