A federal court in Texas vacated the Financial Crimes Enforcement Network’s (FinCEN) 2024 residential real estate reporting rule that required for title companies to report non-financed transfers to entities and trusts.
The FinCEN rule requires title companies to collect and report detailed information about non-financed residential real estate sales to legal entities, including trusts, and shell companies; it did not include sales to individuals. The rule was put into effect as a tool for combating money laundering.
Flowers Title Companies, doing business as East Texas Title Companies, filed a lawsuit in April 2025 stating the rule was unconstitutional. In being required to hand over information without receiving a warrant from FinCEN or being shown evidence pointing to money laundering, the company said it was “being conscripted into performing government surveillance on its clients.”
On Thursday, the US District Court for the Eastern District of Texas vacated the rule, stating it exceeded the agency’s statutory authority. Judge Jeremy Kernodle, a Trump appointee, declared that FinCEN “fails to explain or show how non-financed residential real estate transactions are categorically ‘suspicious.'”
“FinCEN claimed sweeping power to require reporting anytime someone pays cash for a house,” said Luke Wake, an attorney with Pacific Legal Foundation, which represented the title company. “But Congress limited FinCEN to regulating only objectively ‘suspicious’ transactions; that was not a license for the agency to require reports simply because the government might find the data useful.”
FinCEN did not immediately issue a public comment on the ruling.
