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lawsuit filed in the Eastern District of Texas aims to block a new Treasury reporting rule that requires title companies to collect and report detailed information about non-financed residential real estate sales. The rule, finalized by FinCEN in 2024, would require title companies to report on cash purchases, regardless of purchase price, as well as transfers involving trusts or shell companies.

    East Texas Title Companies, a mid-sized company based in Tyler, Texas, claims that the rule is burdensome and unconstitutional. The company argues that it handles thousands of real estate closings each year and would be required to collect and report sensitive information about its clients without a warrant. East Texas Title Companies also contends that the rule is an overreach of FinCEN's authority and violates the separation of powers.

    The reporting requirement would capture cash transactions as low as $200, which could lead to hefty fines and even criminal charges if not complied with. The company claims that complying with the rule would be time-consuming and costly, requiring legal counsel and staff time to create new procedures for tracking and ensuring proper reporting.

    FinCEN asserts statutory authority for the rule under a provision of the Bank Secrecy Act, but East Texas Title Companies argues that this is an unconstitutional delegation of legislative power. The company points to the nondelegation doctrine, which prohibits Congress from surrendering its lawmaking responsibilities to other entities.

    The case is similar to a previous lawsuit filed by Flowers Title Companies LLC d/b/a East Texas Title Companies v. Bessent, which challenged the Corporate Transparency Act (CTA) reporting requirement. In that case, the court granted a preliminary injunction and stay in Smith v. U.S., prohibiting FinCEN from enforcing the CTA.

    East Texas Title Companies is seeking an order setting aside the rule on the basis that it is unlawful. If the rule goes into effect as planned in December 2025, title companies would be required to report on cash transactions without a warrant, raising concerns about the Fourth Amendment's protection against unreasonable searches and seizures.