T
he information provided in this column is for general understanding purposes only and should not be considered as legal advice. Readers with specific legal issues should consult an attorney to address their unique circumstances.Big Brother, Federal Government Regulation, is expanding its reach into residential real estate transactions, following the Corporate Transparency Act (CTA). The Residential Rule, issued on February 7, 2024, aims to combat money laundering by increasing transparency in non-financed residential real estate deals involving certain entities and trusts. This rule requires professionals, including attorneys, to file a report with FinCEN, providing detailed information about transactions and parties involved.

    While the CTA and Residential Rule share some similarities, there are key differences. The CTA applies broadly, whereas the Residential Rule focuses on non-financed residential real estate deals involving certain entities and trusts, essentially targeting cash transactions. The Residential Rule replaces the Suspicious Activity Report (SAR) with a streamlined Real Estate Report, which combines beneficial ownership information and transactional data.

    The rule will require disclosure of trust settlors, grantees, trustees, and beneficiaries, effectively ending the long-held notion that trusts are private entities. The Residential Rule applies to residential real estate, defined as properties containing structures for one to four families or vacant land zoned for such construction. Many communities, including Huntsville, are pushing for zoning regulations, raising questions about their purpose.

    The American Bar Association and other real estate organizations have opposed the proposed rule, citing concerns over confidentiality and attorney-client privilege. The Texas Disciplinary Rules of Professional Conduct also prohibit attorneys from disclosing confidential information without client consent. If adopted, the Residential Rule could become effective as early as next year, with a 2026 implementation date pending finalization.

    As we head to the polls, it's essential to remember that our elected representatives will shape the future of government regulation and taxation. By voting for those who prioritize limited government intervention and reduced taxation, we can protect our rights and freedoms from further erosion.