If the purchase of a one- to four-family property by a corporation, LLC, or partnership (entity) was to be accomplished by paying all cash, it was always a business decision and a private matter. Since March 1, 2016, however, significant disclosure requirements regarding the identity of the members of the buyer vehicle (beneficial owners) and the source of the acquisition funds prevail for the cash purchase of high-end residential properties in select counties in New York, California, Florida, and Texas. (For corporations, partnerships or similar business entities, each individual who, directly or indirectly, owns 25 percent or more of the equity interest of the purchaser [with such individuals being defined as a “beneficial owner”] must be provided. If the purchasing entity is owned by another entity, then information for each individual beneficial owner of the ultimate parent entity must be provided. For limited liability companies, all members, including 25 percent beneficial owners, must be reported.)
While the identity of sundry principals was once effectively shielded behind the purchasing entity, it must now be disclosed. While none of the information reported is intended for public dissemination—it is solely for analysis by the Financial Crimes Enforcement Network (FinCEN) and corresponding agencies—should a violation appear, there is no assurance that their identity will remain confined to FinCEN or a related agency.