Treasury Department request may complicate real estate sales

Background checks may soon be required in real estate sales.

As anyone who has ever bought or sold a home knows, real estate transactions can be incredibly complicated and time-consuming. When a property with a relatively niche market is involved - for example, luxury condominiums, multi-family housing units or commercial property - the stakes grow even higher.

In these situations, buyers and sellers alike often find themselves at capacity just managing the basics. Matching the right person with the right property, organizing financing and overseeing closing can be difficult enough.

Depending on the outcome of a lobbying effort directed at the U.S. Department of the Treasury, though, these real estate transactions may be on the cusp of becoming even more complex.

Combating foreign money laundering

The concern surrounds foreign nationals who make real estate purchases in the United States. A recent investigative series in The New York Times revealed that some wealthy foreign buyers have been using shell companies to purchase real estate while concealing their true identities. While many of these purchases are legitimate, some have been used to launder money from criminal enterprises.

The proposal would ask real estate brokers and others involved in the closing process to verify the true identity of a buyer before proceeding with a sale. In addition, potential buyers would be subject to an anti-money-laundering screening, which includes verifying the source of the funds that will be used to purchase the property.

These due diligence protocols were actually passed into law in 2001 as part of the Patriot Act. However, the real estate industry was exempted from the regulations in 2002. The Treasury Department is now being asked by several nonprofit organizations to repeal that exemption.

Getting help from an attorney

Regardless of what happens, it is important to remember that this is just one of the myriad issues that can complicate a real estate transaction. In truth, most real estate matters - whether residential or commercial, single-family or multi-unit - are too complex for even a well-educated person to manage on his or her own.

When you're selling a piece of real estate, the last thing you want is for a deal to fall through at the last minute because of an issue with the buyer or his or her financing. When you're buying, you want to make sure that you're getting a fair deal and are being made aware of any potential issues with the property.

It is always a smart idea to get help from an experienced attorney in any real estate transaction. The attorneys at Chester & Shein are well-equipped to assist with any real estate matter, including purchases and sales, leasing and financing.

Keywords: real estate, sales, Treasury Department