The FinCEN Rule in Limbo: Key Questions for the Title Industry

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The legal and regulatory future of FinCEN’s Residential Real Estate Rule remains uncertain following a federal court decision in Texas vacating the rule and the government’s subsequent appeal. While FinCEN recently clarified that title companies are not currently required to file reports while the court order remains in effect, the litigation has raised significant questions for the title industry about timing, compliance obligations and what comes next.

The uncertainty has been compounded by additional legal challenges in other jurisdictions, including a separate appeal involving Fidelity National Financial in the 11th Circuit, as well as another lawsuit filed in the U.S. District Court for the District of Puerto Rico. As multiple federal courts weigh questions surrounding FinCEN’s authority to implement the rule, title companies are closely watching for guidance on whether the reporting requirements could eventually return and how long the legal process may take.

To help provide clarity on the current landscape, Steve Gottheim, ALTA’s general counsel, answers questions about the status of the litigation, the appeals process and what title professionals should be monitoring in the months ahead.

What is the current status of FinCEN’s Residential Real Estate Rule following the Texas court ruling?

• The federal court in Texas vacated the rule, so it is currently not in effect. FinCEN has stated that while the court order remains in effect, title companies “are not required to file Real Estate Reports with FinCEN and are not subject to liability if they fail to do so.”

Does the ruling completely vacate the rule nationwide, or are there still unresolved legal questions?

• The Texas court vacated the rule under the Administrative Procedure Act. If the ruling is ultimately upheld on appeal, the rule would effectively be removed from the Code of Federal Regulations.

Is there a chance the rule could come back into place during the appeal process?

• Likely not. While it is common for parties to seek a stay of a lower court order pending appeal, the timing here makes that less likely. To obtain a stay, the government would need to show that it is likely to succeed on appeal, that it would suffer irreparable harm without a stay, that its harm outweighs the harm to other parties and that a stay would serve the public interest. Given that the government waited nearly the full 60 days to appeal, it would be difficult to argue irreparable harm. Additionally, the government could still issue Geographic Targeting Orders to capture much of the reporting activity if it chose to do so.

What did FinCEN clarify in its recent guidance to the industry?

• FinCEN clarified that if the court’s order is overturned and the rule becomes legally effective again, reporting persons will not be required to retroactively file reports for covered transactions that closed while the court order was in effect. That clarification is important because it confirms title companies do not need to collect or preserve reporting data for transactions closing during the current appeal period.

What does FinCEN’s decision to appeal signal about the government’s commitment to the rule?

• The Department of Justice decides whether to appeal a district court ruling, so the appeal suggests broader support within the administration for maintaining visibility into residential real estate transactions. Even if FinCEN ultimately loses the appeal, the agency could attempt to draft a revised rule in the future.

Realistically, how long could the appeals process take before the industry has meaningful legal clarity?

• A reasonable estimate is somewhere between eight and 12 months. Under the federal appellate rules, the briefing process alone can take roughly 70 to 98 days. After briefing is complete, the court then decides whether to schedule oral arguments, which could add several more months. Once oral arguments occur, there is no required timeline for the court to issue a decision, although opinions often take at least a couple of months after arguments are heard.

What procedural milestones should title companies watch during the appeal?

• The most important milestones will be when briefs are filed and whether oral arguments are scheduled.

Could the Fifth Circuit issue a decision quickly, or are appeals like this typically lengthy?

• It would be very unusual for a case like this to move quickly. Appeals involving significant administrative and regulatory questions generally take time.

If the case eventually reaches the Supreme Court, how much longer could uncertainty continue?

• Unlike federal appellate courts, the U.S. Supreme Court chooses which cases it will hear. If the Supreme Court agrees to take the case, a final decision likely will not come until spring 2028. If the court declines to hear the case, the matter could effectively conclude sometime in fall 2027.

We now have multiple federal court challenges involving the same rule. How unusual is that?

• It’s actually very common to see different federal courts considering similar legal questions at the same time.

Does Fidelity’s appeal increase the likelihood that appellate courts, or eventually the Supreme Court, will need to resolve the issue?

• If the 11th Circuit reaches a different conclusion than the Fifth Circuit, that would increase the chances the Supreme Court could ultimately become involved.

Could we eventually see different federal circuits reaching different conclusions about FinCEN’s authority?

• Yes. There is also an active case in Puerto Rico, which would fall under the First Circuit if appealed. It is certainly possible for different federal appellate courts to reach different conclusions on these issues.

Could FinCEN decide it is easier to revise the rule rather than continue litigating the current version?

• Probably not. The federal government likely does not want to leave the Texas opinion standing because of the broader implications it could have beyond real estate reporting. The ruling could potentially affect future efforts to bring other financial markets, including cryptocurrency, into the financial crimes reporting framework.

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Contact ALTA at 202-296-3671 or communications@alta.org.