Earlier this year, a federal district court in Flowers Title Companies, LLC v. Bessent vacated FinCEN’s Residential Real Estate Reporting Rule. The court concluded that FinCEN exceeded its authority under the Bank Secrecy Act when it attempted to impose nationwide reporting requirements for certain non-financed residential real estate transfers involving entities and trusts.

The federal government has now filed a notice of appeal to the United States Court of Appeals for the Fifth Circuit, seeking review of the district court’s decision. The appeal means that the future of the reporting rule remains uncertain.

For now, however, the practical result remains the same. FinCEN has advised that reporting persons are not currently required to file real estate reports and are not subject to liability for failing to do so while the district court’s order remains in effect.

The appeal is particularly significant because federal courts have reached differing conclusions regarding FinCEN’s authority to adopt the rule. While the Texas court concluded that the agency exceeded its statutory authority, a federal court in Florida upheld the rule.

Real estate lawyers should continue to monitor developments closely. Although the reporting requirements are currently on hold, they could be reinstated if the Fifth Circuit reverses the district court or if a stay is entered during the appeal process.

For now, the rule remains vacated, but the litigation is far from over.