Disclosure Rules Around All-Cash Buyers Struck Down

A federal judge dealt a blow to Washington’s latest attempt to shine light on opaque real estate deals, striking down a rule that would have forced disclosure of all-cash homebuyers nationwide.

The decision invalidates a 2024 regulation from the Treasury Department’s Financial Crimes Enforcement Network that aimed to track beneficial owners behind shell companies and trusts purchasing residential property, Bisnow reported. The rule would have required buyers in non-financed transactions to submit personal data — including Social Security numbers — to a federal database.

U.S. District Judge Jeremy Kernodle ruled the agency overstepped its authority, writing that regulators failed to justify why all-cash residential transactions should be broadly treated as suspicious. The opinion undercuts a years-long federal push to expand anti-money laundering oversight in real estate, a sector long viewed as vulnerable to illicit capital flows.

The decision was first reported by Reuters.

The shot-down rule marked a significant escalation from FinCEN’s earlier geographic targeting orders, which since 2016 applied only to high-risk markets like Manhattan and Miami and only to deals above $300,000. The 2024 expansion would have gone nationwide and removed the minimum purchase threshold, sweeping in an estimated 800,000 transactions annually.

Industry players braced for the compliance burden. Title companies and attorneys argued the rule effectively deputized them into federal surveillance roles, exposing them to liability while alienating privacy-conscious clients.

A lawsuit brought by the Pacific Legal Foundation on behalf of a Texas title agency framed the mandate as both unconstitutional and commercially impractical, particularly in fast-growing Sun Belt markets where cash deals are common.

The ruling lands at a moment when cash remains a major force in housing. Approximately 28 percent of homebuyers paid all-cash last year, according to the National Association of Realtors, while about 22 percent of purchases involved corporate entities such as LLCs, precisely the structures regulators sought to pierce.

Treasury officials argued the crackdown was necessary, citing estimates that $2.3 billion in illicit funds flowed through U.S. real estate between 2015 and 2020. But with the rule now vacated, oversight reverts to the narrower, location-specific regime.

— Holden Walter-Warner