Miami-Dade Transactions Under Close Scrutiny

There's never a dull moment in the world of title insurance and real property transactions! Last week, an announcement from the Department of Treasury hit the press and within minutes emails were flying back and forth.

What is this all about? Treasury is investigating transactions in which property is purchased for the purpose of laundering money for illegal purposes. In Florida, Treasury is focusing (for now) on transactions in Miami-Dade County that meet the following criteria:

1. Sale price more than $1,000,000
2. Residential property (probably limited 1 to 4 person dwelling unit)
3. No financing, i.e., a "cash" transaction (some nuance in the way the Treasury defines "cash")
4. Purchaser is an entity (LLC, corporation, partnership, etc.)

If a transaction meets this criteria, the title insurance company (through its agents) must collect and report certain information about the person representing the entity at the closing AND the owners of beneficial interests of at least 25% in the entity. If the purchasing entity is a limited liability company, the name, address and taxpayer identification number of all of the members must be reported.

The reporting requirement begins March 1 and expires August 27, 2016.

BEFORE YOU ALL START FIRING OFF EMAILS WITH QUESTIONS...

The Fund is working closely with Old Republic to get clarification of the order (officially called the "Geographic Targeting Order") so that we are as clear as possible about what transactions are covered, what information is required and what procedures must be followed.

We will have all of this information communicated to you in advance of the effective date (March 1) so that if you have a pending transaction meeting the criteria, you will know what is expected and required.

In the meantime, here is a link to the press release from Treasury (it's interesting). The internet is chock-full of alerts and memorandum from various industry groups and so there is plenty for you to read if you desire. But I assure you that The Fund and Old Republic are on top of this situation and will give you the guidance you need.

Turning to Florida rule-making: The unlawful inducement rule issued by the Department of Financial Services will be effective on February 9, 2016. The purpose of this rule is to provide specific guidance as to activities that violate Secs. 626.9521 and 626.9541(1)(h)3, F.S., so that the Department of Financial Services can be more successful in its enforcement actions. Generally, this is Florida's version of the RESPA "kickback" and "unlawful inducement" provisions with which we are all familiar. Here is a link to the text of the rule. When it is finalized, we will update the link. There are 18 listed prohibited activities; the list is not meant to be exclusive and exhaustive – merely illustrative of the types of activities that are prohibited. There is also a short list of marketing activities that do NOT violate the statute. Please review and refresh your memory as to the types of activities that should not be allowed to go unnoticed and without challenge. This will be a topic covered at Assembly at one of the breakout sessions. On this topic, I invite your emails with comments and questions!

That's all for this week. As always, thank you for your support of The Fund.

Best Regards,

Melissa Jay Murphy
Senior Vice President and
General Counsel