FinCEN entity-purchase reporting: do we build it into our closing service or hand every file to buyer's counsel?

What did the two attorneys quote for building the intake and the certification language? I have been trying to work out what a procedures package like that actually costs, because every service idea I look at on the compliance side seems to start with a legal spend I can't size yet.

The mechanism matters for your decision. The rule identifies a set of people who could be the reporting person on a covered transfer and then works down a cascade, so the person who ends up filing is determined by function at that closing rather than by job title. Written designation agreements are contemplated in that framework. Confirm the current text, the covered-transfer definitions and the timing with counsel in writing before you price anything, because the details drive your exposure more than your process does.

Two things should decide this for you rather than the revenue.

First, who is doing the closing in your state. Some states require an attorney to conduct residential closings and others run them through title or escrow agents, so in an attorney-closing state your shop is likely performing work under attorney supervision already, and building it in is a smaller step. In a title-agent state you may be the functional closer, which changes both the analysis and your insurance conversation.

Second, collection versus judgment. Gathering identifying information from an entity buyer is process work you can staff. Deciding whether a given transfer is covered, whether an exemption applies, and what a trust structure means for beneficial ownership is legal judgment. Firms that get burned usually do so by letting staff make the second call while pricing it as the first.

At 40 files a year, the E&O endorsement cost and your counsel's per-file review fee are the whole decision. Get both in writing, then compare against your referral fee alternative.

We priced ours at $275 a file and lost one investor client over it. Still cheaper than guessing on a federal filing.

Genuine question from the licensing side, thatch. Does anyone at your shop need a specific credential to collect and file this, or is it a task an unlicensed coordinator can do as long as an attorney signs off on the procedures? I ask because my exam prep material says nothing about it and I expect clients to ask me in year one.

Half my owners are moving rentals into entities right now, so somebody is going to have to answer this on the management side too.

On the capital side the buyer is almost always an LLC with a fund above it, and the sponsor's counsel is the only party who actually knows the ownership chain. When I have been on the buy side of a small residential portfolio the closing agent kept asking us for organizational documents and getting the wrong version. Handing that to buyer's counsel isn't laziness, it's the only party with the org chart in front of them.

The thing that strikes me reading this is that the whole service exists because a rule appeared. If regulation keeps arriving at this pace, is compliance coordination a durable service line for a small shop, or does it get absorbed by whoever runs the closing software in three years?