A Texas title company’s federal lawsuit has successfully struck down a new nationwide real estate reporting rule, which had forced title companies to file detailed reports on certain non-financed residential real estate transfers.
Flowers Title Companies LLC, headquartered in Tyler, argued the reporting requirements have proved burdensome and effectively conscripted title companies as government surveillance agents.
The dispute is far from over, as the case has been appealed to the Fifth Circuit Court of Appeals in New Orleans.
Background
In 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) finalized a new rule requiring title companies to collect information and report details pertaining to nonfinanced transfers of residential property—when ownership is transferred to an entity or trust.
This reportedly includes sensitive personal information they must now gather from clients.
Exemptions include transfers “resulting from the death of an individual” or transfers “incident to divorce.”
FinCEN first began issuing geographic targeting orders (GTOs) in 2016, which required Flowers Title to file reports and maintain records on such transfers in select metropolitan areas of the U.S. The new rule gives nationwide scope to FinCEN’s real estate reporting requirements.
FinCEN stores collected information in a database that is accessible to federal, state, and local law enforcement. The stated purpose is to help law enforcement gather information when investigating possible violations of law or regulation—sold as an “Anti-Money Laundering Regulation.”
The new rule was finalized on August 29, 2024, and took effect on December 1, 2025.
FinCEN asserts that the federal Bank Secrecy Act authorizes these requirements, as it allows rules mandating disclosure of “any suspicious transaction relevant to a possible violation of law or regulation.”
According to court filings, “Congress enacted the Bank Secrecy Act in 1970 to combat money laundering primarily in international transactions. Since then, Congress has expanded the statute’s reach to include certain ‘suspicious’ domestic transactions.”
The statute also authorized the secretary of the treasury to prescribe regulations to carry out the act’s purposes.
The Lawsuit
In April 2025, Flowers Title filed a lawsuit in the U.S. District Court for the Eastern District of Texas against FinCEN, the Treasury Departments, and Treasury Secretary Scott Bessent in his official capacity.
Flowers Title challenged the new rule as unlawful under the Administrative Procedure Act (APA), arguing the rule exceeds FinCEN’s statutory authority provided by the Bank Secrecy Act. If the act is found to authorize the rule, the company then contends the act is unconstitutional.
According to the lawsuit, Flowers Title “objects to being conscripted into performing government surveillance on its clients. The company objects to FinCEN’s demand that it must hand over its records without a warrant.”
The company contends the rule effectively conscripted title companies as surveillance agents, forcing them to collect and transmit sensitive information in ordinary intrastate transactions and imposing significant compliance costs. The collection of such data is not relevant to facilitating closings under state or local law.
“[T]here is nothing inherently suspicious about a buyer using his or her own money,” reads the lawsuit. “Buyers who can afford to purchase property without taking out a loan often prefer to do so for many legitimate reasons.”
“Nonetheless, the Final Rule deems commonplace real estate transactions inherently ‘suspicious’ because it is conceivable the government might glean information of relevance to possible statutory or regulatory violations if title companies are required to systematically report the details of all such transactions,” the suit continues.
Flowers Title asked the court to declare the new rule unconstitutional, set it aside, and block the defendants from enforcing it against them.
The Ruling
On March 19, the court agreed with Flowers Title, ordering the rule be vacated.
The court reasoned that FinCEN failed to explain or show how non-financed residential real estate transactions are categorically “suspicious.”
Vacatur—a latinized legal form of “vacature”—is the only statutorily prescribed remedy for a successful APA challenge to a regulation. The Court found that vacatur would not be unduly disruptive since the rule had only been in place since December 1, 2025.
By granting vacatur, “it would do nothing but re-establish the status quo absent the unlawful agency action,” reads the opinion.
On May 11, the defendants appealed this decision to the Fifth Circuit Court of Appeals in New Orleans.
The appellate court must decide whether FinCEN acted within its statutory authority and whether the lower court properly invalidated the rule nationwide.
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