Andy Krantz Discusses the Corporate Transparency Act on Brewed in Monmouth

The Corporate Transparency Act (CTA) has introduced new federal reporting requirements that are changing the landscape for real estate investors and small business owners. To help explain what these changes mean in practice, Andy Krantz, Esq. recently joined the Brewed in Monmouth: The Real Estate Tea podcast to discuss how the law affects individuals and investors who use LLCs to hold property.

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) requires many businesses, including LLCs commonly used by real estate investors, to report Beneficial Ownership Information (BOI) to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). In simple terms, the law requires entities to disclose the individuals who actually own or control the company.

Key Takeaways for Real Estate Investors

Here’s the quick “over coffee” version of what was discussed:

• If you own an LLC, you may need to report who the real owners are.
• If you’re buying property through an LLC, this requirement could apply to you.
• New LLCs have tight filing deadlines, sometimes right after formation.
• Ignoring it can get expensive, with penalties that can add up quickly.

Listen or Watch the Full Interview

What are the FINCEN requirements | Brewed In Monmouth: The Real Estate Tea

Catch the full episode, “What Are the FinCEN Requirements?” from Brewed in Monmouth: The Real Estate Tea, featuring guest Andy Krantz, a real estate attorney with Zager Fuchs in Monmouth County. Hosted by top local real estate agents Kate Raftery of NextHome Peninsula Realty Group and Doreen DeMarco of Berkshire Hathaway Fox & Roach, the podcast highlights local entrepreneurs, real estate insights, and the people who make the Monmouth County community special.

* Watch on YouTube: Click here to view the video
* Listen on Spotify: Click here to stream the audio

 

Video Transcript Summary:

• Co-Host: Welcome to another episode of Bruin and Monmouth. Today we’re joined by Andy Krantz from Zager Fuchs. We’re excited to have Andy back—he’s actually our first returning guest. Welcome back, Andy!
• Andy Krantz: Thanks for having me. I’m glad to be back.
• Co-Host: You’re here to talk about a new rule that could significantly affect the real estate industry. Can you explain what’s coming?
• Andy Krantz: Sure. Beginning March 1, certain residential real estate transactions will need to be reported to FinCEN, the Financial Crimes Enforcement Network. The rule mainly applies when property is purchased in cash by an entity such as an LLC, corporation, or trust, rather than an individual, and there’s no institutional financing involved.
• Co-Host: So if someone is buying a property with a traditional bank mortgage, it wouldn’t apply?
• Andy Krantz: Correct. Traditional financing from a bank or major financial institution is already regulated under anti–money laundering laws. This new requirement focuses on cash purchases made through entities, which regulators believe could potentially be used to hide ownership or move illicit funds.
• Co-Host: What exactly will need to be reported?
• Andy Krantz: The title company—or whoever is acting as the settlement agent—will need to gather and report detailed information about the people behind the entity purchasing the property. That includes names, addresses, dates of birth, and Social Security numbers. They may also need to verify the source of the funds used in the transaction.
  If the buyer is an LLC, anyone who owns 25 percent or more of that entity will generally need to be disclosed.
• Co-Host: Who is responsible for submitting that information?
• Andy Krantz: In most cases, the responsibility falls on the title company handling the closing. They will have to submit the report to FinCEN within about 30 to 60 days after the transaction.
  If they fail to file the report, they could face significant penalties.
• Co-Host: What impact will this have on real estate transactions?
• Andy Krantz: The biggest impact will likely be administrative. Title companies estimate that the reporting process could add nearly three additional hours of work to a transaction. Because of that, buyers and sellers may see additional closing costs, possibly in the range of $300 to $500.
  It shouldn’t necessarily delay a closing if the parties cooperate and provide the requested information, but it does add another step.
• Co-Host: Does the rule apply to all real estate?
• Andy Krantz: No. It focuses on residential real estate, specifically one-to-four-family homes, condos, co-ops, and even vacant land intended for residential development. Larger multifamily properties—those with more than four units—are generally exempt.
• Co-Host: What about people who buy a property in their personal name and then transfer it to an LLC for liability protection?
• Andy Krantz: That’s a common scenario. Many property owners do that if they plan to rent the property and want to protect their personal assets. Under the new rule, those transfers could potentially trigger reporting requirements depending on the circumstances.
• Co-Host: Are there any exemptions?
• Andy Krantz: Yes. For example, transferring property into a revocable trust where the owner is still the grantor is generally exempt. Certain transfers related to divorce or inheritance are also excluded.
• Co-Host: Is this a New Jersey rule?
• Andy Krantz: No, it’s a federal rule, so it applies nationwide.
• Co-Host: When does it take effect?
• Andy Krantz: The rule is currently expected to take effect on March 1, although there are still some legal challenges pending, so there’s a chance it could be delayed again.
• Co-Host: It sounds like something both real estate professionals and buyers should be aware of.
• Andy Krantz: Definitely. For most people, it will just mean providing a little more information during the closing process. But investors who frequently purchase property through LLCs or trusts will likely notice the biggest change.
• Co-Host: Thanks so much for breaking that down for us, Andy.

Contact Zager Fuchs for Guidance

If you have questions about the Corporate Transparency Act, FinCEN reporting requirements, or structuring real estate investments through an LLC, the team at Zager Fuchs, P.C. can help. Contact Andy Krantz and the Zager Fuchs team today to ensure your real estate investments remain protected and compliant with current federal regulations.

Questions About FinCEN or the Corporate Transparency Act?

If you have questions about the Corporate Transparency Act or Financial Crimes Enforcement Network reporting requirements for LLCs and real estate investments, contact Andy Krantz and the team at Zager Fuchs, P.C.. They can help ensure your business and property holdings remain compliant with current federal regulations. Learn more at zagerfuchs.com.

Learn More: For official guidance on Beneficial Ownership Information (BOI) reporting, visit the Financial Crimes Enforcement Network website: www.fincen.gov

Thanks to the Hosts!

Special thanks to Kate Raftery of NextHome Peninsula Realty Group and Doreen DeMarco of Berkshire Hathaway Fox & Roach, hosts of Brewed in Monmouth: The Real Estate Tea, for the insightful conversation about how these new rules affect real estate investors and property owners.