The Patriot Act and Real Estate Transactions: Real Estate Radio Hour Legal Minute, March 15, 2014



My March 15 Legal Minute covers a somewhat obscure issue in real estate law which is contained in one of the more controversial federal laws on the books today; namely the Patriot Act.  You can listen to the clip here.


In response to the terrorist attacks of September 11th, Congress enacted the USA Patriot Act on October 26, 2001. The Act was intended to give law enforcement greater powers, create new and enhance existing criminal penalties, and place additional burdens on financial institutions and other parties.


Did you know that the Act also impacts real estate transactions?   It’s true.  The Act provides that “any person who, in the course of a trade or business, in which such person is engaged, receives currency in excess of $10,000 in one transaction (or two or more related transactions) shall, except as otherwise provided, make a report of information with respect to receipt of the currency.” This section went into effect on January 1, 2002, and requires that any party who receives more than $10,000 in any transaction file a report with the U.S. Treasury Department.  This situation arises most often in commercial real estate transactions.


As a result of this new requirement, it is now commonly accepted practice to include this provision within the seller representations and warranties in a commercial purchase agreement:



Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.


 As always, archived segments are available here.

Posted in Blog, Real Estate Law, Real Estate Radio Hour Legal Minute