While quick to say that people who pay for expensive homes with all cash offers in the millions and who hide their identities behind numbered companies might not be committing fraud, King County wants to know the real names of who is buying real estate, and where that money came from.
King County surrounding Seattle is now enacting a U.S. Treasury Department edict requiring the identities of all home buyers to be revealed to law enforcement officials if a house purchase costs $300,000 or more.
How many houses are purchased through shell companies?
In King County ten percent of houses are purchased this way. The Federal Treasury Department already requires Manhattan and Miami to reveal the real names of people buying homes, and now counties including Seattle, Boston, Dallas, Honolulu and Las Vegas are required to do so as well.
As the Seattle Times observed “The reason is to root out criminals laundering money through home purchases. For example, someone could steal some money, buy a home with it, and then sell the home, and voilà – the proceeds from the sale can be put into a regular bank account. That type of criminal activity doesn’t get as many headlines here as it does in places like Manhattan and Miami (or in nearby Vancouver, B.C.), but the Seattle area remains among the most lucrative real estate markets in the country – a potentially attractive place for criminals to park their money.”
The approach appears to be effective-so called “secret buyers” vanished from the Miami market. However housing prices remained stable, suggesting that shell company buyers were simply using “straw buyers” or mortgaging a small portion of the housing price to duck oversight.
The U.S. Treasury Department’s edict is subject only to single family houses and does not apply to commercial real estate, residential apartment or office buildings.
A YouTube video below shows purchases of real estate in New York City by secret buyers. In 2014 63% of purchases over five million dollars were transacted with shell companies or secret buyers.
