Business associations find the Patriot Act may result in some burdensome regulations threatening their ability to do business. These groups endorsed amendments limiting the federal government’s ability to access confidential business records. One of the organizations to sign the endorsement was the National Association of Realtors (NAR).
NAR says that real estate corporate profits and agent revenue in second-home and vacation communities have dropped off due to new government security policies.
In a letter to U.S. Senator Arlen Specter (R-Pa.), who chairs a committee reviewing the Patriot Act, NAR and other business groups complained that confidential records about customers and employees, trade secrets and other proprietary information can be obtained too easily by government officials.
NAR identified two specific areas of concern for the real estate industry.
First, the definition of “financial institutions” includes “persons involved in real estate settlements and closings” and is too broad.
The other concern is that Patriot Act provisions for access to business records are vague and can result in unwarranted seizures.
Real Estate settlements and closings may eventually be regulated under anti-money laundering rules and the federal government may seize records with little state jurisdiction, NAR warns.
NAR outlines several points of which real estate practitioners should be aware.
Although the Patriot Act focuses on money laundering activities, there is no need for real estate professionals to implement anti-money laundering programs at this time, NAR says. Financial institutions will be required to implement a customer identification program and may ask a real estate professionals client for personal information to complete a financial transaction.
Both NAR and PAR (Pennsylvania Association of Realtors) acknowledge realtors have responsibilities under the Patriot Act. Their responsibilities, however, differ depending on the type of transaction and the level of involvement by the broker or agent they say.
John Cognetti, president of Hinerfeld Realty Company in Scranton and active member of several industrial realty organizations, says the real estate sales process will get more sophisticated, requiring more controls, but he does not feel real estate business is threatened.
Pennsylvania is already on the forefront of regulating real estate transactions as part of consumer protection efforts, Cognetti says, so many of the safeguards of the patriot act are already in place.
Cognetti does not hear many complaints by real estate professionals concerning the Patriot Act at this time. He adds that may support it.
One area that will be an immediate concern, Cognetti says it will become necessary to define, in detail, where to place the responsibility off all the stakeholders involved in the real estate trade. Banks, realtors, local governments, buyers, sellers and title companies will all have to evaluate their responsibilities.
Cognetti does not for see the cost of businesses rising – only the stack of necessary paperwork. This change is just another in a long list of changes over the last 10 to 15 years.
– Courtesy of the Northeastern Pennsylvania Business Journal
