Open Forum

I've been digging into the new FinCEN Real Estate Reporting Rule and specifically the reporting cascade, and I ran into an interesting question around Tier 6: "the person who provides an evaluation of the status of title."

Most transactions will obviously be captured much earlier in the cascade (settlement agent, settlement statement preparer, deed recorder, title insurer, etc.). But Tier 6 appears to exist as a backstop for transactions that bypass the traditional closing structure.

According to the FinCEN FAQ:

I.15. The sixth tier of the reporting cascade is the person that provides an evaluation of the   status of a title.  What does it mean to evaluate the status of a title?

Providing an evaluation of the status of a title refers to the process of verifying ownership and identifying potential defects in the title to specific property.  This typically results in the creation of a document that is a lawyer's professional assessment of a property's ownership status and any potential claims or encumbrances against it. [Issued February 13, 2026] 

This made me start thinking about how broadly Tier 6 could apply and where the line is between a simple title search and an "evaluation of title status."

A couple of questions came to mind.

First, how should we interpret the FAQ language?

If interpreted functionally, verifying ownership and identifying defects sounds very similar to what a title searcher or abstractor does.

If interpreted more narrowly, FinCEN seems to describe a lawyer's professional title opinion, which would exclude most title searches.

So the question becomes:

Does Tier 6 apply only to formal attorney title opinions, or could it also apply to title examiners/searchers who produce written reports identifying liens and chain of title issues?

Second, I started thinking about the kinds of transactions where Tier 6 might actually become the reporting tier.

For Tier 6 to activate, every earlier tier would have to be absent, meaning:

• No settlement/closing agent

• No settlement statement

• No deed recorded

• No title insurance

• No professional funds disbursement

One scenario I imagined:

An investor orders a title search on a property they're considering buying. Later, they purchase the property in a private cash transaction using an LLC, prepare their own deed, transfer funds directly to the seller, and never record the deed.

In that scenario, the only professional service provider involved might be the title searcher who evaluated the property beforehand.

Obviously this would be an unusual situation, but Tier 6 seems designed specifically for edge cases where transactions are structured to bypass the normal closing ecosystem.

I also wondered about a more modern wrinkle.

If someone uses AI-powered title search/examination software to evaluate a property and generate a report identifying ownership and potential defects, does that technically qualify the software company as "providing an evaluation of title status"?

My instinct is that this would be extremely unlikely to trigger reporting obligations for a software provider, but the language of Tier 6 does raise interesting questions about how regulators might interpret automated title analysis tools as they become more common.

So I'm curious how others are interpreting Tier 6:

• Do you think FinCEN intended this tier to apply only to attorney title opinions, or more broadly to anyone evaluating title status?
• Are title searchers on the hook for transactions they may have zero knowledge of taking place? Any title searchers out there? Are you taking any steps to prepare or changing any of your policies or procedures to protect yourself?
• Do you think an AI title search/examination software company could be obligated to file a FinCEN report?
• Can you think of more realistic scenarios where Tier 6 might actually become the reporting tier?

My sense is that Tier 6 will probably rarely be the actual reporting tier, but the wording raises some interesting edge-case questions.

Would love to hear how others are interpreting it.

Cheryl,

You raise an interesting question. But since a conveyance has to actually occur in order to trigger reporting, I think FinCEN would be hard pressed to come back on an innocent attorney who examined a chain of title (or, more importantly, an abstract of title) and made an opinion on the status of the state of title months before a contract was entered into. If the attorney was not involved in the later sale or had no knowledge of a later sale, I don't know if s/he would qualify as a reporting entity.

But that raises an even more interesting point (especially since I work in Texas). What about the sale of mineral rights UNDER a residential property or airspace rights OVER a residential development? I can see a lot of scope creep in the future of this rule.

I've been digging into the new FinCEN Real Estate Reporting Rule and specifically the reporting cascade, and I ran into an interesting question around Tier 6: "the person who provides an evaluation of the status of title."

Most transactions will obviously be captured much earlier in the cascade (settlement agent, settlement statement preparer, deed recorder, title insurer, etc.). But Tier 6 appears to exist as a backstop for transactions that bypass the traditional closing structure.

According to the FinCEN FAQ:

I.15. The sixth tier of the reporting cascade is the person that provides an evaluation of the   status of a title.  What does it mean to evaluate the status of a title?

Providing an evaluation of the status of a title refers to the process of verifying ownership and identifying potential defects in the title to specific property.  This typically results in the creation of a document that is a lawyer's professional assessment of a property's ownership status and any potential claims or encumbrances against it. [Issued February 13, 2026] 

This made me start thinking about how broadly Tier 6 could apply and where the line is between a simple title search and an "evaluation of title status."

A couple of questions came to mind.

First, how should we interpret the FAQ language?

If interpreted functionally, verifying ownership and identifying defects sounds very similar to what a title searcher or abstractor does.

If interpreted more narrowly, FinCEN seems to describe a lawyer's professional title opinion, which would exclude most title searches.

So the question becomes:

Does Tier 6 apply only to formal attorney title opinions, or could it also apply to title examiners/searchers who produce written reports identifying liens and chain of title issues?

Second, I started thinking about the kinds of transactions where Tier 6 might actually become the reporting tier.

For Tier 6 to activate, every earlier tier would have to be absent, meaning:

• No settlement/closing agent

• No settlement statement

• No deed recorded

• No title insurance

• No professional funds disbursement

One scenario I imagined:

An investor orders a title search on a property they're considering buying. Later, they purchase the property in a private cash transaction using an LLC, prepare their own deed, transfer funds directly to the seller, and never record the deed.

In that scenario, the only professional service provider involved might be the title searcher who evaluated the property beforehand.

Obviously this would be an unusual situation, but Tier 6 seems designed specifically for edge cases where transactions are structured to bypass the normal closing ecosystem.

I also wondered about a more modern wrinkle.

If someone uses AI-powered title search/examination software to evaluate a property and generate a report identifying ownership and potential defects, does that technically qualify the software company as "providing an evaluation of title status"?

My instinct is that this would be extremely unlikely to trigger reporting obligations for a software provider, but the language of Tier 6 does raise interesting questions about how regulators might interpret automated title analysis tools as they become more common.

So I'm curious how others are interpreting Tier 6:

• Do you think FinCEN intended this tier to apply only to attorney title opinions, or more broadly to anyone evaluating title status?
• Are title searchers on the hook for transactions they may have zero knowledge of taking place? Any title searchers out there? Are you taking any steps to prepare or changing any of your policies or procedures to protect yourself?
• Do you think an AI title search/examination software company could be obligated to file a FinCEN report?
• Can you think of more realistic scenarios where Tier 6 might actually become the reporting tier?

My sense is that Tier 6 will probably rarely be the actual reporting tier, but the wording raises some interesting edge-case questions.

Would love to hear how others are interpreting it.