FIRPTA Requirements: Title Agents / Escrow Agency

As a title agent or escrow agency for the sale of a property owned by a U.S. non-resident, you have many duties, including:

Title Agent

Investigating the property title for legitimacy.
Title search: investigating public records for any issues.
Issuing title insurance and resolving any title issues.
Preparing and recording closing documents.

Escrow Agency

Holding the buyer’s funds until closing.
Ensuring that all terms of relevant contracts are met.
Distributing the net sale proceeds to the seller.
Protecting both the buyer and the seller from any fraudulent activities.
You know your role, and you do it well.

FIRPTA Requirements

However, when a non-U.S. resident sells a property to a U.S. buyer you represent, you face the challenge of meeting all FIRPTA compliance requirements.

Compliance Errors

There are many ways errors can occur in FIRPTA compliance. These are a few examples:

Failure to file withholding forms within 20 days. Late filing can cost your clients thousands.
Using the incorrect withholding rate and consequently filing the wrong withholding form.
Under the IRS Substantial Presence Test, FIRPTA may not apply if the seller was physically present in the U.S. for a certain amount of time in the current and preceding years and, according to the IRS, is a U.S. resident for tax purposes.
If the FIRPTA withholding requirements have not been met, the buyer can be held responsible for the uncollected amount, plus penalties and interest.

We Can Help You BREATHE EASY!

Wouldn’t it be a relief to focus on your title or escrow duties without worrying about the FIRPTA compliance requirements?
When you use our services, you’ll get that relief!

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