In the last few weeks, the world watched as Russia carried out its invasion of Ukraine. Among the fallout here at home, we’ve seen a rise in gas prices, increased inflation, and a shaken stock market.
However, there are other areas affected that may not seem so surface level. One of the sectors already seeing impacts from recent sanctions is the real estate realm.
As we evolve into a global society, it’s become clear that our banking institutions are interlinked all over the world. With an expansive economic reach, American banks rely on other countries to complete transactions in everything from commodities to manufacturing. Real estate is no exception to this model and, sadly, neither is Russian banking.
So, How Does This Affect You?
Recently, the Office of Foreign Assets Control as part of the U.S. Treasury launched five directives pertaining to Russian sanctions. Within these directives are prohibitions against engaging with any Russian entities like banks, buyers, or mortgage lenders. This spells delays or cancelations for certain closings caught up in sanctioned activity.
When dealing with a bank or asset on the sanctions list, OFAC approval is required to complete any transitions. Therefore, it’s important to know who you’re dealing with.
Lydia Blair, our Title Tip columnist and vice president and escrow officer at Allegiance Title, sees these sanctions coming up more and more.
“I got a reminder today from one of our title insurance underwriters,” Blair says. “In fact, prior to closing any real estate transaction, all title insurance companies must check the OFAC Sanctions Lists for the names of parties to a transaction.”
“My favorite saying regarding these rules,” says Blair, “is ‘If you’re on the no-fly list, you may be on the no-buy list.'”
How to Avoid the Headaches
As the Biden administration ramps up sanctions under Eastern European tensions, you must understand where your money comes from. Before engaging in any large-scale purchase such as buying a home, be sure you properly vet your institutions. This includes title companies, lenders, sellers, and sellers’ agents.
If you have any questions concerning your selling or purchasing parties, you can contact the US Treasury for clarification. For up-to-date information about these sanctions, the White House has fact sheets outlining major Russian banks and where they stand.
As if this housing market couldn’t get any harder, we find ourselves amid one of the biggest European conflicts in decades. And though this adds to the frustrations at home, we must remember that it helps our allies abroad.
