What you Must Know About the Financial Crimes Enforcement Network Residential Real Estate Rule
By Zoe Tsicalos and Adam Leitman Bailey
As of March 1, 2026, the Financial Crimes Enforcement Network (“FinCEN”) is now requiring federal reporting for certain residential real estate transactions. The Residential Real Estate Rule is expanding FinCEN’s anti-money laundering surveillance to residential real estate transactions. The rule is expected to create an increase in transparency with respect to the acquisitions of residential real property by entities and trusts.
The Rule and the Real Estate Report
Under FinCEN’s Residential Real Estate Rule, reporting is required for certain non-financed transfers of residential real property located in the United States, including all-cash transactions, where the purchaser is a legal entity or trust. The purpose of the rule is to create more transparency into transactions that appear to conceal beneficial ownership through entity and trust structures.
The Real Estate Report is a form issued by FinCEN to report certain residential real estate transfers that present a heightened risk of illicit finance. The information collected through these reports is intended to combat and deter money laundering by increasing transparency in the U.S. residential real estate market. Individuals who allegedly launder funds through residential property often use legal entities and trusts to conceal their identities and obscure the source of criminal proceeds. In addition, such actors frequently favor non-financed transactions to avoid scrutiny from financial institutions, which are subject to anti-money laundering programs and Suspicious Activity Report (“SAR”) filing requirements under the Bank Secrecy Act.
The rule applies to the following forms of residential real property: one to four family homes, condominiums, cooperatives, and certain unimproved land on which a transferee desires to build a one to four family residential structure.
Transferee Entity
A “transferee entity” refers to any transferee that is not an individual or a transferee trust. This category includes corporations, partnerships, limited liability companies, estates, and associations. It also includes statutory trusts formed under the Uniform Statutory Trust Entity Act or comparable state law, which are treated as transferee entities rather than transferee trusts.
Transferee Trust
A “transferee trust” is a legal arrangement in which a person places assets under the control of a trustee for the benefit of one or more beneficiaries or for a specified purpose. Under the rule, transfers of residential real property to either revocable or irrevocable trusts are reportable if the transaction is non-financed and no exemption applies. Accordingly, FinCEN will require disclosure of identifying information about the trust, as well as information concerning individuals who exercise control over the trust or are beneficiaries. Individuals who use trusts for estate planning or asset management purposes should anticipate additional information requests from FinCEN and the potential for closing delays.
Non-Financed Transfers of Real Property
A non-financed transfer of real property refers to a transfer that does not include an extension of credit to the entity buying or receiving the property that is (1) secured by the transferred property and (2)
extended by a financial institution subject to anti-money laundering program requirements and Suspicious Activity Report (“SAR”) reporting obligations.
Additionally, transfers that are financed by a lender without an obligation to maintain an AML program and a requirement to file SARs fall under the definition of non-financed transfers and thus, must be reported.
Exempt Transfers of Real Property
Under the new rule, certain categories of transfers are exempt from the reporting requirement, including transfers resulting from death, divorce, court order, or bankruptcy proceedings, as well as certain transactions conducted pursuant to Section 1031 exchanges. In addition, transfers made without consideration by an individual to a trust for which the individual, the individual’s spouse, or both are the settlors or grantors are also exempt.
In addition, partially financed transfers are generally not reportable. For example, if a transferee provides a 50% down payment and obtains a mortgage loan to finance the remaining balance, the transaction is not subject to reporting under the rule. However, if a partially financed transaction involves multiple transferees and only some of them obtain secured financing, the transaction is reportable with respect to each transferee who does not obtain financing.
Filing Residential Real Estate Report
Filing Deadline
The Real Estate Reports for such transfers are required to be filed by the last day of the month in which the date of the closing occurred or thirty (30) calendar days after the date of the closing, whichever is later. Thus, “reporting persons” will have about thirty (30) to sixty (60) days to file the reports.
Who Must File the Report?
Under the rule, FinCEN created a chain of responsibility to determine what real estate professionals are responsible for the filing of the Real Estate Reports. The first applicable individual in the chain must file such reports. The obligation to file the Real Estate Reports falls on the following individuals in the following order:
1. The closing or settlement agent listed on the closing statement;
2. The individual who was responsible for preparing the closing statement;
3. The individual who is responsible for recording the deed;
4. The transferee or purchaser’s title insurance underwriter;
5. The individual who disbursed the greatest amount of funds at closing in connection with the transfer; and
6. The individual who prepared the deed.
However, it is important to note that Parties to residential real estate transactions can allocate the responsibility of filing the Real Estate Report by written agreement rather than following the chain of responsibility set forth under the rule. Such person will be referred to as the “Reporting Person.” One report must be filed for every transfer. The responsibility of filing the report can be assigned to certain
professionals involved in the closing process, including, the settlement agent, title agent, escrow agent, or an attorney handling the transfer.
Information that Must be Reported
The Residential Real Estate Report requires the filing of information regarding the individual who is responsible for filing the report, the residential real property related to the transaction, the transferor, the transferee entity or trust, attorneys representing the transferee entity or trust, and the beneficial owners of the transferee entity or trust.
For each beneficial owner of a transferee entity or trust, the report must include identifying information such as name, date of birth, residential address, citizenship status, and taxpayer identification number.
Regarding the property that is transferred, the report must disclose the purchase price of the property and certain payment information.
All reports that are filed must be fully completed. Fincen does not provide any exceptions for any transferees that fail to cooperate with the new reporting requirement.
Obligation to Maintain Records
Individuals who file Residential Real Estate Reports must keep certain records for a period of five (5) years following the filing date. Required records include beneficial ownership certifications and designation agreements.
As these reports often contain confidential information, all associated materials must be safeguarded and maintained in a secure manner.
Consequences of Noncompliance
The failure to cooperate and comply with FinCEN’s new reporting requirements can lead to serious civil and criminal penalties under the Bank Secrecy Act. Even negligent violations can trigger monetary penalties, particularly when there is a pattern of negligent conduct. Furthermore, will violations of such requirements may result in substantial civil penalties up to the amount involved in the transaction, and even the possibility of up to five (5) years in prison. Overall, noncompliance is risky, very costly, and can potentially be life-altering.
Next Steps for Real Estate Professionals
Now that the Residential Real Estate Rule is effective, real estate professionals, particularly those who are involved with transactions that fall under the rule, should:
1. Establish procedures to identify reportable non-financed transfers;
2. Develop uniform beneficial ownership certification forms;
3. Set up formal practices for handling designation agreements;
4. Educate staff on reporting requirements and identifying red flags; and
5. Adopt strong practices for handling and retaining sensitive information.
Ongoing Litigation Related to FinCEN’s Reporting Requirements
Most recently, Fidelity National Financial, Inc. and Fidelity National Title Insurance Company (“Fidelity”) challenged FinCEN’s Residential Real Estate Reporting Rule in federal court, however, like many other title companies that challenged the reporting rule, Fidelity was unsuccessful in striking down the rule.
Most recently, on February 19, 2026, the U.S. District Court denied the Plaintiffs’ motion for summary judgment challenging FinCEN’s anti-money laundering regulations for residential real estate. In the motion, Plaintiffs’ argued the rule (1) exceeds FinCEN’s statutory authority under the Bank Secrecy Act, (2) is arbitrary and capricious in violation of the Administrative Procedure Act, (3) violates the fourth amendment’s prohibition on unreasonable searches, and (4) violates the first amendment’s prohibition on compelled speech.
The Court’s decision reflects the position that FinCEN may require reporting of information related to certain non-financed residential property transfers to increase transparency in the residential real estate sector.
A number of title companies have challenged FinCen’s Residential Real Estate Reporting Rule. As of the date of this writing, no court has struck down the rule.
Conclusion
Overall, FinCEN’s new Residential Real Estate Reporting Rule is expected to have a substantial impact on residential real estate transactions. By requiring disclosure of information relating to certain non-financed transfers, the rule aims to increase transparency in the residential real estate market and to enhance anti-money laundering efforts.
However, the rule will affect transaction timelines, the preparation and review of closing documentation, and the collection of information for all-cash and privately financed transfers.
Additionally, the rule is likely to cause significant harm while providing very little benefit. First, the names and personal information of property buyers will become public, infringing on one of the most fundamental freedoms we enjoy as Americans: privacy in our homes. The public should not have access to what we are buying or where we live. This poses real risks for individuals seeking to protect their privacy from stalkers, intrusive media, and anyone who may wish them harm. Second, attorneys and title companies will be on the front lines of enforcing this rule, forcing us to compromise the sacred duty we owe our clients—their right to anonymity. Third, the rule’s stated objectives are unlikely to be achieved. Purchasing property is not a crime, and in a nation that upholds the principle of “innocent until proven guilty,” it is not difficult to seize the assets of convicted criminals after being convicted of a crime.