FinCEN Residential Real Estate Reporting Requirements to Take Effect March 1, 2026

FinCEN Residential Real Estate Reporting Requirements to Take Effect March 1, 2026

Beginning March 1, 2026, the Residential Real Estate Rule requires certain professionals involved within a real estate closing and/or settlement to submit reports to the Financial Crimes Enforcement Network (“FinCEN”) when (1) residential real estate is being transferred to certain legal entities or trusts; and, (2) traditional financing is not involved in the sale transaction.

What is a Reportable Transfer?

The FinCEN final rule states that a Real Estate Report must be filed on any “reportable transfer,” which is a (1) non-financed (2) transfer of (3) residential real estate to a (4) business entity or trust.

FinCEN defines “residential real estate” to mean:

1. Real property located in the US that includes a structure principally designed for occupancy by one to four families.
2. Land within the US on which a transferee intends to build a structure principally designed for occupancy by one to four families.
3. A unit principally designed for occupancy by one to four families within a structure on land located within the US.
4. A share in a cooperative housing corporation for which the underlying property is located on land within the US.

FinCEN identifies a “transfer” to mean any transfer of an ownership interest in residential real property demonstrated by deed (or via stock or other contractual agreement evidencing ownership if an interest in cooperative housing corporation). This is not restricted to a sale of real estate: transfers of ownership for which no consideration is exchanged are included in the new reporting requirements, which includes transfers to a revocable trust, limited liability company, or gift transactions.

FinCEN identifies “non-financed” transfers as those that do not involve an extension of credit to all transferees that is both (1) secured by the transferred property, and (2) extended by a financial institution subject to AML program requirements and Suspicious Activity Report (SAR) reporting obligations. FinCEN states that if a reporting person is unsure whether a lending institution involved in a transfer has an obligation to maintain an AML program and file SARs, they should contact the lending institution.

FinCEN’s final ruling states that a “transferee entity” is defined as any person, other than a transferee trust or an individual. This may be a corporate, partnership, estate, association, or limited liability company.

A “transferee trust” is any legal arrangement created when an asset is under the control of a trustee for the benefit of one or more beneficiaries. This definition includes most trusts and similar foreign legal arrangements.

What types of transfers are not considered reportable?

FinCEN identifies the following non-exhaustive list of transfers that do not trigger the requirement to file the Real Estate Report:

1. A transfer that is a grant, transfer, or revocation of an easement.
2. A transfer resulting from the death of an individual, whether pursuant to the terms of a will, the terms of a trust, the operation of law (such as transfers resulting from intestate succession, surviving joint owners, and transfer-on-death deeds), or by contractual provision (such as transfers resulting from beneficiary designations).
3. A transfer incident to divorce or dissolution of a marriage or civil union (such as transfers required by a divorce settlement agreement).
4. A transfer made to a bankruptcy estate.
5. A transfer supervised by a court in the United States.
6. A transfer for no consideration made by an individual, either alone or with their spouse, to a trust of which that individual, that individual’s spouse, or both, are the settlors or grantors.
7. A transfer to a qualified intermediary for the purposes of a like-kind exchange for purposes of Section 1031 of the Internal Revenue Code.
8. A transfer for which there is no reporting person.

 

Who must submit The Real Estate Report?

The FinCEN final rules require a “reporting person” to file the Real Estate Report. This reporting person plays a role in the reportable transfer, and FinCEN has created a list of duties related to a real estate transaction and organized them into a reporting cascade. If a person is performing the first function described within the list, then that person would be the reporting person. If no person is performing the first function described, then the reporting person would be the person performing the second described function, if any, and so on down the cascade.

The reporting cascade is as follows:

1. The person listed as the closing or settlement agent on the closing or settlement statement;
2. If no person described above is involved, the person that prepares the closing or settlement statement;
3. If no person described above is involved, the person that files with the recordation office the deed or other instrument that transfers ownership of the residential real property;
4. If no person described above is involved, the person that underwrites an owner’s title insurance policy for the transferee with respect to the transferred residential real property, such as a title insurance company;
5. If no person described above is involved, the person that disburses in any form, including from an escrow account, trust account, or lawyers’ trust account, the greatest amount of funds in connection with the residential real property transfer;
6. If no person described above is involved, the person that provides an evaluation of the status of the title; or
7. If no person described above is involved, the person that prepares the deed or, if no deed is involved, any other legal instrument that transfers ownership of the residential real property, including, with respect to shares in a cooperative housing corporation, the person who prepares the stock certificate.

 

In the alternative, the parties involved in a reportable transaction may enter into a written agreement that designates a person to submit the Real Estate Report.

What must be disclosed within The Real Estate Report?

The Real Estate Report will require the reporting person to identify themselves; the residential property being transferred; the transferor; the transferee entity or transferee trust; the individuals representing the transferee entity or transferee trust; and the beneficial owners of the transferee entity or transferee trust.

To submit this report, the reporting person will need to collect name, date of birth, residential address, citizenship, and taxpayer identification number(s) for any beneficial owner of a transferee entity or transferee trust. The reporting person must also report the total consideration paid for the property.

When must The Real Estate Report be filed?

The latter of:

1. The final day of the month following the month in which the transfer occurs; or,
2. Thirty (30) calendar days after the date of closing.

What happens if The Real Estate Report is not timely filed?

FinCEN has not yet published a schedule of penalties, interest, or fees that will accrue for failing to file timely. For further information, see: https://www.fincen.gov/rre