FinCEN Residential Real Estate Reporting Rule Still Alive — Effective March 1, 2026

Highlights

• The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has adopted a new Residential Real Estate (RRE) Rule, which goes into effect March 1, 2026. The rule requires certain real estate professionals to report transactional information to FinCEN.
• Non-financed, residential real estate transfers involving entity or trust transferees will trigger reporting obligations beginning March 1.
• Private client, estate planning, and real estate attorneys as well as paralegals may constitute designated reporting persons for certain transactions.
• Not to be confused with the Corporate Transparency Act (CTA), the RRE Rule currently does not contain reporting exemptions for domestic U.S. entities or persons.

Residential Real Estate Reporting Rule

Non-financed residential real estate closings take notice.

FinCEN's new RRE Rule, which will take effect March 1, 2026, imposes reporting obligations on designated "reporting persons" involved in certain kinds of transfers of residential real property considered high-risk for money laundering, terrorism financing, or other illicit financial activity.

The RRE Rule applies to any "non-financed transfer to a transferee entity or transferee trust of an ownership interest in residential real property" and requires the reporting of details regarding the residential real property, the transferor, the transferee, the inpiduals representing the transferee, and the beneficial owners of the transferee.

Beginning March 1, buyers using entities or trusts to take title to residential real estate and parties involved in all-cash or privately financed transactions may find their transfers subject to reporting. While settlement agents and title companies are expected to bear the brunt of the related reporting obligations, escrow providers and legal professionals may be caught in the crosshairs of FinCEN's designated reporting person cascade.

This is especially pertinent for attorneys that routinely handle escrow and title (e.g., attorneys working in New York, Connecticut, Delaware, Georgia, Massachusetts, North Carolina, South Carolina, Vermont, and West Virginia). Buyers and sellers must be prepared to provide timely and accurate information to designated reporting persons.

Non-Financed Residential Real Property Transfers

Residential Real Property

Under the RRE, residential real property includes single-family houses, townhouses, condominiums, and cooperatives (including condominiums and cooperatives in large buildings containing many such units), as well as entire buildings designed for occupancy by one to four families and vacant land on which any of the foregoing will be built. Specifically, the RRE defines residential real property as:

Real property located in the United States that includes a structure designed principally for occupancy by one to four families;

• Land in the United States on which the transferee intends to build a structure designed principally for occupancy by one to four families;
• A unit designed principally for occupancy by one to four families within a structure on land located in the United States; and/or
• A share in a cooperative housing corporation for which the underlying property is located on land within the United States.

A property may be considered residential real property even if it includes a commercial element (e.g., a single-family residence that is located above a commercial enterprise).

Transfers of Residential Real Property

A transfer of residential real property is any transfer of an ownership interest in residential real property that is demonstrated through a deed or, for an interest in a cooperative housing corporation, through stock, shares, membership, a certificate, or other contractual agreement evidencing ownership. This definition includes purchases of residential real property for any amount, as well as transfers of ownership for which no consideration is exchanged, such as a gift.

Non-Financed Transactions and AML/SAR Obligations

A non-financed transfer is a transfer that does 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 anti-money laundering / combatting the funding of terrorism (AML/CFT) program requirements and Suspicious Activity Report (SAR) reporting obligations. Transfers that are financed by a lender without an obligation to maintain an AML/CFT program, and a requirement to file SARs are treated under the final rule as non-financed transfers that potentially must be reported. A seller-financed transfer where the seller is an unlicensed inpidual without an AML/CFT program or SAR filing obligation, for example, would be considered a non-financed transfer.

Transferee Entities and Trusts; Exemptions from Reporting

The RRE Rule defines a transferee entity as any person other than a transferee trust or an inpidual. For example, a transferee entity may be a corporation, partnership, estate, association, or limited liability company. A transferee trust is any legal arrangement created when a grantor or settlor places assets under the control of a trustee for the benefit of one or more beneficiaries or for a specified purpose.

Certain regulated entities may qualify for exemptions from the transferee entity definition. The RRE Rule enumerates 16 exemptions available to corporate entities and 4 exemptions available to trusts; the exemptions primarily extend to entities that are already subject to regulatory oversight and/or AML/CFT obligations.

Note Regarding Interaction With CTA Interim Final Rule (2025)

Despite often being referenced in connection with the CTA, the RRE Rule is separate and distinct. While the RRE Rule borrows certain language and definitions from the text of the CTA, the status of an entity or trust as a "reporting company" under the CTA currently does not impact the entity's status as a reportable transferee under the RRE. As of the date of this alert, U.S. entities and trusts are not excluded from the transferee entity definition by virtue of their domestic status.

Determination of Reporting Person

Under the RRE Rule, the responsibly to report in respect of any given reportable transfer falls to a single reporting person. The identity of this inpidual is determined by the below-outlined reporting cascade. For any reportable transfer, the default reporting person may enter into a designation agreement with any other person described the reporting cascade to designate such other person as the reporting person with respect to such transfer. A separate designation agreement is required for each reportable transfer.

Reporting Cascade

The RRE Rule's reporting cascade corresponds to the IRS Form 1099-S compliance cascade. Accordingly, the RRE Rule 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.

If none of the above functions are performed for a given reportable transfer of residential real property, then an RRE report is not required to be filed.

Reporting Obligations

By the later of (i) 30 calendar days after the date of closing and (ii) the last day of the month following the month in which the date of closing occurred, the designated reporting person for any given reportable transfer must file a Real Estate Report (RER) with FinCEN. RERs are filed using FinCEN's BSA E-filing System, which requires the reporting person to possess an inpidual BSA E-Filing account. The RER filing portal is currently available.

When filing an RER, a reporting person is required to submit the following information necessary to identify:

• themselves;
• the residential real property;
• the transferor;
• the transferee;
• the inpiduals representing the transferee; and
• the beneficial owners of the transferee.

Identifying information for beneficial owners includes name, date of birth, residential address, citizenship, and taxpayer identification number.

Helpful FinCEN Resources

For additional information, please see the resources published by FinCEN below.

FinCEN RRE Rule Homepage: https://www.fincen.gov/rre

FinCEN RRE Rule FAQ: https://www.fincen.gov/rre-faqs

FinCEN Quick Reference Guides: https://www.fincen.gov/rre-quick-reference-guides

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.