1. Overview

Effective March 1, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) implemented a nationwide “Residential Real Estate Rule” (the “Rule”), requiring reporting of certain residential real estate transactions.

The rule primarily applies to cash purchases of residential real estate by entities or trusts and introduces new compliance steps that affect both buyers and sellers.

The Rule was challenged and on March 19, 2026, the U.S. District Court for the Eastern District of Texas issued an order vacating the Rule. FINCEN is appealing the decision and FINCEN’s Residential Real Estate Rule webpage reflects that reporting persons are not required to file real estate reports with FINCEN and are not subject to liability for not filing while the case is pending.

The following is a summary of the Rule:

2. Transactions Triggers

A transaction will generally be reportable if:

  • The property is a 1–4 family home, condominium, townhouse, or residential land.
  • The buyer is an entity, including a LLC, corporation, partnership, or trust.
  • The purchase is made without institutional financing.

3. Key Exemptions

The following transactions are generally not reportable:

  • Purchases by individuals (natural persons)
  • Transactions involving a bank or institutional mortgage
  • Transfers of an easement
  • Transfers to a bankruptcy estate
  • Estate-related transfers (inheritance, probate)
  • Divorce or court-ordered transfers

Certain no-consideration transfers, including:

*Transfers into revocable (grantor) trusts

*Transfers between commonly controlled entities

4. Who Is Responsible for Reporting?

The obligation to file a report with FinCEN falls on a designated “reporting person,” typically the title insurance company or settlement agent, or other professional involving in the transaction.

5. Information That Must Be Reported

A. Property

  • Address, legal description, county, tax lot/block
  • Closing date

B. Buyer (Entity or Trust)

  • Legal name, formation details, business address

C. Beneficial Owners (Individuals) Buyers must disclose the individuals who ultimately own or control the purchasing entity or trust, even if ownership is layered through multiple entities.

  • Full legal name
  • Date of birth
  • Residential address
  • Government-issued identification number

D. Seller (Transferor)

  • Name and address

E. Payment / Source of Funds

  • Purchase price
  • Method of payment (wire, check, etc.)
  • Financial institutions and accounts used

F. Reporting Person

  • Identity of the title company or settlement agent

6. Filing Deadlines

The required information must be filed by the latter of the last day of the month following the month in which the reportable transfer occurred, or 30 calendar days after the closing date.

7. Penalties for Noncompliance

Civil Penalties

  • Negligent violations, penalty of up to $1,394.00 for each violation up to the amount involved in the transaction for willful violations

Criminal Penalties (Willful Violations)

  • Fines up to $250,000 and/or
  • Imprisonment of up to 5 years

As noted above, the Rule was vacated by the Eastern District of Texas Court, and is currently not being enforced. We will provide updates as they become available. You can also check out the latest from FINCEN at: https://www.fincen.gov/rre.

If you have questions about these new rules and their potential impact on your business, please contact Angelo J. Bolcato, Esq. at Laddey Clark & Ryan, LLP at [email protected], or (973) 729-1880.