Beginning March 1, 2026, a new federal rule will require certain residential real estate transfers to be reported to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. These requirements are part of the federal government’s broader effort to combat money laundering and increase transparency in real estate transactions.
If you buy or sell residential property through an entity or trust without traditional financing, this rule may apply to you. This article provides a practical overview of the reporting requirements.
What Is Changing?
Previously, reporting requirements for real estate were only governed at the state level, e.g., Real Estate Transfer Statements. Now, for certain types of residential real estate transfers, a “Real Estate Report” must be filed with FinCEN by the designated reporting person. The rule applies to closings that occur on or after March 1, 2026.
When Is a Transfer “Reportable”?
A transfer is reportable only if all three of the following conditions are met:
1. The Property Is Residential Real Estate. The rule only applies to transactions involving structures designed for occupancy by 1-4 families, like a house or duplex. Reporting is required for both rental and sale properties. Also note that the rule applies to land where the buyer intends to build a 1-4 family residence. The rule does not apply to commercial properties or apartment buildings with five or more units.
2. The Transfer Is Not Financed. Reporting is not required for financed transactions. FinCEN specifies that it will consider a transaction “financed” when: i) the property is being used as security for the loan; and ii) the loan is extended by a federally regulated financial institution. This means that a traditional home purchase financed through a mortgage is not subject to reporting.
3. The Property Is Transferred to an Entity or Trust. Transactions between individuals or from an entity to an individual are not subject to reporting. If the previous two conditions are met, most entities are required to report when buying real estate, including trusts, corporations, limited liability companies, and all types of partnerships. Banks, credit unions, and government authorities are not required to report.
Exceptions to Reporting
The following transfers are notable exceptions to the reporting rule, even when all three conditions above are met:
- Transfers due to death, whether by will, trust, operation of law, or contract.
- Transfers incident to divorce or dissolution of marriage.
- Transfers for no payment from an individual (or individual with spouse) to a trust which that individual (and/or spouse) is the settlor or grantor.
Reporting Person
If a transaction meets the conditions for a reportable transfer and does not fall within an exception, it must be reported by the individual or entity that prepares the deed or other legal documents which convey the real property. FinCEN refers to that individual or entity as the “reporting person”. This is typically the title company/closing agent, if one is involved, or the attorney who drafted the deed.
Timeframe to File
The Real Estate Report must be submitted to FinCEN by the later of:
- The last day of the month following the month of closing, or
- 30 calendar days after the date of closing.
Failure to accurately report the transaction within the specified timeframe may result in civil penalties up to $1,430 for each negligent violation and patterns of negligence could result in over $100,000 in fines. Willful violations may be subject to greater fines and up to five years imprisonment.
Best Practice
If you are purchasing residential real estate through an entity or trust without traditional financing, it is important to be aware of the FinCEN reporting requirement and contact legal counsel to ensure your transactions are compliant.
This article is provided for general information purposes only and should not be construed as legal advice. Those requiring legal advice are encouraged to consult with their attorney.
