FinCEN Residential Real Estate Reporting

Take-Away: Starting March 1, 2026, transfers of residential real estate to a trust may be reported to the Financial Crimes Enforcement Network (FinCEN.)

Background: Just when attorneys were learning to forget about complying with FinCEN’s beneficial owner rules we are reminded that, come March 1, 2026, many U.S. residential real estate transactions will be required to report high-risk, non-financed residential property transfers to legal entities, or trusts, to FinCEN. The purported purpose of this reporting rule is to combat perceived money laundering by requiring transparency for the transfer of residential properties like family homes, condominiums, and vacant land by disclosing the ‘beneficial ownership’ [ah, there’s that infamous terminology again!] of the purchasing entity.

Effective Date: FinCEN released this new residential reporting requirement back on August 28, 2024, back when most of us were anxiously focused on FinCEN’s much broader beneficial ownership reporting requirements, which meant most of us were not paying any attention to this additional reporting requirement. This reporting rule became effective on December 1, 2025, with a postponed effective date of March 1, 2026.

Key Reporting Components: The scope of what is covered under this new FinCEN reporting rule includes the following.

Reporting Burden: This new FinCEN reporting obligation falls on attorneys, title insurance agents, closing agents, and other (vaguely described) agents who are involved in the real estate closing. Like most of the FinCEN reporting rules that we started to become familiar with a couple of years back, there is a hierarchy among those who are involved with the real estate transfer who has the FinCEN reporting responsibility. Those possible reporting parties can also use a written agreement to designate the specific reporter to FinCEN..

Reporter Hierarchy: The hierarchy of those responsible for this FinCEN reporting obligation follows: (i) the closing or settlement agent, i.e., the person list on the real estate settlement statement; (ii) the preparer of the settlement statement if no agent is listed; (iii) the person who records the deed; (iv) the person who underwrites the title insurance policy; (v) the person who handles the ‘largest’ fund transfer in the transaction; (vi) the person who provides a title check or writes a title opinion letter; and (vii) the person or attorney  who prepares the deed.

Residential Real Estate: FinCEN’s definition of residential property covers real property designed for 1-4 family homes, townhouses, condominiums, real estate housing cooperative interests, and vacant land intended for 1-4 family residential use.

Real Estate Buyers: The beneficial owners of the following are reportable buyers: any legal entity, like an LLC, partnership, corporation, or a trust, but not a direct individual. One important exception to this new reporting rule is a transfer to a testamentary trust. It should be noted, too, that these reporting rules apply to the purchase of any residential real estate for any amount, as well as transfers of ownership for which no consideration is exchanged, such as a gift. [FinCEN FAQs, B.3.]

Covered Real Estate Transfer: The real estate transfer of residential real estate that must be reported to FinCEN is any non-financed transaction, using cash, private loans, or seller financed, like a land contract. Consequently, a residential real estate transaction that would not be covered under these new reporting rules would be a sale that involves a loan from a financial institution that already has in place anti-money laundering reporting obligations, e.g., a purchase money loan from a bank or credit union.

Exempt Transfers: Most ‘routine’ transfers of residential real estate that arise from death, divorce, bankruptcy, or court supervision are exempt from the FinCEN reporting obligation. A transfer of residential real estate to a revocable grantor trust, or even apparently a SLAT, would appear to be exempt. [FinCEN FAQs, B.5(6.)]

FinCEN Filing Information: The individual who is required to report to FinCEN must collect and submit the following information using the FinCEN BSA E-Filing System: (i) the name, date of birth, address, and taxpayer identification number for any individual with 25% or more ownership or ‘substantial control’ over the residential real estate buyer; (ii) the total payment amount, date of closing, and property address; and (iii) a written certification from the buyer’s representative that the information provided to FinCEN is accurate. [I tend to break out in hives whenever I try to decipher how broadly FinCEN defines  ‘substantial control’ of a transferee entity.]

FinCEN Record Retention: The reporting individual must keep copies of the beneficial ownership certification and reporting designation agreement, if any is used, for a period of five years. The failure to comply with these reporting obligations can result in both civil and criminal penalties under the Bank Secrecy Act.

Transfers to Trusts: Skimming FinCEN’s frequently asked questions regarding these new residential real estate transfer reporting rules, it states “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 and includes most trusts and similar foreign legal arrangements. A trust is a transferee trust regardless of whether the residential real property is titled in the name of the trust itself or in the name of the trustee. However, certain types of trusts are exempted.”  [FinCEN FAQ B.7] This would apparently cover a statutory ‘purpose trust’ where there are no identifiable beneficiaries, e.g., a cottage trust for a class of unidentified beneficiaries.

The FAQs also state that a reportable transfer may have more than one transferee entity or transferee trust.  As long as at least one of the transferees in a residential transfer is a transferee trust, the transfer is reportable to FinCEN. However, the FinCEN Real Estate Report only requires identifying information for the reportable transferees. So, a transfer of a 50% tenant in common interest to an individual, and the other 50% interest is transferred to an irrevocable trust, that would require a report to FinCen of the trust’s beneficial owners.

Conclusion: Even before this new FinCEN rule there were plenty of forms to be completed and disclosure statements associated with a ‘simple’ home purchase. We now have at least one additional form that will have to be completed, and filed, as part of what is supposed to be a ‘simple’ transaction. Since most home purchases are financed using bank loans, they will be exempt from the reporting requirements. However, a land contract sale, i.e., seller financed, will be covered, even when a deed is held in escrow pending the complete payment required under the land contract. If the prior FinCEN beneficial ownership rules were ultimately suspended, one wonders if this new residential transfer reporting requirement, scheduled to be effective on March 1, 2026, will also be suspended. Stay tuned.

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