NEWS & INSIGHTS

The Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Department of the Treasury, has enacted new Residential Real Estate Transaction Reporting Requirements (See: Residential Real Estate Rule) effective as of March 1, 2026. This regulation impacts non-commercial real estate transfers involving legal entities and trusts. The rule imposes certain documentation and reporting obligations upon parties to affected transactions.

The Application of the Rule

The rule applies to transactions involving “residential real property” and requires reporting when all of the following apply:

1. The property is a single-family home, condominium, co-op, apartment building, and land intended for residential development; and
2. No mortgage is to be recorded upon the real estate. This includes cash purchases, seller financing, or involves lending from unregulated lenders (a/k/a “private lenders”); and
3. The buyer is a business entity (such as an LLC, partnership, corporation or trust) and not an individual human being; and
4. There is no exemption from reporting.

Reporting Requirements and Timing

The required Real Estate Report imposes information reporting requirements that are much broader than required in customary residential closings. For each reportable transfer, a designated “reporting person” must file a Real Estate Report including: 

1. Identification of the property address, legal description, and the nature of the transfer;
2. Identification of the transferee (or buyer) business entity, including its name, record address, and identification of the people who own or control the entity;
3. Identification of anyone signing on behalf of or representing the transferee;
4. The name of the transferor (seller);
5. Details concerning payments – the purchase price, payment methods, sources of funds, and bank account information used to fund the transaction or make payments on behalf of the buyer; and 
6. The report must be submitted by no later than 30 calendar days after closing or the last day of the month following the month that closing occurred, whichever is later.

A Transaction’s “Reporting Person” Must File the Report 

In each reportable transaction, one party is designated as the “reporting person” to file the Real Estate Report. FinCEN determines the reporting person based on functions performed in the transaction, unless the parties designate some other party in writing. The “reporting person” will be the following, in order:

1. The closing agent listed on the settlement statement;
2. The person who completed the settlement statement;
3. The person who records the deed transferring ownership to the property;
4. The title insurer that has, or will, issue the owner’s title insurance policy;
5. The person who disbursed the greatest amount of funds in connection with the transaction;
6. The person who examined the status of title; or
7. The person who prepared the deed to the transferred property.

Generally, the settlement agent or title company will serve as the reporting person. The reporting person must retain a copy of the report for five years.

Penalties for Failure to file the Report

Failure to comply with the rule may result in civil and criminal penalties under the Bank Secrecy Act. Negligent violations, including failure to file or filing an incomplete or inaccurate report, may result in civil penalties assessed on a per-violation basis (currently up to $1,430 per violation), with penalties of up to $111,308 for a pattern of negligent activity. Willful violations of the rule may result in civil penalties of up to $286,184. In addition, willful violations of the rule could result in criminal fines of up to $250,000 or imprisonment for up to five years, or both. FinCEN has emphasized that enforcement will be a priority.

Recommended Action

For any residential real estate transaction closing after March 1, 2026, parties to transactions should identify whether transactions will be reportable transactions and coordinate with other transaction parties regarding reporting responsibility. In addition, industry professionals should be prepared to collect and review the information referenced above and ensure that filing procedures are established. Although legal challenges to the rule are pending, the reporting requirements are in effect now, thus parties to residential transactions should carefully comply with the Residential Real Estate Rule until further notice. 

If you have any questions about the new Residential Real Estate Transaction Reporting Requirements, contact attorney Sean P. Murphy via our contact form or phone at 202-329-1654.