FinCEN Real Estate Rule goes into effect

As of March 1, 2026, the long-awaited Residential Real Estate Reporting Rule¹ (Rule) requires certain persons involved in non-financed residential real property transfers to entities or trusts to file Real Estate Reports identifying, among other information, the transferee’s beneficial owners.

The Rule aims to assist the US Department of Treasury Financial Crimes Enforcement Network (FinCEN) and other agencies in “addressing illicit finance vulnerabilities in the US residential real estate sector, and to curtail the ability of illicit actors to anonymously launder illicit proceeds through transfers of residential real property.”² FinCEN finalized the Rule on August 29, 2024, and it was initially intended to go into effect on December 1, 2025.³ On September 30, 2025, FinCEN announced it was postponing the Rule’s effective date to March 1, 2026, to “reduce business burden and ensure effective regulation.”⁴

The Rule requires reporting persons to submit a Real Estate Report whenever (1) residential real property is transferred, (2) the transfer is not financed, (3) the property is transferred to a transferee entity or trust (and not individuals), and (4) no exception applies. 

What qualifies as “residential real property”? 

The Rule applies to four categories of residential real property: (1) real property located in the United States containing a structure designed principally for occupancy by one to four families, (2) land in the United States on which the transferee intends to build a structure designed principally for occupancy by one to four families, (3) a unit designed principally for occupancy by one to four families within a structure on land located in the United States, and (4) shares in a cooperative housing corporation for which the underlying property is in the United States.

What transfers are considered “non-financed”? 

A transfer is non-financed if it does not involve an extension of credit to all transferees that is both (i) secured by the real property and (ii) extended by a financial institution subject to the Bank Secrecy Act’s anti-money laundering program requirements and suspicious activity reporting obligations. 

What are the exceptions? 

There are exceptions to the reporting requirement based on (i) the transferee and (ii) the type of transfer. For example, common transferee exceptions include, among others, securities reporting issuers, banks, credit unions, broker-dealers, and insurance companies.

There also are exceptions for transfers of easements, transfers resulting from death or incident to divorce, transfers to bankruptcy estates or supervised by a court, certain transfers for no consideration to a trust, certain transfers to qualified intermediaries for purposes of nontaxable like-kind exchanges, and transfers for which there is no reporting person.

Who is required to file a Real Estate Report? 

The Rule establishes a cascade of reporting responsibility to identify who is responsible for filing the report in a given situation. Reporting persons include closing or settlement agents, title insurance underwriters, title companies, escrow agents, title examiners, and attorneys involved in real estate transfers (among others). Importantly, only one report must be filed for each reportable transfer—but the parties are responsible for identifying who must file within the Rule’s parameters. 

What information needs to be reported? 

The Real Estate Report must generally include sufficient information to identify the transferee(s), each of the transferee’s beneficial owners (i.e., those who exercise substantial control over or own or control at least 25% of the ownership interests of the transferee) and signing individuals, the transferor, the residential real property, and the amount and method of payment, as well as the reporting person.

What are the penalties for failing to report?

Reporting persons who are negligent and fail to file Real Estate Reports may face civil penalties of up to $1,430 per violation and an additional penalty of up to $111,308 for a pattern of negligent activity. Those who engage in willful violations may face civil penalties up to $286,184 and criminal penalties up to $250,000 and five years’ imprisonment.⁵

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Individuals and entities involved in residential real property transfers should consider whether they may be responsible for filing Real Estate Reports and, if so, taking measures to ensure that they comply with the Rule.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 31 C.F.R. § 1031.320.}

_{2 FinCEN, Anti-Money Laundering Regulations for Residential Real Estate Transfers, 89 FR 70258 (Aug. 29, 2024), https://www.govinfo.gov/content/pkg/FR-2024-08-29/pdf/2024-19198.pdf.}

_3 Id.

_{4 TREASURY, Exemptive Relief Order to Delay the Effective Date of the Residential Real Estate Rule (Sept. 30, 2025), https://www.fincen.gov/system/files/2025-09/RRE-Rule-Exemptive-Relief-Order-508.pdf.}

_{5 Penalties discussed herein are current as of February 26, 2026. Civil penalties are subject to adjustment under the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461. Maximum civil penalties are set out in the Penalty Adjustment Table in 31 C.F.R. § 1010.821. Maximum criminal penalties are set out in 31 U.S.C. § 5322.}