By: Jeana Goosmann (CEO, Founding & Practicing Attorney), Maya Kindle (Estate Planning Attorney), and Ashley Kraus (Estate Planning Attorney)
For decades, all-cash residential real estate transactions have been a blind spot in the fight against money laundering and illicit financial activity. These transactions often move quickly, rely on layered entities or trusts, and historically avoided the scrutiny applied to traditional, financed purchases.
That is about to change.
Beginning March 1, 2026, the Financial Crimes Enforcement Network (Financial Crimes Enforcement Network or FinCEN) will implement its Residential Real Estate Reporting Rule, fundamentally reshaping how certain residential real estate transfers are documented and reported.
For attorneys, title companies, settlement agents, and other real estate professionals, this rule is more than a compliance update. It represents a significant shift in responsibility, risk allocation, and transaction workflow, requiring preparation well in advance of the effective date.
What Is a “Reportable Transfer” Under the FinCEN Rule?
A transaction is considered a reportable transfer if all four of the following conditions are met:
- The transfer is non-financed
- The buyer is a transferee entity or transferee trust
- The transfer involves an ownership interest in residential real property
- No statutory exception applies
Each of these elements is precisely defined under the rule.
Key Definitions You Need to Understand
Non-Financed Transfer
A non-financed transfer occurs when the buyer does not obtain a traditional mortgage or loan from a regulated financial institution. In other words, the purchase is completed without financing subject to standard anti-money laundering (AML) oversight, making these transactions a focal point of the new reporting requirements.
Transferee Entity
A transferee entity includes any legal person other than an individual or transferee trust, such as:
- Corporations
- Limited liability companies (LLCs)
- Partnerships
- Estates
Certain entities, including governmental authorities and banks, are excluded from this definition.
Transferee Trust
A transferee trust is any trust or similar legal arrangement, whether formed in the United States or in a foreign jurisdiction.
Residential Real Property
Property qualifies as residential real property if it falls into any one of the following categories:
- U.S. real property containing a structure designed for occupancy by one to four families
- U.S. land on which the transferee intends to build a one-to-four-family residential structure
- A residential unit designed for one to four families within a larger structure located in the United States
- Shares in a cooperative housing corporation tied to U.S. residential property
Transactions That Are Exempt From Reporting
Not all transfers are reportable. The rule expressly excludes, among others:
- Easements
- Transfers upon death (via will, trust, operation of law, or contract)
- Transfers incident to divorce or dissolution
- Transfers to bankruptcy estates
- Court-supervised transfers
- Certain no-consideration transfers to grantor trusts
- 1031 exchanges
- Transfers for which no reporting person exists
Understanding these exclusions is critical to avoiding unnecessary filings.
Who Is Responsible for Filing the Real Estate Report?
Only one party involved in a reportable transfer is responsible for filing the Real Estate Report. That party is known as the “reporting person.” The reporting person is determined in one of two ways:
- Through the reporting cascade outlined in the rule, or
- Through a written designation agreement among qualifying real estate professionals
Understanding the Reporting Cascade
The reporting cascade is a prioritized list of seven roles. The first professional in the list who performs their respective role becomes the reporting person.
Reporting Cascade Order
- Closing or settlement agent listed on the settlement statement
- Person who prepares the settlement statement
- Person who records the deed or transfer instrument
- Title insurance company underwriting the owner’s policy
- Person disbursing the greatest amount of funds
- Person providing a title status evaluation
- Person who prepares the deed or transfer instrument
If none of these roles are performed, no report is required.
What Information Must Be Included in the Real Estate Report?
The reporting person must collect and report:
- Identifying information for the buyer and seller
- Information about the property
- Details regarding how the purchase was funded
When the buyer is an entity or trust, the report must also disclose beneficial ownership information.
Beneficial Ownership Requirements
Beneficial Owners of Transferee Entities
A beneficial owner generally includes any individual who:
- Exercises substantial control, or
- Owns or controls 25% or more of the entity
For nonprofit entities, individuals exercising substantial control must be reported regardless of ownership percentage.
Beneficial Owners of Transferee Trusts
Beneficial owners of a transferee trust may include:
- Trustees
- Individuals with authority to dispose of trust assets
- Certain beneficiaries
- Grantors or settlors with revocation rights
- Beneficial owners of entities or trusts holding any of the above positions
Filing Deadline for the Real Estate Report
The Real Estate Report must be filed by the later of:
- The last day of the month following the closing month, or
- 30 calendar days after closing
Late or incomplete filings may expose reporting persons to regulatory risk.
What This Rule Means for Real Estate and Legal Professionals
FinCEN’s Residential Real Estate Reporting Rule signals a clear shift: cash real estate transactions are no longer invisible, and transparency is no longer optional. For professionals responsible for closing transactions, the real impact will be operational:
- Determining whether a transfer is reportable
- Identifying the reporting person early
- Collecting beneficial ownership information efficiently
- Managing risk through contracts and internal processes
While March 1, 2026 may feel distant, the contractual, compliance, and workflow implications require attention now. Firms that prepare early will reduce disruption, protect client relationships, and avoid costly missteps. For real estate professionals, attorneys, title companies, and settlement agents, the question is no longer whether this rule applies to your work, but how ready will you be when it does?
This article is for informational purposes only and does not constitute legal advice. For questions about how this rule may affect your business, consult with a qualified attorney.