Beginning March 1, 2026, new federal reporting requirements will change how certain real estate transactions are handled, particularly all-cash purchases by a legal entity or trust of residential real property. Transactions directly to individuals and transactions involving traditional mortgages from regulated financial institutions are generally excluded, but the effects of this rule will be felt across the entire real estate industry.
So, what exactly is changing about these transactions, and what does it mean for buyers, sellers and real estate professionals?
What is FinCEN?
Founded in 1990, the Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury. Its mission is to combat money laundering, terrorist financing and other financial crimes by collecting and analyzing information about financial transactions and enforcing the Bank Secrecy Act (BSA) on financial institutions.
With a heavy focus on transparency in financial transactions, FinCEN is zeroing in on real estate purchased without traditional financing in an effort to crack down on money laundering. The new Residential Real Estate Rule expands reporting requirements to certain transactions nationwide. While the term “residential” is in the title, this new reporting rule affects more than single-family homes and may affect certain commercial transactions.
What transactions need reported to FinCEN?
Real estate closings occurring on or after March 1, 2026, that meet all four of the following criteria must be reported to FinCEN:
1. Residential real property
Under the Residential Real Estate Rule, residential real property means:
- Real property located in the United States containing a structure designed principally for occupancy by one to four families;
- Land located in the United States on which the transferee intends to build a structure designed principally for occupancy by one to four families;
- A unit designed principally for occupancy by one to four families within a structure on land located in the United States; or
- Shares in a cooperative housing corporation for which the underlying property is located in the United States.
Residential real property therefore includes single-family houses, townhouses, condominiums, and cooperatives, including condominiums and cooperatives in large buildings containing many such units, as well as entire buildings designed for occupancy by one to four families. These types of properties are considered residential real property even if there is also a commercial element — a single-family residence that is located above a commercial enterprise, for example.
Certain types of land on which a residence is not yet built are also included if the transferee intends to build on the property one or more structures designed principally for occupancy by one to four families. The reporting person may reasonably rely on information provided by the transferee to determine such intent, but only if the reporting person does not have knowledge of facts that would reasonably call into question the reliability of the information.
Can an apartment building be residential real property?
Yes. Real property located in the United States containing an entire apartment building could be residential real property under the rule if the building itself is designed principally for occupancy by one to four families. Alternatively, an entire apartment building designed principally for occupancy by more than four families does not meet the definition of residential real property.
2. Non-financed transfers
A non-financed transfer of residential real property is a transfer that does not involve an extension of credit to all transferees (the entity or entities buying or receiving the property) that is both (1) secured by the transferred property and (2) extended by a financial institution subject to anti-money laundering (AML) program requirements and Suspicious Activity Report (SAR) reporting obligations.
Transfers that are financed by a lender without an obligation to maintain an AML program and a requirement to file SARs are treated under the rule as non-financed transfers that must be reported if other criteria making a transfer reportable are met.
3. Transferee entity or trust
A transferee entity is defined as any person other than a transferee trust or an individual. For example, a transferee entity may be a corporation, partnership, estate, association, or limited liability company. Statutory trusts, which are trusts created or authorized under the Uniform Statutory Trust Entity Act or as enacted by a state, are also considered transferee entities, rather than transferee trusts, for the purposes of this reporting requirement.
4. No exemptions apply
Not every property transfer is subject to reporting. The following transfers of residential real property do not need to be reported:
- A transfer that is a grant, transfer, or revocation of an easement.
- A transfer resulting from the death of an individual, whether pursuant to the terms of a will, the terms of a trust (including testamentary trusts), the operation of law (such as transfers resulting from intestate succession, surviving joint owners, and transfer-on-death deeds), or by contractual provision (such as transfers resulting from beneficiary designations).
- A transfer incident to divorce or dissolution of a marriage or civil union (such as transfers required by a divorce settlement agreement).
- A transfer made to a bankruptcy estate.
- A transfer supervised by a court in the United States.
- A transfer for no consideration made by an individual, either alone or with their spouse, to a trust of which that individual, that individual’s spouse, or both, are the settlors or grantors.
- A transfer to a qualified intermediary for the purposes of a like-kind exchange for purposes of Section 1031 of the Internal Revenue Code (26 CFR 1.1031(k)-1); or
- A transfer for which there is no reporting person.
Reporting persons should evaluate the specific facts of each individual transfer to determine whether it constitutes a reportable transfer under the rule.
When determining whether a transfer is exempt and making any other determination necessary to comply with the reporting and recordkeeping requirements, the reporting person generally may rely on information provided by other persons if the reporting person does not have knowledge of facts that would reasonably call into question the reliability of the information.
What needs reported to FinCEN?
The goal of the Residential Real Estate Reporting Rule is to identify the actual individuals behind entity-owned purchases to increase transparency in cash and non-traditionally financed transactions.
The FinCEN report must contain detailed identification and transaction information, including:
- The reporting person
- The residential real property being transferred
- The transferee entity or transferee trust
- The beneficial owners of the transferee entity or transferee trust
- Certain individuals representing the transferee entity or transferee trust in the transfer
- If the transferee is a transferee trust, any trustee that is an entity
- The transferor.
The reporting person must also report the total consideration paid for the property, along with certain information about any payments made by the transferee entity or transferee trust.
What is a beneficial owner?
A beneficial owner of a transferee entity is an individual who, on the date of closing, either directly or indirectly:
- Exercises substantial control over the transferee entity, or
- Owns or controls at least 25% of the transferee entity’s ownership interests.
An individual might be a beneficial owner through substantial control, ownership interests, or both. Not every transferee entity will have an individual who owns or controls at least 25 percent of the entity’s ownership interests, but FinCEN expects that every transferee entity will be substantially controlled by one or more individuals, and therefore that every transferee entity will be able to identify and report at least one beneficial owner. Moreover, transferee entities established as non-profits are assumed to only have beneficial owners who exercise substantial control. Because beneficial owners must be individuals (i.e., natural persons), trusts, corporations, or other legal entities are not considered to be beneficial owners.
What this means for buyers and sellers
For buyers:
If buyers are purchasing through an LLC or other legal entity, they may be required to provide:
- Beneficial ownership information
- Identification documentation
- Organizational documents for the entity
- Information about individuals with control over the entity
For sellers:
In most cases, the reporting burden falls on the buyer side and the designated reporting person. However, closing timelines may include additional compliance steps, and there may be additional documentation requests. Being aware of these requirements and the extra time they may demand beforehand helps ensure smoother closings.
How we protect your information
Under the new rule, a designated reporting person must file the required information with FinCEN. This responsibility will typically fall to the settlement agent or title company, depending on how the closing is structured.
At Landmark Title Assurance Agency, we are preparing now to ensure:
- Secure collection of required transaction documentation
- Clear communication with agents and clients
- Efficient reporting procedures
- Protection of sensitive client information
- Minimal disruption to closing timelines
Our goal is to make compliance seamless while protecting transactions. The new FinCEN rule represents a significant shift in real estate compliance nationwide. While it primarily impacts non-financed and entity purchases, its ripple effects will be felt across the industry.
We are committed to staying ahead of regulatory changes and communicating those changes to our partners and clients, so they are not caught off guard. If you’re preparing for a non-traditionally financed residential, commercial or land transaction that involves an LLC, entity, trust or layered ownership structure, reach out with any questions or concerns about reporting. Our expert team of title and escrow professionals is here to help you navigate transactions with clarity and confidence.