Beginning March 1, 2026, individuals involved in real estate closings and settlements must submit reports to the Department of the Treasury Financial Crimes Enforcement Network (FinCEN) regarding certain non-financed transfers of residential real estate to legal entities or trusts. Here’s what you need to know if you handle residential real estate transactions:

Why is the Department of Treasury requiring this filing?

This reporting requirement is designed to combat money laundering and increase transparency in the residential real estate sector. While legal entities and trusts may own residential real property, the Department of Treasury seeks to deter individuals from disguising their identities and making the proceeds of their crimes difficult to identify.

What is the Real Estate Report?

The Real Estate Report is a FinCEN form used to report information required by 31 CFR 1031.320 concerning transfers of certain residential real estate due to their high risk for illicit finance. A reportable transfer is a “non-financed transfer to a transferee entity or transferee trust of an ownership in residential real property.” As such, transfers financed only by private lenders (or seller-financing) may be treated as “non-financed,” as well as quitclaim deeds to an entity or trust with no consideration.

Note that some transactions are exempt from the filing requirement, including a transfer that is a grant, transfer, or revocation of an easement or a transfer made to a bankruptcy estate. A full list of transfers that do not need to be reported can be found here.

How is residential real property defined?

For purposes of the Residential Real Estate Rule, “residential real property” is defined as:

• Real property containing a structure designed for the occupancy of one to four families;
• Land 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; or
• Shares in a cooperative housing corporation.

Accordingly, residential real property can include single-family homes, townhouses, and condos, as well as cooperatives in large buildings containing many units and entire buildings designed for one to up to four families to occupy.

Who is a reporting person?

The “reporting person” is the individual who must file the Real Estate Report. Only one person per transaction is considered the reporting person and can be identified through the reporting cascade (defined below) or by a written designation agreement described in the cascading reporting order.

The reporting cascade is a list of seven functions that may be performed in a reportable transfer of residential real property. As noted above, unless otherwise designated, the reporting cascade determines who the reporting person is. In other words, the individual who performs the first function described below is the reporting person. However, if no one performs the first function, the reporting person is the individual who performs the second function and so on.

The reporting cascade follows:

1. The person listed as the closing or settlement agent on the closing or settlement statement;
2. If no person described above is involved, the person that prepares the closing or settlement statement for the transfer;
3. If no person described above is involved, the person that files with the recordation office the deed or other instrument that transfers ownership of the residential real property;
4. If no person described above is involved, the person that underwrites an owner’s title insurance policy for the transferee with respect to the transferred residential real property, such as a title insurance company;
5. If no person described above is involved, the person that disburses in any form, including from an escrow account, trust account, or lawyers’ trust account, the greatest amount of funds in connection with the residential real property transfer;
6. If no person described above is involved, the person that provides an evaluation of the status of the title; or
7. If no person described above is involved, the person that prepares the deed or, if no deed is involved, any other legal instrument that transfers ownership of the residential real property, including, with respect to shares in a cooperative housing corporation, the person who prepares the stock certificate.

When do I have to file the Report?

A Real Estate Report must be filed for any reportable transfer that has a closing date of March 1, 2026 or later. It must be filed by the last day of the month following the month in which the closing occurred or thirty days after the date of closing (whichever is later).

How do I file the Report?

If you are a reporting person, you can file the Real Estate Report electronically through FinCEN’s free BSA E-Filing System, at https://bsaefiling.fincen.gov/. You can log in to the BSA E-Filing System through a www.login.gov account and review whether previously submitted filings were successful.

How does this Rule affect real estate attorneys?

Lawyers involved with residential real estate transactions should carefully evaluate whether they are obligated to file a Real Estate Report. Specifically, lawyers should determine whether a reportable transfer has occurred and whether their function in the transaction obligates them to file the Report as the reporting person.

Compliance with this Rule is critical as violations carry significant civil and criminal penalties,  with fines of $1,430 for each negligent violation and additional penalties of up to $111,308 for a pattern of negligent activity. Criminal penalties for a willful violation of the rule may result in a prison term of up to five years and fine not to exceed $250,000.

For more information concerning the Residential Real Estate Rule, see the Frequently Asked Questions page of the FinCEN website here.