New Compliance Obligations for Real Estate Professionals Under FinCEN’s Residential Real Estate Rule
Beginning March 1, 2026, title companies, escrow agents and attorneys are subject to new reporting obligations for non-financed transfers of U.S. residential real estate to most legal entities and trusts. The U.S. Financial Crimes Enforcement Network (FinCEN), issued the Anti-Money Laundering Regulations for Residential Estate Transfers Rule in August of 2024, requiring the filing of a Real Estate Report (“RER”) for any “reportable transfer.” Reporting obligations were previously to commence as of December 1, 2025 but were recently pushed back to March 1, 2026.
The requirements imposed by the final rule were designed to increase transparency in transactions that present higher risks of money laundering and other forms of illicit finance. The final rule expands the reporting requirements established by Geographic Targeting Orders, FinCEN’s traditional tool for combatting illicit finance in the residential real estate sector. The final rule applies nationwide, covers transfers to trusts in addition to other legal entities, removes monetary thresholds and renders attorneys and escrow agents as potential reporting persons in addition to title companies.
What Transfers Are Reportable?
A transfer is reportable if it meets all of the following:
- The transfer involves residential real estate (1–4 family homes and apartment buildings, townhouses, condo and co-ops units and vacant land intended for 1-4 family residential use),
- The transfer is non-financed or financed by lenders who are not subject to anti money-laundering and suspicious activity reporting under federal law (e.g., all-cash or private/seller financing),
- The buyer is an entity or trust (domestic or foreign), and
- No exemption applies.
Mixed use properties may also be reportable if they contain residential real estate (e.g., a single-family residence above a commercial enterprise).
What Information Is Reportable?
- The property being transferred,
- The legal entity or trust acquiring ownership of the property,
- The beneficial owners of that entity or trust,
- The individuals signing documents on behalf of the transferee entity or trust,
- The transferor, and
- The total consideration and information about the payments made.
Who Is Responsible for Reporting?
The “reporting person” must file the RER electronically on the form promulgated by FINCEN, which may be reviewed at the following link: https://www.fincen.gov/system/files/2025-09/RER-Form-508C.pdf. The final rule sets forth a cascading framework to identify the reporting person, based on seven (7) key roles within a transaction that are typically served by title companies, independent escrow agents or a party’s attorney. The transaction’s closing or settlement agent has the highest priority for filing under the cascading framework; if no such agent is involved, the professionals involved must move down the cascade until a role applies to the transaction. Notably, the potential reporting parties may designate the responsible filer by written agreement rather than follow the cascading framework.
Reporting persons’ collection of information is subject to a reasonable reliance standard, meaning a reporting person may rely upon information supplied by other persons so long as there is no reason to suspect the information is false.
When Is the RER Filed?
The RER must be filed by the last day of the month following the later of: (i) the month in which the closing occurred, or (ii) 30 calendar days from the date of closing.
RER Recordkeeping
The reporting person is not required to retain a copy of the filed RER, however they must retain any certifications regarding the transferee’s beneficial ownership information and any written agreements as to the designation of the reporting person for five (5) years. All other parties to a designation agreement must retain a copy of the agreement for the 5-year period as well.
The filed RER will be maintained by FinCEN in a secure database that will not be accessible by the general public. Pursuant to federal law, reports such as the RER are exempt from disclosure under the Freedom of Information Act.
What Are the Penalties?
Non-compliance may lead to fines for negligent or non-willful violations, especially where there is a pattern of non-compliance or failure to maintain required records. Willful violations, such as knowingly failing to file, filing false information, or aiding and abetting such conduct, may lead to substantial fines and possible imprisonment. These penalties are not set forth within the final rule but apply under the Bank Secrecy Act (“BSA”), which imposes civil and criminal penalties for violations of the BSA’s requirements.
Exemptions
Certain transfers are excluded from reporting obligations either due to the nature of the transfer or the transferee, including but not limited to transfers: (i) to individuals, (ii) to governmental authorities, insurance companies, regulated financial institutions and the subsidiaries of the foregoing transferees, (iii) related to inheritance, divorce or bankruptcy, (iv) made under court supervision, (v) to qualified intermediaries in a 1031 exchange, (vi) to trusts for estate planning purposes and (vii) to other exempt trusts, which include securities reporting issuer trusts, statutory trusts and their subsidiaries.
Conclusion
As the March 1, 2026 reporting date approaches, real estate practitioners should begin to update their transaction procedures and develop recordkeeping systems to ensure timely and accurate reporting. Early preparation will be critical to navigating these new requirements and minimizing legal and regulatory risk. We are closely monitoring regulatory developments and well-prepared to assist both clients and affected real estate professionals with interpreting the final rule, updating compliance protocols, and addressing any questions regarding implementation.
Our Real Estate Practice Group is experienced in the entire range of commercial and residential real estate transactions, cooperative and condominium governance and related matters, and offers a sophisticated and cost-effective alternative to BigLaw rates without compromising quality. Please feel free to contact Neal Weinstein, nweinstein@kanekessler.com at 212 519-5184 or Seamus McDonough smcdonough@kanekessler.com at 212 519-5183 with any questions regarding this Article or any other matter you may want to discuss.
Kane Kessler, P.C. is a full-service, general practice law firm with expertise in multiple disciplines, including Corporate, Securities and Capital Markets, Mergers and Acquisitions, Finance, Litigation, Intellectual Property, Real Estate and Trusts and Estates.