New FinCEN Reporting Rule Starts March 1 | What Agents, Buyers, and Sellers Should Expect at Closing

On March 1, 2026, an important new federal reporting requirement from the Financial Crimes Enforcement Network (FinCEN) will go into effect and change how certain residential real estate transactions are handled. While most buyers and sellers won’t see big changes, transactions involving legal entities or trusts with non-financed residential deals will require additional information collection and reporting. Your partnership in helping educate your clients will support a smooth process and help ensure your transaction closes efficiently and on time.

Why Is This New Rule Happening?

FinCEN’s goal with this rule is to increase transparency and reduce money laundering and financial crime in the U.S. real estate market. Federal officials have found that non-financed property transfers through legal entities (like LLCs, corporations, or trusts) have been used to hide the identities of buyers who may be using illicit funds.

What Transactions Are Affected?

This new rule only applies to certain transactions, including:

• Residential real estate — single-family homes, condos, townhouses, co-ops, and even vacant land where residential construction is planned.

• Non-financed transfers — transactions without a financial institution, lender, or bank mortgage and is a cash, seller-financed, hard money lender, etc. type of purchase.

• Transferee entities and trusts — the buyer is a business entity (LLC, corporation, partnership) or a trust (except certain exempt trust types).

• No exemptions apply.

The transaction must meet all four requirements to be deemed "reportable" to FinCEN.

What Are The Exemptions?

Certain transactions may be exempt from data collection under the FinCEN rule. Exemption eligibility depends on specific details — such as how and what property is being transferred, the type of entity involved, financing structure, etc. Each transaction will be reviewed individually. Our team is trained to evaluate whether reporting is required and will guide all parties through the process when applicable.

What Information Will Be Collected?

For transactions deemed "reportable," the reporting person (typically the settlement agent, title company, or closing attorney) must collect and report detailed information to FinCEN, including:

Information About The Buyer(s) (Transferee Entity/Trust):

• Name of the entity or trust

• Name(s) of individuals with beneficial ownership — generally those who own or control at least 25% of the entity or have significant control

• Date(s) of birth

• Residential address(es)

• Tax identification number(s)

Information About the Property and Transfer:

• Property address and description

• Date of closing

• Total consideration paid and funding details

• Identity of the seller and buyer’s representative

Who Is Responsible for Reporting?

FinCEN uses a hierarchy to determine who must file the report, often referred to as the reporting cascade. The priority order includes:

1. Person listed as closing/settlement agent on the settlement statement

2. Preparer of the settlement statement

3. Person who records the deed

4. Title insurance underwriter

5. Person disbursing the largest funds

6. Title evaluator or preparer of the deed

If you are closing with us, it's important to note that we (the settlement agent) will be the reporting party in your transaction. We will require all data collection to be complete prior to closing for timely reporting.

What This Means for You and Your Client

As the real estate agent/buyer/seller, you do not file the report yourself, but this rule will affect your transaction in several ways:

For Buyers:

• Buyers using LLCs or trusts — for non-financed deals — will be asked to provide beneficial ownership information during the closing process.

• Expect additional paperwork and questions if a buyer is an entity or trust.

• Understand that this information is not public — it is collected and submitted securely to FinCEN for law enforcement purposes.

For Sellers:

• If the buyer triggers the rule, sellers should be prepared to provide certain basic information required for FinCEN compliance as part of the closing process.

For Real Estate Agents:

• Be ready to educate clients early in the process about potential data requests at closing.

• Coordinate with title and settlement partners to gather the necessary documents PRIOR TO CLOSING.

  
  

The report itself must be filed by the last day of the month after closing or 30 days post-closing — whichever is later.

Final Thoughts

The new FinCEN rule marks a significant shift in how certain residential transactions (non-financed residential purchases by entities or trusts) are documented and reported. By staying informed and preparing clients early, you can help make the process smoother and avoid any closing delays.

If you have questions about specific transactions, feel free to reach out to our team. We're here to help make this transition more manageable for you and your clients.

More information can be found directly on the FinCEN website: https://www.fincen.gov/rre-faqs.