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FinCEN Delays Real Estate Reporting Rule to March 2026

FinCEN Delays Real Estate Reporting Rule to March 2026

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The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has delayed a Biden-era rule that requires real estate professionals involved in closings and settlements to file reports on residential real estate transfers that are “a high-risk for illicit finance” until March 2026. The rule was set to become effective on December 1, 2025. To implement the extension, FinCEN issued a temporary order granting exemptive relief from the reporting requirements. The order notes that the extension will give those in the industry more time to develop procedures and processes necessary to comply. 

Covered transfers include non-financed transfers (all-cash) of residential real estate to a legal entity or trust. The rule applies nationwide. The reporting requirement does not apply to transfers made directly to individuals or to sales involving mortgages or other financing. Only cash sales to entities are reportable. Transfers must be reported regardless of purchase price or the value of the property, so gift transfers also are subject to the rule.

Reporting is done on the RER form, Real Estate Report, and must be done by the final day of the following month after which a closing took place, or 30 days after the date of the closing, whichever is later. That gives the reporting person 30 to 60 days to file the report.

Note that the FinCEN rule requiring title companies to report beneficial owners in specific locations under the Geographic Targeting Order program is still effective.

Who Must File and How Reporting Is Assigned

The obligation to file reports will fall on settlement agents, title insurance agents, escrow agents and attorneys. There is only one reporting person for any given reportable transfer. The proper reporting person can be determined in one of two ways:

  1. Reporting cascade: The reporting “cascade” establishes a list of seven different functions (see below) a real estate professional may perform, with the reporting obligation imposed on the professional who performed a function that appears highest on the list.
  2. Real estate professionals decide: Under this method, the real estate professionals who perform the functions described in the cascading list may enter into a written agreement with each other to designate who will file the report.

The reporting cascade functions are as follows:

  1. Closing or settlement agent
  2. Preparer of closing or settlement statement
  3. Deed filer who records the deed or other instrument
  4. Underwriter, such as a title insurance company
  5. Fund disbursal person who disburses the greatest amount of funds, such as from an escrow account, trust account or lawyers’ trust account
  6. Title evaluator
  7. Deed preparer or preparer of any other legal instrument that transfers ownership

Types of Properties Covered by the Rule

The reporting rule applies to residential real property, including single-family houses, townhouses, condominiums and cooperatives, as well as entire buildings designed for occupancy by one to four families. These properties are reportable even if there is also a commercial use of the same building, such as a single-family residence located above a commercial enterprise. Certain types of vacant or unimproved land on which a residence is not yet built are also included if the land is zoned or permitted for residential construction.

What Must Be Included on the Real Estate Report

The following information must be included on the Real Estate Report:

  • Identity of the reporting person
  • Residential real property being transferred
  • Transferor
  • Transferee entity or transferee trust
  • Individuals representing the transferee entity or transferee trust in the
  • transfer
  • Beneficial owners of the transferee entity or transferee trust
  • Total consideration paid for the property, with information about any payments made by the transferee entity or transferee trust

Why the Rule Targets All-Cash Transfers and What the Delay Means

The Treasury explains that this rule is designed to capture information onnon-financed transfers because, without financial institutions involved, these transfers can used by illicit actors. Bad actors are identified as those that pose domestic threats, such as persons engaged in fraud or organized crime, and foreign threats, such as international drug cartels, human traffickers, and corrupt political or business figures. Moreover, the Treasury notes that non-financed transfers to legal entities and trusts heighten the risk that transfers will be used for illicit purposes.

The three-month pause on reporting will not only give those responsible for reporting transactions more time to comply but will presumably give the Administration another shot at reviewing the rules to determine if changes should be made or further exemptions should be given. Although it is a final FinCEN rule, the Administration could make changes to the scope of residential real estate reporting before it becomes effective, in line with its FinCEN anti-regulation initiatives.

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