Effective March 1, 2026

Beginning March 1, 2026, a new federal law requires certain residential real estate transactions to be reported to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

This rule—known as the FinCEN Residential Real Estate Reporting Rule (RRR)—is intended to increase transparency in residential real estate transactions and help prevent money laundering.

If you are buying, selling, or investing in residential property through an LLC, corporation, partnership, or trust, this new requirement may apply to your transaction.

What Transactions Are Covered?

In general, reporting will be required when:

  • The property is residential or includes any residential units (1–4 family homes, condominiums, townhomes, apartment buildings, or co-ops);
  • The purchase is made without institutional lender financing (such as cash or private/hard money financing); and
  • At least one buyer is a legal entity (LLC, corporation, partnership) or a trust.

If a federally regulated lender with an anti-money laundering program is involved, reporting may not be required.

Because exemptions and exclusions can apply, each transaction must be reviewed individually.

Who Is Responsible for Filing the Report?

The closing agent is responsible for collecting the required information and filing the report with FinCEN.

To avoid closing delays, the required information should be gathered as early as possible – ideally 30-45 days before the scheduled closing date.

If reporting is required, the closing agent must collect the information in order to close the transaction.

What Information Must Be Reported?

The new rule requires detailed ownership and funding information. Depending on the structure of the transaction, the following may be required:

For Entity Buyers (LLCs, Corporations, Partnerships)

  • Full legal name of the entity
  • Trade name (if applicable)
  • Street address (no P.O. Boxes)
  • Tax Identification Number
  • Identification of individuals with substantial control over the entity
  • Identification of owners holding 25% or more of the ownership interest in the entity
  • Full legal name, date of birth, residential address, citizenship, and Tax ID (or foreign equivalent) for required individuals

For Trust Buyers

  • Full legal name of the trust
  • Date trust instrument was executed
  • Identification of all Trustees
  • Identification of all Beneficiaries
  • Identification of all Grantor/settlors
  • Full legal name, date of birth, residential address, citizenship, and Tax ID (or foreign equivalent) for all the individuals noted above

Funding Information

Every dollar paid for the property must be sourced by the Closing Agent. For each check or wire, the following must be disclosed:

  • Originating financial institution
  • Account number
  • Name on the account
  • Method of payment (wire, check, etc.)
  • Dollar amount of funds used for the purchase

Sellers may also be asked to provide certain identifying information necessary to complete the report.

Are There Exemptions?

Yes. Certain transactions and entities may be excluded from reporting.

Examples of potential exemptions include:

  • Transfers due to death, divorce, or bankruptcy
  • Some 1031 exchanges
  • Certain governmental or regulated entities
  • Federally regulated financial institutions

Because exemptions are fact-specific, it is important to consult with your closing agent or legal counsel to determine whether reporting applies.

Can a Closing Occur Without the Required Information?

No.

If a transaction is subject to FinCEN reporting, the closing agent must collect and report the required information in connection with the closing. Title commitments and contract forms may also be updated to reflect these requirements.

Are There Penalties for Non-Compliance?

Yes. Federal penalties may apply for failure to comply.

Negligent violations may result in monetary penalties.
Willful violations may carry significant civil and criminal penalties, including substantial fines and potential imprisonment.

Compliance with the new rule is mandatory where applicable.

What Should Buyers and Investors Do Now?

If you purchase residential property through an entity or trust—particularly in cash or privately financed transactions—you should:

  • Ensure your entity ownership records are current.
  • Identify in advance who qualifies as a beneficial owner.
  • Be prepared to certify required information in writing.
  • Expect additional compliance steps during the closing process.

Early preparation will help avoid delays.

How McKillop Law Firm Has Prepared

Our office is ready for implementation of the FinCEN Residential Real Estate Rule. We have a system in place to help Buyers and Sellers provide the required information online through a secure portal. This will help keep your closing moving forward.

If you have questions about how this rule may affect your upcoming transaction, entity structure, or closing timeline, we encourage you to contact our office.

Frequently Asked Questions About the FinCEN Real Estate Rule

Does FinCEN reporting apply to individual buyers?

In general, no. The reporting requirement typically applies when at least one buyer is a legal entity (such as an LLC, corporation, or partnership) or a trust. If all buyers are purchasing in their individual names, reporting is generally not required.

Does this apply if I am obtaining a traditional mortgage?

If the transaction is financed by a federally regulated financial institution that maintains an anti-money laundering (AML) program, reporting may not be required. However, each transaction must be reviewed individually to determine applicability.

Does this rule apply to hard money or private financing?

Yes. Transactions involving private lenders or hard money financing may still be subject to reporting if the other criteria are met.

Who is considered a “beneficial owner”?

A beneficial owner of an entity generally includes individuals who exercise substantial control over an entity (such as managers, officers and directors) or own 25% or more of the ownership interests. In trust transactions, all trustees, beneficiaries, grantors, and any other individuals with authority to control or withdraw assets must be disclosed.

Will this delay my closing?

It can if required information is not provided in a timely manner. Because the closing agent must collect and report the required information when applicable, parties are encouraged to provide documentation early in the transaction process to avoid delays.

Are there penalties for failing to comply?

Yes. Federal law provides for civil and criminal penalties for negligent or willful non-compliance. Compliance is mandatory where reporting is required.

Will there be an additional fee for FinCEN reporting?

Because reporting requires additional collection and filing responsibilities by the closing agent, a separate compliance or reporting fee may be charged in transactions where the rule applies.

Where can I find official information about this rule?

Additional information is available through the Financial Crimes Enforcement Network (FinCEN) at fincen.gov. However, because the application of the rule is transaction-specific, you should consult with your closing agent or legal counsel regarding your particular situation.