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Breaking Down FinCEN’s New Real Estate Disclosure Requirement

Starting March 1, 2026, the Financial Crimes Enforcement Network (FinCEN) requires disclosures to be made in connection with certain residential real estate transactions. This article provides a summary of these requirements, and what home buyers should expect moving forward. For any other questions or concerns, please contact your transactional attorney, your estate planning attorney, or Kendra Robbins (krobbins@rappandkrock.com).

THE 5 Ws OF REAL ESTATE REPORTING REQUIREMENT

What is the Real Estate Report?

The Real Estate Report (RER), a new requirement for FinCEN. The RER will apply to non-financed transfers of residential real estate.

Non-Financed: Residential real estate transfers are only required to report if they do not involve financing for the buyer or transferee of the property by a financial institution with anti-money laundering safeguards or suspicious transaction reporting requirements. If all of the buyers or other transferees which are party to a transaction uses any of the following financial institutions to finance the transaction, they are not required to report:

Banks;
Credit unions;
Savings and loan associations;
Residential mortgage lenders and originators, generally known as “mortgage companies” and “mortgage brokers”;
Federal National Mortgage Association (Fannie Mae); and
Federal Home Loan Mortgage Corporation (Freddie Mac).

Note: use of any of these financial institutions for partial financing exempts a buyer or transferee from reporting, so long as all buyers or transferees are party to the financing agreements. If one transferee uses financing, but not another, the transaction will be reportable.

Transfers: a transfer is any sale, gift, or other transfer of an ownership interest in residential real property or a cooperative housing corporation evidenced by a deed or other documentation of transfer. Certain transfers, however, are exempt, including transfers on death, divorce, or bankruptcy; court-supervised transfers; gifts; or “no consideration” transfers by an individual to a trust of which the individual and/or their spouse are the settlors or grantors. Grants, transfers, and revocations of easements are also exempt.

Residential Real Estate: single-family houses, townhouses, condominiums, and cooperatives, including condominiums and cooperatives in large buildings containing many such units, as well as entire buildings designed for occupancy by one to four families (i.e., duplexes). Even single-family residences which exist on or above commercial enterprises (think the NYC-style apartment over a store model) will be included in the reporting requirement, as well as land purchased by a developer intending to subdivide the land for smaller single-family residences or homes holding four or less families. Note that apartment buildings intended for occupancy by more than four families is not required to report.

Why is FinCEN requiring the RER?

Similarly to FinCEN’s Corporate Transparency Act requirements for disclosure of beneficial owner information we saw in 2024 (which is at this time not enforced by FinCEN), the Real Estate Report’s purpose is to provide transparency for certain real estate transactions which are at a “high risk for illicit finance” – that is, transactions which may be completed in connection with money laundering and/or fraud.

When will the RER become enforced, and when will residential real estate buyers be expected to report?

The reporting requirements will apply to all transactions occurring on or after March 1, 2026, by the later of (a) the last calendar date of the month following the closing month or (b) 30 calendar days after closing. For example, any reportable transaction occurring in March would have until April 30 to report. Real estate transactions closing prior to March 1, 2026, are not retroactively required to report.

Where will the RER be applicable?

The RER will be applicable to any purchase of residential real estate located in the 50 US. States, D.C., and any and all U.S. territories (such as Puerto Rico and Guam).

Who is subject to the RER requirements?

If one or more of the transferees is a “transferee entity” or “transferee trust,” representatives to the transaction (or transferee entities involved, if no representatives exist) will be required to report beneficial owner information of the transferee entity. Individuals purchasing non-financed real estate do not need to file a report.

Transferee entity: a “transferee entity” may be a corporation, partnership, estate, association, or limited liability company, provided they are not an entity which has heightened reporting requirements due to the nature of the entity (i.e., banks, insurance companies, credit unions, securities exchange or reporting companies). Beneficial owners would include individuals who directly or indirectly exercise substantial control over the entity (directors, managers, officers) and those who own or control at least 25% of the entity’s ownership interests.

Transferee Trusts: a “transferee trust” is any legal arrangement created when a person places assets under the control of a trustee for the benefit of one or more beneficiaries or for a specified purpose, whether formally formed under the laws of the United States or a foreign jurisdiction or informally arranged in such a manner. Exemptions from the “transferee trust” definition include a securities reporting issuer, or its trustees or subsidiaries. Beneficial owners of a transferee trust include the following:

A trustee of the transferee trust;
An individual other than a trustee who has authority to dispose of transferee trust assets, such as may be the case with a trust protector;
A beneficiary who is the sole permissible recipient of income and principal from the transferee trust or who has the right to demand a distribution of, or to withdraw, substantially all of the assets of the transferee trust;
A grantor or settlor who has the right to revoke the transferee trust or otherwise withdraw the assets of the transferee trust; or
A beneficial owner of a legal entity or trust that holds one of the positions described in the above four categories, taking into account the exemptions that apply to transferee entities and transferee trusts.

Reporting Person: the reporting person is the first applicable person involved in the transaction in the following reporting cascade. If none of the following people are involved in a reportable transfer, the report is not required to be filed. Please also note that any persons listed below who are responsible for reporting enters into a designation agreement assigning the reporting requirement to another applicable party from the reporting cascade, the designation agreement will dictate who reports.

The person listed as the closing or settlement agent on the closing or settlement statement;
If no person described above is involved, the person that prepares the closing or settlement statement for the transfer;
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;
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;
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;
If no person described above is involved, the person that provides an evaluation of the status of the title; or
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. In the event a residential real estate buyer uses a lawyer in a transaction, this is where a lawyer would be involved in the process.

6. How do I file the RER?

Reporting persons should submit reports on https://www.bsaefiling.fincen.gov. Note that all reports submitted to FinCEN are confidential and only used for FinCEN’s compliance requirements.

REQUIRED DISCLOSURES FOR THE RER

The following information is required on each RER for transactions occurring on or after March 1, 2026:

The Reporting Person
The applicable property being transferred (address and legal description)
Transferee Entity or Transferee Trust identifying information, including a TIN (note that a street address must be reported, and not a P.O. box for an entity’s address)
Beneficial Owners of the Transferee Entity or Transferee Trust and any signing individual in the transaction, including a TIN
Certain individual representing the transferee entity or transferee trust in the transfer
If the transferee is a transferee trust, any entity trustee
The transferor.

PENALTIES FOR NONCOMPLIANCE

Negligent violations of the rule could result in a civil penalty of, as of 2025, not more than $1,430 for each violation, and an additional civil money penalty of up to $111,308 for a pattern of negligent activity. Willful violations could result in a civil penalty of not more than the greater of the amount involved in the transaction (not to exceed $286,184) or $71,545.

Criminal penalties for willful violations of the rule could result in a term of imprisonment of not more than five years or a criminal fine of not more than $250,000, or both. For more information on criminal penalties, see 31 U.S.C. 5322.

ABOUT THE AUTHOR: Kendra Robbins is an Associate at Rapp & Krock, PC in the Business Transactions group and focuses on business and transactional law matters, including entity choice and formation

Rapp & Krock, PC presents the information in this article for general educational purposes only. Although this article discusses legal issues, it is not legal advice. The law and the content of any linked website may have changed since this article was written, and Rapp & Krock, PC makes no warranty or guarantee about the continuing accuracy of the information presented. Use of this article does not create an attorney-client relationship, and Rapp & Krock, PC does not represent you unless and until we are expressly retained in writing.