Street Law School: New FinCEN Real Estate Reporting Rule Affects Home Transfers To Trusts

Effective March 1, 2026, many common residential real estate transfers will trigger new federal reporting requirements under the Financial Crimes Enforcement Network’s (FinCEN) Anti‑Money Laundering Regulations for Residential Real Estate Transfers (the Reporting Rule).¹ Although issued in August 2024, enforcement was delayed by the U.S. Department of the Treasury; that delay expires on March 1, 2026, and the rule is now fully enforceable.²

Covered Transactions

The Reporting Rule applies to certain non‑financed transfers of U.S. residential real property to legal entities or trusts, including corporations and limited liability companies.³ Covered property generally includes one‑to‑four‑family homes, condominium and cooperative units, and vacant land intended for residential construction.⁴ Transactions financed by a regulated financial institution with a loan secured by the property are generally excluded, as are transfers to certain highly regulated entities.⁵

Key Exemptions

The rule does not apply to several categories of transactions, including transfers at death, transfers incident to divorce, court‑supervised transfers, transfers to bankruptcy estates, certain no‑consideration transfers to grantor trusts, qualifying Section 1031 exchanges (though later transfers may be reportable), and transactions for which no “reporting person” exists under the regulations.⁶

Reporting Responsibility

Reporting obligations are determined under a regulatory “waterfall,” which typically assigns responsibility to the closing or settlement agent listed on the settlement statement, or to another party involved in preparing, recording, insuring, or funding the transaction.⁷ Parties may designate an alternative reporting person by written agreement that satisfies regulatory requirements.⁸ Financial institutions already subject to federal anti‑money laundering reporting obligations are not reporting persons under the rule.⁹

Required Disclosures

The Real Estate Report requires detailed information regarding the reporting person, the transferee entity or trust and its beneficial owners or trustees, the transferor, transaction signatories, and the property.¹⁰ The report must also disclose the purchase price, payment methods, financial institutions and accounts used, and any private or non‑bank financing.¹¹

Filing Deadlines and Penalties

Reports must be filed electronically through FinCEN’s BSA E‑Filing System by the later of 30 days after closing or the last day of the month following the month of closing.¹² Certain certifications and agreements must be retained for five years.¹³ Failure to comply may result in significant civil penalties, and willful violations may carry criminal liability.¹⁴

Practical Considerations

These new federal rules require FinCEN reporting when residential property is transferred to a LLC or a trust. Residential property is broadly defined to include single-family houses, 1-4 family houses, condominiums, and cooperatives. Parties involved in residential real estate transactions—particularly those involving LLCs or trusts and cash or private financing—should review transaction structures, coordinate early with settlement professionals, and ensure timely collection of required ownership and payment information.¹⁵ Finally, the parties to the real estate transfer should agree in writing which professional involved will submit the online FinCEN report. For example, if a trust is the recipient transferee of the real estate, the trust’s attorney should be designated.

Endnotes

1. 31 C.F.R. § 1031.320 (2026).
2. Exemptive Relief Order to Delay the Effective Date of the Residential Real Estate Rule, Fin. Crimes Enf’t Network, U.S. Dep’t of the Treasury (Sept. 30, 2025).
3. 31 C.F.R. § 1031.320(b)(1).
4. Id.
5. 31 C.F.R. § 1031.320(n)(5).
6. 31 C.F.R. § 1031.320(n)(10)–(11); 31 C.F.R. § 1010.380(c)(2).
7. 31 C.F.R. § 1031.320(b)(2).
8. Fin. Crimes Enf’t Network, Residential Real Estate Reporting FAQs, FAQ E.6 (Feb. 17, 2026).
9. 31 C.F.R. § 1031.320(c)(1)(i)–(vii).
10. 31 C.F.R. § 1031.320(c)(4).
11. 31 C.F.R. § 1031.320(c)(2)–(3).
12. 31 C.F.R. § 1031.320(d)–(g).
13. 31 C.F.R. § 1031.320(h), (k).
14. 31 U.S.C. §§ 5321–5322; 31 C.F.R. § 1010.821.
15. Fin. Crimes Enf’t Network, Residential Real Estate Reporting FAQs, FAQs K.1–K.3 (Feb. 17, 2026).