On August 29, 2024, the Financial Crimes Enforcement Network (“FinCEN”) published the Anti-Money Laundering Regulations for Residential Real Estate Transfers (“Residential Real Estate Rule”), which regulations went into effect on December 1, 2025. On September 30, 2025, FinCEN announced a blanket exemption from the reporting requirements of the Residential Real Estate Rule until March 1, 2026. Note, FinCEN’s announcement does state that any Real Estate Geographic Targeting Orders remain in effect.

The Residential Real Estate Rule requires certain persons to report non-financed transfers of residential real property to entities and trusts, on a nationwide basis. The aim of the Residential Real Estate Rule is to further the Bank Secrecy Act (31 USC §5311 et seq.) (“BSA”) and assist law enforcement and national security agencies in addressing illicit finance risks posed by criminals and malign actors in laundering ill-gotten gains through transfers of residential real property. Currently, most residential real estate transactions involve mortgage loans or other financing from financial institutions that are subject to other anti-money laundering reporting requirements under the BSA.

Looking ahead to when compliance with the Residential Real Estate Rule is necessary, below is a brief summary of the Residential Real Estate Rule.

What is “residential real property” under the Residential Real Estate Rule?

Residential real property means:

(i) real property located in the United States containing a structure designed principally for occupancy by one to four families;

(ii) land located in the United States on which the transferee intends to build a structure designed principally for occupancy by one to four families;

(iii) a unit designed principally for occupancy by one to four families within a structure on land located in the United States (e.g. a condominium unit); or

(iv) shares in a cooperative housing corporation for which the underlying property is located in the United States.

What is a “reportable transfer” under the Residential Real Estate Rule?

A reportable transfer is a non-financed transfer to a transferee entity or transferee trust of an ownership interest in residential real property. There is no requirement that all of the ownership interest be transferred in order for the transfer to be a reportable transfer.

A reportable transfer does not include a transfer:

(i) of an easement (including a grant or revocation);

(ii) resulting from the death of an individual, whether pursuant to the terms of a decedent’s will or the terms of a trust, operation of law, or by contract;

(iii) incident to divorce or dissolution of a marriage or civil union;

(iv) to a bankruptcy estate;

(v) supervised by a court in the United States;

(vi) for no consideration made by an individual, either alone or with their spouse, to a trust of which such individual, their spouse, or both, are the settlor(s) or grantor(s);

(vii) to a qualified intermediary for purposes of a 1031 exchange (26 CFR 1.1031(k)–1); or

(viii) for which there is no reporting person.

What is a “non-financed transfer” under the Residential Real Estate Rule?

The term ‘‘non-financed transfer’’ means a transfer that does not involve an extension of credit to all transferees that is: (i) secured by the transferred residential real property; and (ii) extended by a financial institution that has both an obligation to maintain an anti-money laundering program and an obligation to report suspicious transactions.

Thus, a Residential Real Estate Report will have to be filed with FinCEN, even if a transfer involves: (a) financing from a hard money lender, or (b) a private loan or similar loan situation, where the creditor does not have separate obligations to report under the BSA (for instance, suspicious activity reports or other anti-money laundering reports).

What is a “transferee entity” under the Residential Real Estate Rule?

The term ‘‘transferee entity’’ means any person other than a transferee trust or an individual. For example, a corporation, a limited liability company, a partnership, an association or an estate.

A transferee entity does not include:

(i) securities reporting issuers;

(ii) governmental authorities;

(iii) banks;

(iv) credit unions;

(v) depository institution holding companies;

(vi) money services businesses;

(vii) brokers and dealers in securities;

(viii) securities exchanges and clearing agencies;

(ix) other Exchange Act registered entities;

(x) insurance companies;

(xi) state-licensed insurance producers;

(xii) Commodity Exchange Act registered entities;

(xiii) public utilities;

(xiv) financial market utilities;

(xv) pooled investment vehicles; and

(xvi) controlled or wholly owned subsidiaries of any of the above.

What is a “transferee trust” under the Residential Real Estate Rule?

The term ‘‘transferee trust’’ means any legal arrangement created when a person (generally known as a grantor or settlor) places assets under the control of a trustee for the benefit of one or more persons (each generally known as a beneficiary) or for a specified purpose, as well as any legal arrangement similar in structure or function to the above, whether formed under the laws of the United States or a foreign jurisdiction.

A transferee trust does not include:

(i) a trust that is a securities reporting issuer;

(ii) a trust in which the trustee is a securities reporting issuer;

(iii) a statutory trust, which means any trust created or authorized under the Uniform Statutory Trust Entity Act or as enacted by a State; or

(iv) an entity wholly owned by a trust described above.

Who is a “reporting person” under the Residential Real Estate Rule?

The reporting person for a reportable transfer is the person engaged within the United States as a business in the provision of real estate closing and settlement services that is:

(i) the person listed as the closing or settlement agent on the closing or settlement statement for the transfer (e.g. title company, attorney or real estate broker);

(ii) if no person described above is involved in the transfer, then the person that prepares the closing or settlement statement for the transfer;

(iii) if neither of the above is involved, then the person that files with the recordation office the deed or other instrument that transfers ownership of the residential real property;

(iv) if none of the above is involved, then 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;

(v) If none of the above is involved, then 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;

(vi) If none of the above is involved, then the person that provides an evaluation of the status of the title; or

(vii) If none of the above is involved, then 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.

If an employee, agent, or partner acting within the scope of such individual’s employment, agency, or partnership would be the reporting person, then the individual’s employer, principal, or partnership is deemed to be the reporting person. A financial institution that has an obligation to maintain an anti-money laundering program is not a reporting person.

Alternatively, the reporting persons may enter into an agreement with any other person described above as a reporting person to designate such other person as the reporting person with respect to the reportable transfer. If reporting persons decide to use designation agreements, a separate written agreement is required for each reportable transfer and all parties must maintain a copy of such designation agreement for five years.

What information about the transferee must be reported?

The following information must be reported for the transferee:  (i) full legal name (including any trade names or DBAs); (ii) current street address that is the entity’s principal place of business (if such address is not located in the US, then the report must also include the street address for the primary business location in the US); and (iv) a unique identifying number (such as a tax identification number). For transferee trusts, the report must also include: (a) the date the trust instrument was executed and (b) whether such trust is revocable.

Additionally, each beneficial owner (as such term is defined under the Corporate Transparency Act and its regulations) of the transferee must report, such individual’s: (1) full legal name; (2) date of birth; (3) current residential street address; (4) citizenship; and (5) unique identifying number (such as a tax identification number). The same information must also be reported for each individual signing on behalf of such transferee and also include the signing individual’s capacity in which it’s acting, and if such capacity is as an employee, agent or partner, then the name of such employer, principal or partnership.

What other information about the reportable transfer must be reported?

The Residential Real Estate Report must also include information about the transferor, the subject residential real property, the total consideration paid in connection with the reportable transfer, and the payment information. The transferor information includes most of the same information as described above for the transferee, except the report does not need to include the beneficial owner or signing individual information for the transferor. The residential real property information includes the street address, the legal description (such as section, block and lot), and the date of the closing. Additionally, the report must include certain information about the payments made by or on behalf of the transferee for the reportable transfer, including (i) each payment amount, (ii) each payment method (e.g. wire transfer), (iii) if paid from an account held at a financial institution, then such financial institution’s name and account number, and (iv) the name of any payor that is not the transferee. If the reportable transfer involves financing from a hard money lender or another private lender, then such lender must be included in the Residential Real Estate Report.

When must the Residential Real Estate Report be filed with FinCEN?

A reporting person is required to file a Real Estate Report by the later of either: (i) the final day of the month following the month in which the date of closing occurred; or (ii) 30 calendar days after the date of closing.

Where must the Residential Real Estate Report by filed?

The Residential Real Estate Report must be filed electronically with FinCEN. Here is a link to a sample of the Residential Real Estate Report online filing.

What are the penalties for failure to comply with the Residential Real Estate Rule?

Although the Residential Real Estate Rule does not specify penalties for failure to comply, FinCEN has stated that the statutory penalties for failure to comply would apply here, including civil penalties and potentially imprisonment for willful violations.

******************************************

For further information or guidance on your real estate transactions, please contact Leslie Feifer or our Real Estate Practice Group.