In August 2024, the Financial Crimes Enforcement Network (FinCEN) announced a Final Rule that is designed to combat and deter money-laundering by increasing transparency in the US residential real estate market. The rule requires that certain persons involved in a residential real estate closing are to report information to FinCEN about specific transfers of real estate.  This final rule takes effect on December 1, 2025.

Real Estate transfers are reportable when they meet the following requirements:

The property is residential real property.

1. The transfer is not financed by a bank or other financial institution, and
2. The property is transferred to a legal entity (such as an LLC) or trust (including your estate planning trust), and
3. An exemption does not apply.

Note that:

• Transfers meeting the rule’s requirements must be reported regardless of purchase price or the value of the property.
• Gift transfers are subject to the rule.
• However, transfers made directly to an individual are not covered by this rule.

There are exemptions from reporting:

1. transfer of an easement;
2. transfer resulting from the death of an individual;
3. transfer incident to divorce;
4. transfer to a bankruptcy estate;
5. transfer supervised by a court in the US;
6. transfer made for no consideration by an individual;
7. transfer to a qualified intermediary for purpose of a like kind exchange under Section 1031 of the IRS Code; and
8. a transfer for which there is no reporting person. Need to define “reporting person”

Who is Required to Report?

FinCEN believes that the obligation to file the report will typically rest with the settlement agents, title insurance agents, escrow agents, and attorneys. There is only one reporting person for any given reportable transfer.

What must be reported:

• The reporting person
• The legal entity or trust receiving ownership of the property
• The beneficial owners of the transferee entity or transferee trust
• Certain individuals signing documents on behalf of the transferee entity or transferee trust during the reportable transfer
• The transferor
• The residential real property being transferred; and
• Total consideration and certain information about any payments made.

Finally, it is important to note that a report must be filed by the later date of either:

1. the final day of the month following the month in which the reportable transfer occurred; or
2. 30 calendar days after the date of closing.

For additional information about the content in this post or assistance with any questions about real estate transactions or other legal matters, the attorneys at B&D are ready to help you. Reach out to us.