FinCEN Rule

A key federal change is coming to real estate closings beginning March 1, 2026, and it affects Realtors as well as buyers and sellers involved in certain types of transactions. These new rules come from the Financial Crimes Enforcement Network (FinCEN)—a bureau of the U.S. Treasury—not the title insurance industry.  The Law Office of K. Brian Hay wants to make sure you know what is changing, why it is changing, and what it means for you.

Please note the following:

• The Law Office of K. Brian Hay is only acting as the information collector and report transmitter because federal law requires it.

• This is not a title insurance requirement.

• We must assess each real estate transaction to see if FinCEN reporting is required. The file is either a reportable file or non-reportable file. Our office must maintain records for years after the closing of the transaction as to the determination of if a report was filed or if there was an exception to the FinCEN rule (thereby a non-reportable transaction).

• We do NOT have any discretion to opt out.

What?

Beginning March 1, 2026, FinCEN will require a Real Estate Report to be filed for non‑traditionally financed (“all‑cash”) transfers of residential property when the buyer is a legal entity or a trust. This is a nationwide requirement with no minimum purchase price.  FinCEN’s purpose is to increase transparency and deter the use of real estate to hide unlawful funds.

Why?

According to FinCEN, the new rule objectives are to curb money laundering and the use of shell companies to hide ownership of real estate. 

Which Transactions Are Affected?

Beginning March 1, 2026, certain changes of ownership in residential real estate must be reported by certain real estate professionals to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement only applies if ALL of the following conditions are met:

·         the property is residential real estate;

·         the property is transferred without financing from a bank or similar financial institution, such as an all cash purchase or a gift; 

·         the property is transferred to a qualifying legal entity or trust, such as an LLC;

·         the transfer is not covered by an exception.

Who Must File the Report?

FinCEN created a “reporting cascade”—a priority order that determines who must file if no party is pre‑designated.  In most transactions, if a title company is involved, it will be the reporter because it will serve as the settlement or closing agent.

PLEASE REMEMBER:

• This is not optional; and

• This is not a title insurance product or requirement.

What Information Must Be Reported?

FinCEN requires specific details about:

• The reporting filer (person or entity submitting the report)

• The buyer entity or trust

• The beneficial owners (essentially anyone with 25% or more ownership interest or substantial control, senior officers, and persons with signatory authority)

• Identifying information for the beneficial owners to include:

  • SSN or ITIN

  • Identification, such as a Driver’s License or a Passport

  • Address and phone number

  • Occupation

• The seller

• The property and closing date

• The purchase amount and payment method

• Any “hard money” or non‑institutional financing is involved

Reports are not public. They are stored within the government’s Bank Secrecy Act system and accessed only by authorized officials.

What This Means for Realtors

• More documentation from buyers: if your buyer is purchasing through an LLC, partnership, corporation, or trust, they will need to provide ownership and control information.

• Slightly longer prep time before closing: collecting federal reporting details may add steps to your transaction timeline.

• Increased need for early communication: if your buyer/ seller is using an entity or trust, please flag it as early as possible so our team can help keep the closing on track.

What This Means for Buyers and Sellers

Buyers using an entity or trust: you will be required to disclose information regarding the true beneficial owners of the entity or trust purchasing the home.

Sellers: Your information will also be included in the report, but your required information is less extensive.

All parties: It is important to know that:

v  This information is not a public report.

v  The Law Office of K. Brian Hay is only TRANSMITTING information required by federal law.

Helpful Links

FinCEN Residential Real Estate Rule (Official Site) – https://www.fincen.gov/rre

FAQs – https://www.fincen.gov/rre-faqs

Quick Reference Guides – https://www.fincen.gov/rre-quick-reference-guides  

Reference Materials – https://www.fincen.gov/rre-reference-materials

IN CONCLUSION:

While this requirement adds a new federal reporting layer to certain transactions, we will continue to strive to make closing as easy as possible.

If you have questions, reach out—we are here to assist you.