Joe Wallin | March 2026
If you use an LLC, trust, or other legal entity to buy residential real estate—or advise clients who do—there is a new federal reporting obligation you need to know about. As of March 1, 2026, certain real estate transfers to legal entities and trusts must be reported to the Financial Crimes Enforcement Network (FinCEN). This is not a drill. The rules are in effect now.
What Is This Rule and Why Does It Exist?
The Anti-Money Laundering Regulations for Residential Real Estate Transfers—commonly called the Residential Real Estate Rule or RRE Rule—was published by FinCEN in August 2024. The rule is designed to combat money laundering and illicit finance in the U.S. residential real estate market.
For years, FinCEN ran targeted Geographic Targeting Orders (GTOs) requiring title insurance companies to identify the beneficial owners of legal entities buying residential real estate in cash in select metropolitan areas. The new rule nationalizes and expands that concept—no more geographic limits, and closing agents (not just title insurers) are now on the hook to report.
The rule was originally set to take effect December 1, 2025, but the Trump Administration delayed it to March 1, 2026 to give the industry more time to prepare.
What Transactions Are Covered?
A transaction is a "reportable transfer" under the RRE Rule when all three of the following conditions are met:
- The property is U.S. residential real property — this includes single-family homes, townhouses, condominiums, cooperatives, and land on which the transferee intends to build a 1–4 family structure;
- The transfer is non-financed — meaning it is not financed by a lender subject to both an anti-money laundering program requirement and a Suspicious Activity Report (SAR) filing obligation. All-cash deals are the core target, but so are deals financed by private/hard-money lenders that lack AML programs;
- The transferee is a legal entity or trust — LLCs, corporations, partnerships, and most trusts all qualify. Sales to individuals are not covered.
If all three conditions are met and no exemption applies, a Real Estate Report must be filed with FinCEN.
Who Has to File—The Reporting Cascade
Only one party files the Real Estate Report per transaction. FinCEN uses a "cascade" system to determine who that is, based on who performs specified closing or settlement functions. The cascade priority (from first to last) is:
- The closing or settlement agent listed on the settlement statement;
- The person who prepares the settlement statement;
- The person who files the deed with the recording office;
- The title insurance underwriter (e.g., title insurance company);
- The person who disburses the largest amount of funds;
- The person who provides a title evaluation (e.g., title search/opinion);
- The person who prepares the deed or other ownership transfer instrument.
The first person in this hierarchy who participates in the transaction is the reporting person. Parties can also enter into a written designation agreement to shift responsibility to another participant—but that agreement must be transaction-specific, in writing, and retained for five years.
A Special Note for Attorneys
Estate planning attorneys and transactional lawyers should pay close attention. In jurisdictions where attorneys commonly prepare or record deeds—or serve as the settlement agent—they could find themselves as the "reporting person" in the cascade, even in what appear to be routine interfamily or estate planning transfers.
If an attorney wants to avoid being the reporting person, they should consider entering into a designation agreement to shift that responsibility to a title company or other participant. However, the attorney still needs to be mindful of their obligations as a closing participant.
What Information Must Be Reported?
The Real Estate Report requires detailed information about everyone involved in the transaction. The reporting person must identify and provide information about:
- The reporting person itself;
- The property being transferred;
- The transferor (seller), whether an individual, entity, or trust;
- The transferee entity or transferee trust receiving the property;
- The beneficial owners of the transferee entity or trust — each person who exercises substantial control or owns/controls 25% or more of the transferee;
- The signing individuals — those who sign documents on behalf of the transferee;
- Payment details, including purchase price, method of payment, and account information.
Each individual identified must provide their full name, address, date of birth, and a unique identifying number (such as a taxpayer identification number or driver's license number). The definition of "beneficial owner" mirrors the Corporate Transparency Act standard—at least 25% ownership or substantial control.
When Must the Report Be Filed?
Reports are due by the later of: (1) the last day of the month following the month in which the closing occurred, or (2) 30 calendar days after the date of closing. In practice, reporting persons will generally have 30 to 60 days after closing to file.
Reports must be filed electronically through FinCEN's BSA E-Filing System, either via an online form, a PDF upload, or batch XML filing.
What Are the Penalties for Non-Compliance?
The penalties for failing to file are serious:
- Negligent violations: civil penalty of up to approximately $1,394 per violation, plus up to approximately $108,489 for a pattern of negligent activity;
- Willful violations: criminal penalties including imprisonment of up to five years, a fine of up to $250,000, or both.
These are "trap for the unwary" penalties—a real estate professional who inadvertently steps into the reporting cascade and doesn't file could face significant liability.
What Does This Mean for Founders and Investors?
Many founders, investors, and high-net-worth individuals hold real estate in LLCs or trusts for liability protection, privacy, or estate planning reasons. Those structures are now squarely in FinCEN's sights.
If you are buying residential real estate in an LLC, corporation, partnership, or trust, and you are paying cash or using private financing, a Real Estate Report will need to be filed. You and the other beneficial owners of the entity will be identified in that report. That information will be accessible to law enforcement but not publicly released under FOIA.
Practical takeaways for founders and investors:
- Make sure your title company or closing agent knows the rule applies and is prepared to file;
- Be ready to provide beneficial ownership information for your entity or trust at closing;
- Understand that using a FinCEN Identifier from a prior BOI filing can streamline this process for transferee entities;
- If you are working with an attorney who may be preparing or recording the deed, discuss who will be the reporting person before closing.
Where to Learn More
FinCEN has published extensive guidance at fincen.gov/rre, including a full set of FAQs, a Quick Reference Guide, and the Real Estate Report filing instructions. If you have questions about how this rule applies to a specific transaction—especially one involving an LLC, trust, or other entity—please reach out to me directly.
DISCLAIMER: This article is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this post. Please consult a qualified attorney regarding your specific situation.
Joe Wallin is a startup and corporate attorney at Carney Badley Spellman in Seattle. He focuses on QSBS/Section 1202 planning, startup formation, and equity compensation. He can be reached at thestartuplawblog.com.
