FinCEN Reporting Requirements Vacated

A 2024 Final Rule from the Financial Crimes Enforcement Network (“FinCEN”), would require that as of March 1, 2026, any non-financed residential real estate transaction where ownership is transferred to an entity or trust, subject to a few exceptions, would need to be reported to FinCEN. The goal of the 2024 Final Rule was to increase transparency in real estate transactions, and to detect and prevent money laundering through cash purchases of residential real estate by legal entities and trusts. However, a Texas federal district court judge in the case Flowers Title Companies, LLC v. Bessent, Case No. 6:25-cv-127 (E.D. Tex. Mar. 19, 2026), vacated the 2024 Final Rule, finding that the agency exceeded its statutory authority under the Bank Secrecy Act.

This reporting requirement under the 2024 Final Rule would add a whole new layer of paperwork, compliance, and complexity to many common, and often simple transactions, by requiring the filing of reports to FinCEN (the “Real Estate Reports”) regarding certain residential real estate transfers. The Residential Real Estate Reporting Frequently Asked Questions portion of the FinCEN website is 29 pages long, single spaced. These reporting requirements apply to simple transfers, such as if someone wanted to transfer their vacation cottage into a limited liability company to use as a rental property, or if someone wanted to transfer their residential real property into their revocable living trust. While there are exceptions that apply in some of these situations, your average residential real estate owner may not even be aware that the reporting requirement exists in the first place, let alone the exceptions to the reporting requirements and how they apply.

The Real Estate Reports required the reporting person to provide FinCEN with a bevy of information regarding the residential real estate transfer and the parties to the transfer, including (but not limited to) the identity of the reporting person, the residential real property being transferred, the transferee entity or transferee trust, the beneficial owners of the transferee entity or transferee trust, certain individuals representing the transferee entity or transferee trust in the transfer, if the transferee is a transferee trust, any trustee that is an entity, and the transferor. The reporting person also had to report a trove of information about the parties involved in the transaction, and the nature of the transaction, including (but not limited to) the total consideration paid for the property, and certain information about any payments made by the transferee entity or transferee trust.

FinCEN may file a notice of appeal of the Texas court’s decision, so while the reporting requirements are currently vacated, they could end up coming back. One aspect of particular interest will be whether FinCEN allows for an extension of the due date for the Real Estate Reports required under the 2024 Final Rule if it is reinstated. Under the current 2024 Final Rule, a Real Estate Report would need to be filed by the last day of the month following the month in which the date of closing occurred or 30 calendar days after the date of closing, whichever is later.