Fin Buying a property in an Entity or Trust? Visit our Blog to read about what you need to know about the new federal reporting rules.

FinCEN’s New Real Estate Reporting Rule: What Pennsylvania Buyers Need to Know.

The U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has issued new federal reporting requirements that directly impact residential real estate transactions across the country. The Residential Real Estate Reporting Rule (the “Reporting Rule”) introduces new compliance obligations for certain transactions, particularly those involving entities and trusts.

The Reporting Rule is aimed at combating money laundering and increasing transparency in real estate transactions, especially those historically conducted with little oversight, such as all-cash purchases through LLCs or trusts. Federal regulators have identified residential real estate as a frequent vehicle for illicit finance, particularly where beneficial ownership is obscured.

The Reporting Rule became effective on March 1, 2026. However, on March 19, 2026, a federal district court in the Eastern District of Texas, in Flowers Title Company v. Bessent, found that FinCEN exceeded its authority under the Bank Secrecy Act and vacated the Reporting Rule. Despite the Reporting Rule being currently unenforceable, it is highly likely that FinCEN or the U.S. Department of the Treasury will appeal this decision. Thus, it is important buyers know what to expect should the Reporting Rule be reinstated.

Which Transactions Must be Reported?
A transaction is generally reportable if it: i) is a transfer of residential real property which includes 1-4 family dwellings and certain vacant land intended for residential development; ii) is a non-financed transfer; iii) involves a buyer who is a legal entity or a trust; and iv) does not fall within any exemptions under the Reporting Rule. There is no minimum dollar threshold for reporting, even low value or no-consideration transfers may be reportable. The Reporting Rule applies to cash, private financing, or seller-financed deals.

Who Has to Report?
The obligation to report does not fall on the buyer or seller directly, but instead on a designated “reporting person.” Typically, this is determined by a hierarchy, with priority given to the closing or settlement agent, the title insurance agent, the escrow agent, or any attorney involved in the closing.

What Must be Reported and When Must the Report be Submitted?
The required report must include: i) the property details and purchase price; ii) the identity of the purchasing entity or trust; iii) the beneficial ownership information of the purchasing entity or trust including individuals with substantial control or 25% or more ownership; and iv) transaction details and parties involved. In some cases, the report may require the purchasing entity or trust and even the seller to provide financial documents and information used in the transaction. Reports must generally be submitted within 30 days following the closing date, or by the end of the following month, depending on timing. The Reporting Rule requires that supporting documentation must be retained for a period of 5 years.

The Reporting Rule represents a major shift toward federal oversight of real estate transactions. If your entity, business, or trust is purchasing residential real estate, contact one of our Real Estate Attorneys to discuss updates on your reporting obligations.

The information provided on this blog is for general informational purposes only and does not constitute legal advice.
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