Big change is coming to the real estate industry. As of December 1, 2025, a new federal rule from the Financial Crimes Enforcement Network will require more transparency in residential real estate transactions. FinCen’s Nationwide Real Estate Transparency rule is all about identifying the actual people behind property ownership, especially when legal entities or trusts are involved.
For years, certain types of property transfers were not subject to federal reporting and real estate was a haven for illicit financial activity. This rule closes that gap by imposing a national requirement. It’s final, permanent and applies to all states. The goal is to stop criminals from using shell companies or opaque legal structures to hide ownership of real estate.
This affects a wide swath of professionals and property owners. Title companies, real estate attorneys and escrow agents will need to adjust immediately. Buyers and sellers who use trusts or entities will be directly impacted. Awareness and preparation will be key as the deadline approaches.
What’s the Rule?
The new FinCEN reporting of residential real estate transactions requirement applies to residential real estate transfers not financed by institutional lenders. It’s for properties with 1 to 4 residential units, single-family homes, duplexes, triplexes and fourplexes. When the buyer is a legal entity or trust and the purchase doesn’t involve a mortgage from a bank or other financial institution, the transaction is reportable under the new regime.
Examples of covered transactions include cash purchases and seller-financed deals. The rule also applies when payment is made in cryptocurrency or other non-traditional means. It doesn’t matter if the property is an investment asset, second home or primary residence. If it meets the criteria and involves an entity or trust, it’s reportable.
This replaces the old Geographic Targeting Orders. Those were limited to specific metropolitan areas and were temporary. This new rule is nationwide and permanent. It removes ambiguity by applying the same requirements to qualifying transactions in every state and territory. The details are in the official FinCEN Final Rule Fact Sheet, which outlines the agency’s goal and how to comply.
Who’s Affected?
The reporting duty typically falls on the professionals at the closing. That’s title companies, settlement agents and escrow officers. In some cases, an attorney representing a party in the transaction may take on this responsibility but only if there’s a written agreement in place before the filing is due. They will need to collect and verify certain information about the transaction. Property details, buyer and seller information and beneficial owners of the buying entity or trust. More coordination between closing professionals, attorneys and clients.
What Transactions Are Covered?
The rule applies when a residential property with 1 to 4 units is transferred to an entity or trust and no institutional financing is involved. Covered transactions include:
- Cash only
- Seller financed
- Wire transfers or cryptocurrency
Any of these can trigger a report, depending on how the buyer is structured legally. The type of property, no mortgage and the type of buyer all factor into whether a Real Estate Report is required.
Key Definitions and Exemptions
To understand how the new FinCEN rule applies, you need to define some of the terms used and which transactions are exempt. Not all non-financed real estate transfers will require a report. The rule is designed to capture transactions where anonymity is more likely, especially when entities or trusts are involved.
Non-Financed Transfers
A non-financed transfer is a real estate purchase that does not involve a traditional loan or mortgage from a financial institution. These transfers include:
- Cash only
- Seller-financed, where the seller is extending credit to the buyer
- Wire transfers or other non-loan payment methods
These types of purchases are harder for the authorities to trace unless proper disclosures are made. That’s why the reporting requirement focuses on these transfers.
Who Is Exempt?
Several types of transactions are exempt from the reporting requirement. The exemptions are listed in FinCEN’s real estate reporting FAQ. Common exemptions include:
- Natural persons buying property in their own name
- Transfers resulting from divorce or family court orders
- Inheritances and probate transfers
- Gifts of property from one party to another with no payment
- Easement rights or minor interests in property
- Internal reorganizations ,such as a 1031 like-kind exchange
For example, if an individual pays cash for a house and does so in their personal name, that’s exempt. If a parent gifts property to a child through a quitclaim deed and no entity is involved, no report is required.
But if the same parent puts the property in a living trust and transfers ownership through that structure, the trust becomes an entity. In that case, a report may be triggered. This is why legal form trumps transaction size or price.
Beneficial Ownership Disclosure
When a buyer is a legal entity or trust, the individuals behind it must be disclosed in the Real Estate Report. These individuals are called beneficial owners. A beneficial owner is anyone who owns at least 25% of the entity or has control over it.
This definition matches the broader standards set by the Corporate Transparency Act which is already in effect for many business entities across the country. The goal is to prevent the use of anonymous companies and trusts for illegal purposes, including money laundering and tax evasion.
Documentation Requirements
To comply with the rule, the filer must collect:
- Legal names and addresses of all beneficial owners
- Dates of birth
- Government-issued photo identification, such as a passport or driver’s license
- Information about the entity or trust, including its legal structure and registration details
- Source of funds used to purchase
This level of transparency is similar to the financial industry where similar documentation has been required for years under anti-money laundering rules.
See our blog about what to bring to closing for additional identification requirements.
Reporting Requirements
The heart of the new FinCEN rule is the reporting itself. Title companies, escrow officers and settlement agents must now be formal participants in the disclosure process. This is not optional. It’s mandatory and enforceable by federal law.
Who Files the Report?
The default is that the title insurance or settlement agent handling the transaction files the report. However, another party such as a real estate attorney may be designated as the filer. This must be agreed to in writing between the parties. The rule is flexible but only if all parties are clear on who is filing.
If no such agreement exists, the responsibility falls to the entity providing title insurance for the transaction. This is outlined in the FinCEN Real Estate Reporting Guidelines which detail the reporting process.
What to Report
The Real Estate Report, or RER, must include all the following:
- Full address and legal description of the property
- Date and method of transfer
- Buyer and seller information
- Purchaser entity or trust structure
- Each beneficial owner
- Documentation to support source of funds used to purchase the property
In some cases this means collecting bank statements, wire transfer records or financial certifications to prove how the funds were obtained. The title or settlement agent must keep copies of all supporting documents and file the report through FinCEN’s electronic filing system.
Timeframe to File
The Real Estate Report must be filed within 30 days of closing. This is a short window for error correction or additional information gathering. Many in the title and settlement space are revising their intake processes and training now to avoid delays later.
What This Means For Homeowners and Individuals
While the rule targets entities and trusts, some individuals may be affected depending on how they structure their purchases. For example, a family putting a home in a living trust for estate planning purposes may trigger a report even if no financial crime is suspected. Someone buying a second property through a single-member LLC may be subject to the same reporting rules.
Most ordinary homebuyers using their personal name and traditional mortgage financing are exempt. But families gifting property, creating joint ownership structures or managing generational wealth through trusts should consult with legal professionals early in the transaction process. Small procedural choices can create unexpected reporting duties.
The principle is this: if the buyer is not a natural person and the transaction is not financed through a regulated lender, it’s likely within the scope of the rule. Being unaware of that fact will not protect the parties from enforcement or penalties.
Entities and Trusts
Entities and trusts now have a more complicated path to buying a home. Any organization or legal structure that plans to buy a home, duplex, triplex or similar residential unit without institutional financing must prepare for more regulatory scrutiny. This affects everyone from private family trusts to professional investment groups and corporate real estate arms.
Beneficial Ownership Disclosure
When an entity or trust is the buyer, all individuals who own at least 25% or exercise significant control must be identified. These are the beneficial owners. This is not limited to members or shareholders. It includes directors, officers, trustees or anyone who can influence decisions related to the purchase, use or management of the property.
All beneficial owners must submit personal information including their legal name, current address, date of birth and government-issued photo ID. These records must be collected by the filer and kept on file according to federal retention guidelines.
This is similar to the Corporate Transparency Act, which requires similar reporting for business entities. But the FinCEN rule for real estate is specific to property purchases and applies even if the entity is otherwise exempt from broader business filings.
Impact on Closing Timelines
Because this requires collecting and verifying identity information for multiple individuals, closing timelines may be extended. Delays will occur when documentation is incomplete, signatures are missing or beneficial owners are hard to reach. Some real estate professionals expect transactions involving trusts or layered corporate structures to take an additional week or two to prepare.
Legal and accounting teams will need to coordinate more with title companies to ensure compliance. Documents must be submitted promptly and any discrepancies must be resolved before the closing can proceed. In some cases, buyers may need to restructure their entity to simplify ownership and avoid complications.
Compliance Burden for Real Estate Investment Groups
For real estate investors who buy residential properties through business entities, this adds a new layer of administration. Each acquisition will now require a Real Estate Report and full disclosure of ownership information.
Groups that manage funds, portfolios or syndications must ensure all partners or controlling parties are documented. This will mean more legal fees, longer closing cycles and more privacy concerns. It may require software updates, policy changes and staff training across the organization.
Entities that don’t report or provide incomplete or false information can be investigated and penalized. So many investment firms are already consulting with compliance experts and updating their acquisition strategy.
The full implications of the rule are still being worked out by industry experts. But one thing is for sure. Entities and trusts must now treat each residential purchase as a financial event that requires planning, transparency and precision.
What to Do Now
First, do an internal review of your closing process. Where can you collect beneficial ownership data and how will you verify it? Staff should be trained on the new FinCEN reporting of residential real estate transactions regulations, deadlines and how to handle exceptions.
Second, engage your legal department or outside counsel to interpret the rule and draft client communications. Disclosures and intake forms may need to be rewritten. Privacy protocols must be reinforced, especially since we are dealing with sensitive identification documents and ownership structures.
Tools and Systems to Use
Technology can be a big help in compliance. Digital intake forms can collect accurate information from buyers at the beginning of the transaction. Secure identity verification tools can authenticate documents and reduce manual errors. Many title companies are building internal checklists or integrating the FinCEN reporting timeline into their closing calendar to avoid last-minute delays.
These changes are not optional if you plan to continue to do transactions involving entities or trusts. Being proactive will protect you and your client.
Why You Need to Prepare Now
This rule changes how real estate is bought and sold in the United States. It brings transparency to transactions that were once private. For professionals, investors and families alike, preparation is not just a suggestion. It’s required.
Don’t wait until the deadline. Contact your title rep or legal advisor now and start reviewing how this will impact your next transaction.
