Financial Crimes Enforcement Network (FinCEN) New Reporting Requirements Effective 12/1/2025

This week we wanted to alert you to a significant rule change implemented by the Financial Crimes Enforcement Network (FinCEN) as to the new reporting requirements for certain covered real estate transactions.   The new rule is designed to combat and deter money laundering by increasing transparency in the U.S. residential real estate sector without limiting the reporting to certain targeted geographical areas. The rule change requires, on a nationwide basis, certain persons involved in real estate closings and settlements to report information to FinCEN about specified transfers of residential real estate that are a high risk for illicit finance.
The final rule will take effect on December 1, 2025 (the “Effective Date”) and will apply under the following circumstances:

1. Transfer is of a residential property(ies) throughout the entire United States and includes houses, townhouses, condominiums, and cooperatives, including condominiums and cooperatives in large buildings containing many such units designed for occupancy by one to four families. The rule also requires reporting on transfers of land, such as vacant or unimproved land, on which the transferee intends to build a structure designed for occupancy by one to four families. Furthermore, a transfer of property may be reportable even if the property is mixed use, such as a single-family residence that is located above a commercial enterprise.

2. The transfer is non-financed (includes No Consideration Deed Transfers).

3. The property is transferred to a legal entity or trust and

4. An exemption does not apply, as stated herein. 

The new rule identifies a cascade which will be used to determine the applicable Reporting Person designated with the reporting obligations for the covered transaction as follows:
 
A. The person listed as the closing or settlement agent on the closing or settlement statement for the transfer.

B. The person that prepares the closing or settlement statement for the transfer.

C. The person that files with the recordation office the deed or other instrument that transfers ownership of the residential real property.

D. The person that underwrites an owner’s title insurance policy for the transferee with respect to the transferred residential real property, such as a title insurance company.

E. The person that disburses in any form, including from an escrow account, trust account, or lawyers’ trust account, the greatest amount of funds in connection with the residential real property transfer.

F. The person that provides an evaluation of the status of the title.

G. The person that prepares the deed or, if no deed is involved, any other legal instrument that transfers ownership of the residential real property, including, with respect to shares in a cooperative housing corporation, the person who prepares the stock certificate. 
As you can see from the above list, absent a Designation Agreement identifying an agreed upon Reporting Person, the attorneys preparing Closing or Settlement Statements for their clients’ ALL CASH transactions would likely be deemed the Reporting Person for a covered transaction.
 
The following information must be reported on all covered transactions:

• The reporting person;
• Closing Date;
• Property information;
• The legal entity (transferee entity) or trust (transferee trust) receiving ownership of the property;                      
• The beneficial owners of the transferee entity or transferee trust (including authorized signors);   
• Certain individuals signing documents on behalf of the transferee entity or transferee trust during the reportable transfer;
• The transferor (e.g., the seller);
• The residential real property being transferred; and
• Total consideration and certain information about any payments made including bank account    details for sourcing funds.

Exemptions are provided for certain common, lower-risk transfers. A reportable transfer does not include the following:

• a transfer of an easement;
• a transfer resulting from the death of an individual, whether pursuant to the terms of a decedent’s will or the terms of a trust, the operation of law, or by contractual provision;
• a transfer incident to divorce or dissolution of a marriage or civil union;
• a transfer to a bankruptcy estate;
• a transfer supervised by a court in the United States;
• a transfer made for no consideration by an individual, either alone or with their spouse,  to a trust of which that individual, their spouse, or both of them, are the settlor or grantor;
• a transfer to a qualified intermediary for purposes of a like-kind exchange under Section 1031 of the Internal Revenue Code; and
• a transfer for which there is no reporting person.

Failure to report a covered transaction can result in substantial civil and criminal penalties for the designated Reporting Person. While there is pending litigation aimed at challenging the scope of the new reporting requirements, all practicing attorneys should familiarize themselves with the new rule so that they will be prepared to complete all required filings as of the Effective Date if pending challenges are unsuccessful.
 
Attached you will find a Client Letter and FIN CEN Flyer designed to give you additional information on this new rule.  We will be closely monitoring the pending litigation and will advise on any changes and updates to this new rule as they become available.

https://mcusercontent.com/684414a9e2c939c9532812949/files/97446f2e-7f2d-3ad9-05ce-340df549c189/Home_Abstract_Corp_FinCEN_Letter.01.pdf

https://mcusercontent.com/684414a9e2c939c9532812949/files/e6eb210f-fb3b-3e51-d7b6-4daad3e2b31d/FinCEN_flyer_for_attorneys.pdf