31 C.F.R. § 1031.320 (2024)

           The U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN) issued the Real Estate Report Requirement (RERR) in August 2024 to combat money laundering and increase transparency in residential real estate transactions. Effective March 1, 2026, the rule mandates reporting of certain residential real property transactions to the FinCEN database via the Real Estate Report form, without regard to the sales price or property value. The regulation is designed to prevent illicit actors from exploiting residential real property as a vehicle for money laundering by concealing their identities behind legal entities or trusts, thereby enhancing law enforcement’s ability to identify and investigate financial crimes.

RERR Applies When a Transaction Involves:

• A non-financed transfer (i.e., no financing from an anti-money laundering regulated financial institution; all-cash);
• Of residential real property (i.e., a structure designed for occupancy by one to four families, land or a unit intended for such a structure, or shares in a cooperative housing corporation); and
• Transferred to one or more legal entities (e.g., corporations, LLCs) or trusts.

Information Required by RERR:

When a transaction meets the reporting requirements, the Real Estate Report must include detailed information about the transfer, the parties involved, and the property itself.

Who and What Must be reported:

• The identity of the reporting person (typically the closing agent, but otherwise determined by the reporting cascade set forth in the rule; e.g., if not the closing agent, then the person who prepares the closing or settlement statement; if no such person, the person who records the deed, and so on);
• The residential real property being transferred;
• The transferee entity or trust (the buyer);
• The transferor (the seller); and
• Total consideration paid for the property, along with information about payments made by the transferee entity or trust.

Beneficial Owner Identification:

• For transferee entities, beneficial owners include anyone who directly or indirectly owns or controls at least 25% of ownership interests or exercises substantial control over the entity (this could include members of an LLC holding 25% or more ownership interest or a manager of an LLC who has substantial control).
• For transferee trusts, beneficial owners include trustees, certain beneficiaries, and revocable trust grantors.

Exceptions to RERR:

Even when a transfer meets all three RERR requirements, certain exceptions apply that eliminate the reporting obligation:

1. Transfers, grants, or revocations of easements.
2. Transfers resulting from death, regardless of the terms of a will or trust, operation or law, or by contractual obligations.
3. Transfers resulting from a divorce or dissolution of marriage or civil union.
4. Transfers made to a bankruptcy estate.
5. Transfers supervised by a court of the United States.
6. Transfers without consideration made by an individual to a trust where that individual, their spouse, or both are the settlors or grantors.
7. Transfers to a qualified intermediary as part of a 1031 exchange.
8. Transfers to which there are no reporting persons (e.g., transfers where there is no closing agent, no settlement agent, no title company, no deed preparer, and no other person falling within the reporting cascade involved in the transaction).

Reporting Burden:

            The RERR report contains over 100 data entry fields and, according to sources, can take more than 4 hours to complete. Reports must be filed by the later of either the last day of the month following the closing month or 30 calendar days after closing. Given the time-intensive nature of the reporting process, parties involved in non-financed closings should prepare early to ensure timely compliance with RERR requirements.

Failure to Report:

            Failure to file a required Real Estate Report, or filing a report containing false or incomplete information, may subject a reporting person to civil and criminal penalties. Civil penalties for negligent failure to report may reach up to $1,430 per violation, with an additional penalty of up to $111,308 for a pattern of negligent activity. Willful failure to report carries a civil penalty with a minimum floor of $71,545 and a maximum ceiling of $286,184, with the exact amount depending on the value of the transaction at issue. Criminal penalties for willful failure to report may include a fine of up to $250,000, imprisonment of up to five years, or both. See 31 U.S.C. § 5321; 31 U.S.C. § 5322; 31 CFR § 1010.821.