By Beth Stern Fleming | Beth Stern Fleming, LLC | Pennsylvania
If you are involved in residential real estate closings and settlements in Pennsylvania, or anywhere in the United States, there is a significant new federal reporting requirement of which you need to be aware. Starting March 1, 2026, certain professionals are required to file a Real Estate Report with the Financial Crimes Enforcement Network (FinCEN) for qualifying transactions. Here is a clear, practical breakdown of what this means for you.
What Is the FinCEN Real Estate Report?
The Real Estate Report is a mandatory federal filing under the Anti-Money Laundering Regulations for Residential Real Estate Transfers (commonly referred to as the Residential Real Estate Rule, or RRE Rule), codified at 31 CFR 1031.320. Its purpose is to combat money laundering by bringing greater transparency to non-financed residential real estate transactions involving legal entities and trusts.
FinCEN has long recognized that illicit actors often use LLCs, corporations, partnerships, and trusts to obscure their identities when purchasing residential property, particularly in all-cash deals that bypass the “Know Your Customer” scrutiny of regulated financial institutions. This rule permanently replaces the prior temporary Geographic Targeting Orders (GTOs) with a nationwide, uniform requirement.
Reports filed are maintained by FinCEN in a secure database. They are not accessible to the general public and are exempt from disclosure under the Freedom of Information Act (FOIA).
Does This Apply to Your Transaction?
A transaction triggers the reporting requirement when all four of the following conditions are met:
- Residential real property is transferred. This includes single-family homes, townhouses, condominiums, cooperatives, and certain vacant land on which the buyer intends to build a 1 to 4 family residence.
- The transfer is non-financed, meaning it does not involve a mortgage or loan secured by the property and extended by a financial institution with anti-money laundering (AML) program obligations and Suspicious Activity Report (SAR) filing requirements, such as a bank, credit union, or licensed mortgage company. This means that anyone that finances their residential real estate transactions by friends and family or private lenders that do not have AML obligations and SAR filing requirements is considered a non-financed transfer.
- The buyer (transferee) is a legal entity or trust, such as an LLC, corporation, partnership, estate, or trust arrangement.
- No exception applies. Certain transfers are exempt, including those resulting from death, divorce, court order, bankruptcy, easements, or a no-consideration transfer by an individual to a trust of which they are the grantor.
Important: There is no dollar threshold. Even low-value or gift transfers to legal entities or trusts can be reportable.
Who Is Required to File?
Only one person files per transaction. FinCEN uses a reporting cascade to identify who that person is. Responsibility falls to the first person on this list who is involved in the transfer:
- The settlement or closing agent listed on the closing statement
- The person who prepares the closing or settlement statement
- The person who files the deed or transfer instrument with the recordation office
- The title insurance underwriter
- The person who disburses the greatest amount of funds (e.g., from escrow)
- The person who provides a title evaluation
- The person who prepares the deed or transfer instrument
Note: Financial institutions with AML program obligations are exempt from being reporting persons. If a financial institution would have otherwise been the reporting person, the obligation moves to the next person in the cascade.
Parties may also enter into a written designation agreement to assign the reporting obligation to another person in the cascade. Importantly, a separate designation agreement is required for each individual transaction. Blanket agreements covering multiple transfers are not permitted. All parties to a designation agreement must retain a copy for five years.
Real estate agents acting solely in that capacity are not in the reporting cascade and are generally not reporting persons, unless they also perform one of the seven functions listed above.
What Information Must Be Reported?
The reporting person must collect and report the following:
- Reporting person information: Full legal name, role in the cascade, principal business address, and date of closing
- Property information: Street address and legal description of the transferred property
- Transferee (buyer) information: Full legal name, address, Tax ID (if applicable), and trade name
- Beneficial owner information: For each individual who owns or controls 25% or more of the transferee entity, or who exercises substantial control, their full name, date of birth, residential address, citizenship, and a unique identifying number (such as a U.S. Tax ID or foreign passport number)
- Signing individuals: Each person who signed documents on behalf of the transferee entity or trust
- Payment information: Total consideration paid, payment method, and financial institution account details where applicable
- Transferor information: Full legal name, date of birth or entity details, address, and unique identifying number
Beneficial ownership information must be certified in writing by the transferee or their representative. The reporting person may reasonably rely on that certification, provided there are no red flags calling its accuracy into question. Reporting persons are not required to retain copies of passports, driver’s licenses, or other identification documents. Only the written certification itself must be kept for five years.
When Is the Report Due?
For closings on or after March 1, 2026, the report must be filed by the later of:
- 30 calendar days after the date of closing, or
- The last day of the month following the month in which the closing occurred
In practice, this gives most reporting persons between 30 and 60 days from closing.
Example: A closing occurs on March 15, 2026. The report is due by April 30, 2026.
How Is the Report Filed?
Reports are filed electronically and free of charge through FinCEN’s BSA E-Filing System at https://www.bsaefiling.fincen.gov. Filers will need a Login.gov account to access the system.
Three filing options are available:
- Web-based (online form, single session)
- PDF (offline preparation, then upload)
- Batch/XML (for high-volume filers)
Third-party vendors may prepare and submit reports on behalf of a reporting person, but the ultimate responsibility for accuracy and timely filing remains with the reporting person.
What Happens If You Don’t Comply?
Non-compliance carries serious consequences:
- Negligent violations: Civil penalties up to $1,430 per violation, plus up to $111,308 for a pattern of negligent activity
- Willful violations: Civil penalties up to the greater of the transaction amount (capped at $286,184) or $71,545
- Criminal penalties: Up to five years imprisonment and/or fines up to $250,000
There is no exception for an incomplete report, even if a transferee refuses to cooperate. If a reporting person cannot obtain all required information, they should consider declining to perform the function that triggers the reporting obligation.
Key Takeaways for Real Estate Professionals
If you regularly handle closings, prepare settlement statements, disburse funds, provide title evaluations, or prepare deeds for residential transactions, now is the time to act. Consider taking the following steps:
- Assess your role in the reporting cascade and understand when the obligation may fall to you
- Update your intake process to collect beneficial ownership information and written certifications from entity and trust buyers
- Set up your BSA E-Filing System account before March 1, 2026
- Consider designation agreements with your common transaction partners to clarify responsibility upfront, and remember to execute a separate agreement for each transaction
The March 1, 2026 effective date is approaching quickly. Preparation now will protect you from compliance risk and ensure a smooth transition.
Beth Stern Fleming, LLC provides real estate settlement and related services in Pennsylvania. This blog post is for general informational purposes only and does not constitute legal advice. For questions specific to your situation, please consult qualified legal counsel.
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