The Anti-Money Laundering Regulations for Residential Real Estate Transfers Rule also known as the Residential Real Estate Rule requires certain professionals involved in real estate closings and settlements to submit reports to FinCEN regarding certain non-financed transfers of residential real estate to legal entities or trusts.

Certain residential real estate purchases have been used to launder money, which can be a disadvantage to legitimate buyers. The requirement is intended to increase transparency and deter money laundering.

Transfers that meet all four of the following conditions will require that a report be filed:

• The property is residential.
• The transfer is not financed.
• The property is transferred to a specific type of entity or trust.
• An exception does not apply.

It is any property located in the United States and the property either:

• Contains a structure designed for occupancy by one to four families
• Is land on which the buyer intends to build a structure designed primarily for occupancy by one to four families
• Is a unit designed principally for occupancy by one to four families within a structure on land
• Is comprised of shares in a cooperative housing corporation.

It is a transfer of residential real property that does not involve an extension of credit to all buyers buying the property that is both secured by the property being purchased and extended by a financial institution subject to anti-money laundering program requirements and suspicious activity report obligations. Please note though that even if a transaction is financed, but the lender extending credit is not a financial institution subject to the anti-money laundering laws or suspicious activity report obligations, a report still may be required.

An entity subject to the reporting requirements if the other conditions are met include any corporation, partnership, estate, association or limited liability company, and a statutory trust, which is created or authorized under the Uniform Statutory Trust Entity Act or as enacted by the state. It also includes any legal arrangement where a grantor or settler places assets under the control of a trustee for the benefit of one or more beneficiaries also known as a trust, whether formed under US law or the law of a foreign country as well as any legal arrangements that are similar in either structure or function to trusts. There are several entities and trusts that are exempt and they can be found here: Exceptions Fact Sheet.

In most cases, the person required to file a report is a closing or settlement agent or another real estate professional. This generally does not include real estate license holders who represent either the buyer or seller in the transaction. For more information on who is the correct person to file the report, please visit Am I a Reporting Person?

The report must identify the property being transferred, each legal entity or trust receiving the property, each beneficial owner of the legal entity or trust, each individual who is signing, each individual, legal entity or trust that is transferring the property and any payments made for the property.

Any closings on or after March 1, 2026, are affected by these requirements. It's possible that your clients may be subject to the reporting requirements due to the nature of their transactiona (a non-financed purchase of residential real property by an entity or trust that is subject to the reporting requirements). Title companies may delay closing if the parties do not provide the required information to complete the reports and may charge additional fees for the preparation and filing of such reports. These are things that your client should be made aware of prior to closing.