Our friends at Chicago Title Insurance Agency have shared information regarding a new rule applicable to non-financed residential real estate transfers in which the purchaser is an entity or trust.

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is a bureau within the United States Department of the Treasury that collects and analyzes information about financial transactions to combat domestic and international money laundering, terrorist financing and other financial crimes. On August 29, 2024, FinCEN issued its final Residential Real Estate Rule (the “RRE Rule”) regarding the reporting of non-financed residential real estate transfers to combat and deter money laundering. The rule will require a “Real Estate Report” to be filed for certain real property sales if the following conditions are met:

1. The property is residential real property;
2. The transfer is non-financed (i.e., it is an all-cash sale);
3. The property is transferred to a legal entity or trust (not to an individual); and
4. An exemption does not apply.

The report must be filed by the later date of either (1) the final day of the month following the month in which the reportable transfer occurs; or (2) thirty calendar days after the date of closing.  The requirement to report a non-financed residential real estate transfer becomes effective December 1, 2025. 

The final RRE Rule is available by clicking here. 

FinCEN’s RRE Fact Sheet is available by clicking: FinCEN RRE Fact Sheet.

Frequently Asked Questions:

When is the RRE Rule Effective Date? The RRE Rule takes effect December 1, 2025.

What is Required by the RRE Rule? The RRE Rule requires a closing/settlement agent in a covered transaction to complete and submit to FinCEN a Real Estate Report with specific information about the transaction.

What Transactions are Covered? The RRE Rule applies to all transactions involving the cash purchase of residential real estate in the U.S., and all territories, where the purchaser is a legal entity or applicable trust.

• First, the definition of “cash purchase” includes not only all-cash sales, but also transactions involving private or seller-financing. It also includes sale transactions or lines of credit involving a loan by a bank, mortgage broker or mortgage banker or other source that is not required to have an anti-money laundering program.
• Next, the definition of “residential real estate” includes existing residential 1-4 family properties, co-ops, condominiums, and mixed use and apartment buildings. It also includes vacant land or a lot on which the purchaser intends to build a residential structure primarily for occupancy by 1-4 families.
• There are exemptions which cover certain types of transfers which are not considered cash purchases. More details about exemptions will be provided in subsequent communications and training related to the RRE Rule.

When must a Real Estate Report be Submitted? The Real Estate Report is due the later of 30 days after the closing date or the last day of the month following the closing date. For example, if the closing occurred on March 15th, the Report is due on or before April 30th.

Who must Submit a Real Estate Report? According to the RRE Rule, the primary “reporting person” who is required to file a Real Estate Report is the person conducting the settlement/closing or the person who prepares the settlement statement. In a split closing, the RRE Rule designates the primary “reporting person” as the person who prepares the settlement statement for the purchaser.

What Information must be Included in a Real Estate Report? FinCEN has not yet released a final version of the Real Estate Report form, but it is expected that data fields will include the following:

• Reporting person information
• Closing date
• Property address and full legal description
• Transferee/Purchaser information
• Person(s) associated with the Transferee/Purchaser (authorized signers and beneficial owners)
• Transferor/Seller information
• If the Transferor is Trust, provide the trustee’s information
• Purchase price
• Payment Information, including bank account details for the source of funds
• Detailed payment information for payments made on behalf of the Transferee/Purchaser

What Should You Do to Prepare for the RRE Rule? Now is the time for everyone to familiarize themselves with the requirements of the RRE Rule and to prepare purchasers for the reporting requirements that take effect December 1, 2025.

Unless a designation agreement is used, the person to file the Real Estate Report most likely will be the closing or settlement agent that prepares the closing or settlement statement. As you might expect, the settlement agent likely will charge additional fees to the purchaser for this service. Please contact your Burr & Forman lawyer with questions.