January 29, 2026
What Virginia Attorneys Need to Know About the New FinCEN Residential Real Estate Reporting Rule
Starting March 1, 2026, the Residential Real Estate Rule (“RRE” or the “Rule”) requires certain professionals to report residential real estate transaction information to the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) on transactions where the Buyer is an entity (corporation, LLC, etc.) or a trust and there is no lender with an anti-money laundering program involved. FinCEN has established the Real Estate Report requirement for certain transfers of real estate that are a high-risk for illicit finance, to help combat and deter money laundering. Originally scheduled to begin December 1, 2025, the Rule was postponed and reporting now begins March 1, 2026. Failure to comply with the Rule can result in civil penalties including fines up to $1,394 per violation, with higher penalties for negligence, while willful violations can trigger criminal penalties including up to five years in prison and $250,000 in criminal fines.
All-Cash and Hard Money Lenders… (and some gifts)
The Rule targets non-financed (all-cash or non-institutional lenders) transfers of residential real estate to legal entities or trusts. A transfer of residential real property is any transfer of an ownership interest in residential real property that is demonstrated through a deed or, for an interest in a cooperative housing corporation, through stock, shares, membership, a certificate, or other contractual agreement evidencing ownership. This definition includes purchases of residential real property for any amount, as well as transfers of ownership for which no consideration is exchanged, such as a gift. There are exemptions, such transfers resulting from death, court supervised transfers, 1031 exchange transfers, and transfers to an estate planning trust.
It's not just Single Family Homes…
Residential real property as defined in the rule includes:
- Properties with one to four family structures, including single-family houses, townhouses, condominiums, and cooperatives
- Condominiums and cooperatives in large buildings containing many such units
- Entire buildings designed for occupancy by one to four families
- Certain types of unimproved land on which a residence is not yet built
- Residential properties that also include a commercial element—such as a single-family residence that is located above a commercial enterprise
Reporting Cascade
The requirement to file a Real Estate Report rests with the “reporting person,” one of a small number of persons who play specified roles in the reportable transfer. Only one business would be deemed to be the reporting person, and would be required to file a report. The Rule establishes a “reporting cascade” to determine the reporting person on a specific transaction.
The reporting cascade consists of:
- Closing or settlement agent
- Settlement statement preparer
- Deed filer
- Title insurance underwriter
- Largest fund disburser
- Title evaluator
- Deed or legal instrument preparer
Spill the Data
On the Real Estate Report, the reporting person must submit information necessary to identify themselves; the residential real property being transferred; the transferor; the transferee entity or transferee trust; the individuals representing the transferee entity or transferee trust in the transfer; and the beneficial owners of the transferee entity or transferee trust. For example, the reporting person must collect the following identifying information for any beneficial owner of a transferee entity or a transferee trust: name, date of birth, residential address, citizenship, and taxpayer identification number. The reporting person must also report the total consideration paid for the property, along with certain information about any payments made by the transferee entity or transferee trust.
For more information, go to https://www.fincen.gov/rre.