There’s been a lot of discussion in the real estate world about the Financial Crimes Enforcement Network (FinCEN) and its new reporting requirements. If you’re a real estate investor, you may be wondering what this means for your transactions.
Below is a quick breakdown of what the rule is and how it may impact you.
What Is the New Rule?
Effective March 1, 2026, a new reporting rule from the Financial Crimes Enforcement Network (FinCEN) requires certain real estate transactions to be reported.
FinCEN is a bureau within the U.S. Department of the Treasury whose mission is to combat money laundering and financial crimes. The goal of this rule is to prevent individuals from using real estate purchases—particularly through shell companies—to conceal the source of funds.
Under this regulation, certain residential real estate transactions must be reported to FinCEN. The report is typically coordinated by the title company or settlement agent handling the closing, but both buyers and sellers may be required to provide specific information about the transaction.
Who Will Be Affected?
The rule primarily affects residential real estate purchases involving entities and non-traditional financing.
Generally, a FinCEN report may be required when:
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- The property being purchased is residential real estate
- The buyer is a legal entity (LLC, corporation, partnership) or trust
- The buyer uses cash or non-traditional financing
For purposes of this rule, non-traditional financing refers to financing that does not come from a regulated financial institution that already follows federal anti-money-laundering requirements.
Examples may include:
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- Hard money loans
- Private financing
- Seller or owner financing
The rule applies to purchases of:
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- Residential properties with 1–4 units
- Vacant land intended for residential development
Transactions That May Be Exempt
Not every real estate transaction will require reporting. Some common exemptions include:
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- Commercial real estate transactions
- Properties purchased by an individual (not an entity or trust)
- Transfers resulting from death, divorce, or bankruptcy
Your title company or closing agent will typically help determine whether a transaction triggers a reporting requirement.
What to Expect During Closing
For investors who regularly purchase property through entities or use alternative financing, the new rule will likely introduce a few changes to the closing process.
More Paperwork
This rule adds another step to the closing process. If a report is required, it must be completed and submitted before settlement can occur.
More Disclosure
Additional information may need to be disclosed to FinCEN, including:
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- Entity ownership information
- Contact details for involved parties
- Addresses of buyers and sellers
- Social Security numbers or identifying information
- Bank account information
- Loan details and purchase price
The purpose of this disclosure is to provide transparency around the individuals who ultimately control the purchasing entity.
Possible Fees
FinCEN does not currently charge a government filing fee for the report. However, many title companies will likely charge a fee to prepare and coordinate the filing as part of the closing process.
Bottom Line
If you regularly use hard money, private financing, or seller financing, and purchase properties through an LLC, other entity, or trust, there is a good chance this rule will apply to some of your transactions.
The key takeaway is simple: expect additional paperwork and disclosure requirements, and make sure the necessary information is provided early in the closing process to avoid delays.
The rule is intended to help prevent money laundering through shell companies and opaque ownership structures. For most legitimate real estate investors, however, it will primarily mean a bit more documentation and coordination during closing.
Planning ahead and understanding the requirements can help ensure your transactions continue to move forward smoothly.
I hope this breakdown was helpful for you, and I wish you the best of luck in your investing journey!