Where Things Stand with FinCEN's Residential Real Estate Rule

Compliance Update | Brickstone Escrow, Inc. 

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FinCEN’s Residential Real Estate Rule: Where Things Stand

For buyers and sellers using an entity or trust to purchase residential property, the regulatory picture has shifted twice in the last few months. Here is a concise summary of where things currently stand. 

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A New Reporting Framework Takes Effect

On March 1, 2026, FinCEN's Residential Real Estate Rule took effect nationwide, replacing the prior Geographic Targeting Orders that had applied only to select high-value markets like Manhattan and Miami-Dade. The new rule required closing and settlement agents to report certain non-financed residential transfers made to legal entities or trusts, with no purchase-price threshold. For all-cash purchases structured through an LLC or trust, a common approach in luxury real estate, the rule was designed to apply directly.

Source: FinCEN.gov, Residential Real Estate FAQs 

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A Federal Court Vacates the Rule

On March 19, 2026, a federal judge in the Eastern District of Texas vacated the rule in Flowers Title Companies, LLC v. Bessent, holding that FinCEN had exceeded its authority under the Bank Secrecy Act. As a result, reporting persons are not currently required to file these reports and face no penalty for not doing so. FinCEN, through the Department of Justice, filed a notice of appeal to the Fifth Circuit on May 11, 2026. Other federal courts have reached the opposite conclusion and upheld the rule, so the outcome on appeal remains genuinely uncertain.

Source: Holland & Knight; Davis Wright Tremaine, June 2026 

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What This Means at the Closing Table

1. Reporting is currently paused: No Real Estate Report is required to close a transaction today.
2. The rule could return quickly: A stay or reversal from the Fifth Circuit could reinstate reporting obligations with little advance notice.
3. We are preparing either way. We continue collecting beneficial ownership information on entity and trust purchases as a precaution, so your closing timeline won't be affected if reporting resumes.

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We're tracking this closely and will share updates as the appeal develops. If you're purchasing or selling through an entity or trust and have questions about how this may affect your transaction, we're happy to walk you through it. 

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This post is provided for general informational purposes and is not legal advice. For guidance specific to your transaction, please consult qualified legal counsel.

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