Banking and Business – February 2026

Introduction

Beginning March 1, 2026, new federal regulations issued by the Financial Crimes Enforcement Network (FinCEN) will significantly affect how certain residential real estate closings are handled. Issued under the authority of the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., and codified at 31 C.F.R. § 1031.320, the rule requires the reporting of specified non-financed residential real estate transfers involving legal entities and trusts. The regulations were published at 89 Fed. Reg. 70258 and, following a delayed implementation period, will take effect on March 1, 2026. Their stated purpose is to increase transparency in all-cash residential real estate transactions.(1)

For clients, this means the closing process may involve additional steps, earlier preparation, and closer coordination among the attorney, the real estate broker, and the settlement agent. Understanding the new rule will help ensure a smooth, timely, and fully compliant transaction.

Background

The new federal reporting requirement applies when a buyer acquires residential real property through an entity or trust using non-financed funds. Residential real property includes one-to-four-family homes, condominiums, cooperative units, and land intended for residential construction.(2) The rule is triggered only when the buyer takes title through an LLC, corporation, partnership, or trust, and the purchase does not involve a loan from a financial institution subject to federal anti-money laundering oversight.(3)

Many buyers use entities or trusts for legitimate reasons, including privacy and estate planning. Under 31 C.F.R. § 1031.320, however, these ownership structures now require the collection and reporting of ownership and control information. Although certain transactions are exempt under § 1031.320(n), in practice, most all-cash residential purchases through an entity will fall within the scope of the rule.(4)

Because the settlement agent must file a federal report, the information required must be assembled well in advance of closing. This makes early communication between the client, real estate broker, and attorney essential.

Impact on the Closing Process

Beginning March 1, 2026, the settlement agent must complete and file a Real Estate Report for any transaction that meets the criteria in § 1031.320.(5) This report includes information about the buyer’s entity or trust, the individuals who ultimately own or control it, the property being transferred, and the source of the funds used at closing.

This requirement affects multiple participants in the transaction. Clients using an entity or trust must be prepared to provide documentation identifying the structure and ownership of that entity. Real estate brokers are often the first to learn whether a buyer intends to purchase through an entity or trust and should communicate that information as early as possible. This allows the attorney to determine whether the rule applies and to advise the client on what information will be required.

Attorneys play a pivotal role in ensuring that clients understand what must be disclosed and that their personal information is handled with care. They also coordinate with the title company and settlement agent to ensure the reporting requirements do not interfere with the scheduled closing date. A well‑coordinated team reduces uncertainty, prevents last‑minute document requests, and ensures that all legal requirements under the regulations are satisfied efficiently.

Takeaway

The new federal reporting rules represent an important change in how many all-cash or entity-based purchases will be closed after March 1, 2026. Under 31 C.F.R. § 1031.320, buyers using LLCs, corporations, partnerships, or trusts must expect to provide ownership and control information, and sellers must be prepared for this requirement if their buyer uses one of these structures.(6)

Early planning makes the process smooth. Working with a real estate broker who communicates clearly and an attorney who understands the new reporting requirements ensures that transactions remain on schedule and fully compliant with federal law. The combination of proper legal guidance and informed real estate representation helps protect the client’s interests and promotes a seamless closing experience. If you have questions about how these rules may affect an upcoming transaction, or if your real estate broker would like a more detailed explanation, we are available to assist.

Thanks go to Anthony Letto for his help writing this article. For further inquiries or questions, please contact me at smigala@lavellelaw.com or at (847) 705-7555.

(1)https://www.fincen.gov/news/news-releases/fincen-announces-postponement-residential-real-estate-reporting-until-march-1

(2)https://www.fincen.gov/rre

(3)Bank Secrecy Act, 31 U.S.C. § 5311 et seq.

(4)https://www.fincen.gov/rre

(5)https://www.gao.gov/products/b-336653

(6)https://www.fincen.gov/rre