Although the Residential Real Estate Rule is not currently enforceable, it remains under appeal and may be reinstated. Title and settlement offices that maintain readiness will be positioned to comply promptly if the rule returns. This guide outlines the key compliance steps.
Current status (June 2026): The rule is vacated and not enforceable. FinCEN has appealed to the Fifth Circuit, and reinstatement, including through a stay during the appeal, is possible.
Determine your role in the reporting cascade
Identify where your office falls within FinCEN’s reporting cascade for typical transactions. Settlement and closing agents generally hold the reporting obligation by default because they occupy the first tier. Where the obligation should rest elsewhere, such as with a title underwriter centralizing filings, a designation agreement is required. This determination should be made in advance rather than on a transaction-by-transaction basis.
Offices should also assess their transaction mix. A significant volume of entity or trust purchases without an anti-money-laundering-regulated lender warrants a more developed readiness plan, while infrequent exposure may require only a documented process that can be activated as needed.
Collecting beneficial ownership information
Identifying beneficial owners is the most demanding aspect of the report. For an entity, a beneficial owner is any individual who exercises substantial control or owns at least 25%. For a trust, the definition extends to trustees, certain beneficiaries, individuals with authority to dispose of trust assets, and grantors with the power to revoke the trust or withdraw its assets.
A reporting person may collect this information directly from the transferee or the transferee’s representative, provided the information is certified in writing as accurate to the best of the provider’s knowledge. The general reasonable-reliance standard is narrower for beneficial ownership: reliance is permitted only where this written certification is obtained. The certification is therefore a required safeguard.
Offices should prepare a beneficial ownership certification form for incorporation into existing closing documents. FinCEN permits reporting persons to design their own form and integrate it into current document packages.
Filing deadlines
When the rule is in effect, a Real Estate Report is due by the later of the last day of the month following the month in which the transfer closed or 30 calendar days after the closing date. This generally provides 30 to 60 days, depending on the month’s closing date. Offices should incorporate this deadline into their post-closing workflow rather than relying on manual tracking.
Recordkeeping requirements
A reporting person is not required to retain a copy of the Real Estate Report. The reporting person must retain, for five years, the beneficial ownership certification obtained from the transferee or representative and any designation agreement entered into. All parties to a designation agreement are independently subject to the five-year retention requirement.
Maintaining readiness during the vacatur
Because no filing is currently required, offices may be tempted to suspend related processes. The recommended approach is to continue collecting entity and trust transaction details on transfers that would be reportable and to retain them in an organized format. Much of this information is already required for underwriting and intake. Maintaining it preserves continuity and avoids data gaps if the rule is reinstated, particularly through an expedited stay.
Staff training and intake updates
Front-line staff who manage intake and closings are responsible for identifying reportable transactions. They should be trained to recognize the relevant pattern: an entity or trust transferee, the absence of an anti-money-laundering-regulated lender, and residential property. A reference summary of the four conditions and the principal exemptions supports accurate identification. Engagement letters and intake forms should be reviewed so that requests for beneficial ownership information are an established part of the process if the rule returns.
Monitoring the rule’s status
The principal risk during the appeal is failing to identify a change in the rule’s status. Responsibility for monitoring the Fifth Circuit proceedings should be assigned to a specific individual or a service partner so that any reinstatement is identified promptly.
Penalties under the Bank Secrecy Act
The rule operates under the Bank Secrecy Act, which provides for civil and, in certain cases, criminal penalties for reporting failures. No penalties are being assessed during the vacatur. (Confirm specific penalty figures against current FinCEN guidance before publication, as Bank Secrecy Act amounts are periodically adjusted.)
Maintaining readiness requires limited effort and is straightforward to reverse. Offices should confirm their cascade position, prepare a certification form, establish deadline-tracking and record-keeping procedures, train relevant staff, continue collecting transaction data, and monitor the appeal.
