Author: Tiffany Wingo, JD
The Financial Crimes Enforcement Network (FinCEN) recently issued a rule that went into effect on December 1, 2025, which imposed a new federal reporting requirement affecting certain residential real estate transactions. The rule required parties involved in real estate closings to report transfers of residential real estate if the transfer was non-financed and the property was transferred to a legal entity or a trust. Certain exceptions applied to transfers resulting from the death of an individual, transfers incident to a divorce and transfers to a trust of which the transferring individual or their spouse were settlors. The rule required reporting of personal information for beneficial owners of the transferee entity or trust and total consideration paid. Penalties for noncompliance were steep and included substantial civil and criminal fines.
FinCEN’s rationale for imposing this rule was that FinCEN has statutory authority under the Bank Secrecy Act of 1970 to require financial institutions to report any “suspicious transaction”. FinCEN argued that all non-financed residential real estate transfers to entities or trusts are categorically “suspicious.” The U.S. District Court for the Eastern District of Texas ruled on March 19, 2026, in Flowers Title Companies, LLC v. Scott Bessent, that the rule exceeded FinCEN’s statutory authority under the Bank Secrecy Act and vacated the rule entirely. The Court said that FinCEN had failed to substantiate that all non-exempt, non-financed transfers are suspicious.
While the Court’s ruling is applicable nationwide and the rule is no longer in effect, it is anticipated that the U.S. Government will appeal the decision. If you are considering making non-financed transfers of residential real estate as part of your estate planning, you should be aware of this active and developing area of FinCEN’s real estate sector.
