12 Jan PURCHASE OF HOME BY A TRUST MAY REQUIRE REPORTING TO FinCEN FOR CLOSING AFTER MARCH 1, 2026
The Financial Crimes Enforcement Network (FinCEN) has a new reporting requirement for closing of some residential property on or after March 1, 2026 in an effort to prevent money laundering.
- Residential property –
(i.e. homes, townhomes, condominiums, vacant land intended for residential use, co-ops, etc.) that is transferred; and - Non-financial transactions –
If the buyer pays all cash or if it is owner-financed (loans from a financial institution would not be subject to the reporting requirement); and - Transfer is made to a legal entity (i.e., LLC, partnership, corporation or trust – such as a revocable living trust) and the entity or trust is by the buyer –
Title companies or other closing agents will be making these reports to FinCEN on a settlement statement.
The rules are not applicable if an individual purchases residential real estate. Transfers to a trust created in your last will and testament are also an exception to the reporting requirement. A transfer of residential real estate for no consideration by an individual, either alone or with their spouse, to a revocable living trust which that individual, that individual’s spouse, or both are the settlers or grantors is also an exception. Property transferred by divorce, bankruptcy or by Transfer on Death deed or Ladybird (enhanced life estate) deed is also non-reportable.
Reporting information will include the property type and address, the name of transferor and entity to which the property is to be transferred, amount paid and how it is to be paid including the source of funds.
If the settlement agent doesn’t report, criminal penalties up to 2 years in prison and a fine up to $10,000 can be accessed.
It should be noted that there is litigation pending challenging the reporting requirements. It has been delayed previously.
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