FinCEN Residential Real Estate Rule - Alliant National Title Insurance Co.

FinCEN Residential Real Estate Rule (RRER)

Alliant National Agent Guide to Navigating Settlement Agent Reporting Requirements

Disclaimer:

This information is provided for general reference purposes only and should not be construed as legal, financial, regulatory, or compliance advice. Compliance with FinCEN’s Residential Real Estate Rule is the responsibility of each agent or organization, and the Alliant National Title does not undertake responsibility for such compliance.

Regulatory requirements may change, and this information may not reflect the most current guidance. We recommend consulting legal counsel and subject-matter experts and referring directly to FinCEN’s Residential Real Estate Rule website at https://www.fincen.gov/rre for official and up-to-date information.

The new FinCEN Residential Reporting Rule (RRER) was issued by the U.S. Department of Treasury to thwart the illicit use of residential real estate and the threats such activities pose to U.S. economic and national security interests. The RRER works to benefit those that seek to compete fairly in the U.S. real estate market. The reporting requirements of the RRER are designed to increase transparency in the U.S. residential real estate sector and to combat and deter money laundering. Alliant National agents will play a key role in these efforts and so we offer this information regarding the RRER for your team and customers’ use.

Important Update: On September 30, 2025, the Financial Crimes Enforcement Network (FinCEN) announced that it is postponing implementation of the Residential Real Estate Rule (RRE Rule) until March 1, 2026. FinCEN issued a temporary exemptive order to provide the industry with additional time to prepare. Until the new effective date, existing FinCEN Geographic Targeting Orders remain in force and will likely be extended through the new RRE Rule effective date.

Financial Crimes Enforcement Network (FinCEN)
- Created by Congress as part of the United States Treasury Department
Its Mission: “…to safeguard the financial system from illicit use, combat money laundering and its related crimes including terrorism, and promote national security through the strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.”

The RRER expands the scope of the currently effective Geographic Targeting Orders (GTOs) from FinCEN which require reporting of beneficial ownership information on certain residential transactions in designated geographic areas of the U.S.
The RRER requires reporting to FinCEN of beneficial ownership information for residential, “non-financed” transactions to entities (LLCs, partnerships or corporations) and trusts.
Also requires reporting on transactions involving hard money loans (lender without NMLS number) and private lenders (seller financing or loans to family members), even zero-dollar transactions may be reportable under the RRER.
- https://www.fincen.gov/rre
- See full text of RRER here: https://www.federalregister.gov/documents/2024/08/29/2024-19198/anti-money-laundering-regulations-for-residential-real-estate-transfers

Start your analysis of the applicability of the RRER to your transaction with this third-party vendor tool: https://fincenrealestatereport.com/rer-quiz-tool/. Please note that Alliant National offers this solely as an additional agent resource and assumes no liability for inaccurate results.
What is residential property under the RRER?
- FinCEN’s definition of “residential real property” includes: One-to-four family residences, vacant land intended for future one-to-four family development, units in buildings designed for one-to-four family occupancy (e.g., condominiums or apartments) and shares in a cooperative housing corporation (co-ops).
What is a transferee entity under the RRER?
- FinCEN defines a transferee legal entity as any person other than a transferee trust or an individual. That includes the following, whether domestic or foreign: corporations, partnerships, and limited liability companies (LLCs).
What is a transferee trust under the RRER?
- Buyer/transferee trust is a legal arrangement where a grantor places assets under a trustee’s control for the benefit of others, or for a specific purpose. Under the RRER, a trust is considered a transferee trust even if the property is titled in the name of the trustee of such trust instead of the trust itself.
What is a “non-financed” transaction under the RRER?
- According to FinCEN, a non-financed transfer is any transfer that:
  - Does not involve a loan or line of credit secured by the property, or
  - Involves financing not provided by a financial institution subject to Bank Secrecy Act (BSA), AML and Suspicious Activity Reporting (SAR) rules.
- This includes:
  - All-cash purchases
  - Seller financing or private lender funding
  - Transactions where the lender is not BSA/AML/SAR-regulated (hard money loan)
- If there’s no loan to fund the transaction or the lender is not regulated under the Bank Secrecy Act and mandated to maintain an anti-money-laundering process, then it is non-financed under the RRER.

▸What transactions are exempt from reporting under the RRER?

Not every property transfer falls under the new FinCEN Residential Real Estate Reporting Rule (RRER). Below is a simplified guide to the main exemptions. If your transaction matches one of these, no FinCEN report is required.
- Exemptions Based on the Reason for the Transfer – Some property transfers are exempt because of the circumstances under which they occur:
  - Transfer due to the death of an individual (including under a will, trust, law, or contract).
  - Transfer resulting from divorce or dissolution of a marriage or civil union.
  - Transfer to a bankruptcy estate.
  - Transfer that is court-ordered or otherwise supervised by a U.S. court.
  - Transfer of an easement.
  - Transfer for no consideration made by an individual (alone or with their spouse) to a trust where that individual (and/or their spouse) is the grantor/settlor.
  - Transfer to a qualified intermediary as part of a 1031 exchange.
  - Transfers where no reporting person exists under the RRER (see “Who is responsible for reporting to FinCEN under the RRER?” below).
- Exemptions Based on the Buyer’s Entity – If the buyer is one of the following (or a wholly owned subsidiary of one of these), the transaction is exempt:
  - Securities reporting issuer (public company) (31 CFR 1010.380(c)(2)(i)).
  - Government authority (31 CFR 1010.380(c)(2)(ii)).
  - Bank or credit union (31 CFR 1010.380(c)(2)(iii) and (iv)).
  - Depository institution holding company (31 CFR 1010.380(c)(2)(v)).
  - Money services business (31 CFR 1010.380(c)(2)(vi)).
  - Broker or dealer in securities (31 CFR 1010.380(c)(2)(vii)).
  - Securities exchange or clearing agency (31 CFR 1010.380(c)(2)(viii)).
  - Other Exchange Act–registered entity (31 CFR 1010.380(c)(2)(ix)).
  - Insurance company (31 CFR 1010.380(c)(2)(xii)).
  - State-licensed insurance producer (31 CFR 1010.380(c)(2)(xiii)).
  - Commodity Exchange Act–registered entity (31 CFR 1010.380(c)(2)(xiv)).
  - Public utility (31 CFR 1010.380(c)(2)(xvi)).
  - Financial market utility (31 CFR 1010.380(c)(2)(xvii)).
  - Registered investment company (15 USC 80a-3(a)).
- Exemptions Based on the Buyer’s Trust – If the buyer is a trust (or a trustee of a trust), it may also qualify for exemption if it is:
  - A trust that is itself a securities reporting issuer (31 CFR 1010.380(c)(2)(i)).
  - A trust whose trustee is a securities reporting issuer.
  - A statutory trust created under state law (e.g., Uniform Statutory Trust Entity Act), but note that it is treated as a transferee entity under the RRER.
  - An estate-planning trust where:
    - The transfer is made for no consideration, and
    - The transferor/seller (and/or their spouse) is also the grantor/settlor of the trust.

Buyer – Entity/Trust Details and Identification of the Beneficial Owners including address, TIN (e.g., EIN for an entity/trust, or foreign equivalent, and SSN for an individual), and/or Passport Number for a foreign individual who doesn’t have a SSN or foreign equivalent.
- If multiple legal entities or trusts are receiving ownership interests, each one must be evaluated individually; the fact that one or some of the joint purchasers may be individual(s) does not eliminate the reporting requirement as it pertains to those who are entities or trusts/trustees. Reporting requirements apply to each qualifying transferee under the RRER.
Seller – Individual’s Information or if an entity or trust, information about the entity or trust and Beneficial Owner Information
Property Details – Address, legal description and closing date
Banking Information for Buyers, including Source of Funds
ALTA Data Collection Forms – ALTA has developed forms for collection of the necessary data from your customers.

What is the Reporting Cascade?
- OPTION 1: Cascading Reporting Order
  - First choice: The person who is listed as the settlement agent on a settlement statement
  - Second choice: The person who prepares the settlement statement
  - Third choice: The person who files the deed for recordation
  - Fourth choice: The person who issues the owner’s title insurance policy (Underwriter)
  - Fifth choice: The person who disburses the greatest amount of funds
  - Sixth choice: The person who did a title examination
  - Final choice: The person who prepares the deed
What is a Designation Agreement?
- OPTION 2: Written Agreement between Cascading People
- A person higher up in the Cascading Reporting Order who has the reporting responsibility can enter into a written “Designation Agreement” to transfer his or her responsibility to another person within the Cascade Reporting Order, regardless of which category or “choice” the latter may fall under. A separate Designation Agreement must be prepared (e.g., no blanket Designation Agreement permitted) for each reportable transfer and must include the following information:
  1. Date of the agreement
  2. Name and address of the transferor
  3. Name and address of the transferee entity/transferee trust
  4. Information identifying transferred residential real property
  5. Name and address of the person designated through the agreement as the reporting person
  6. Name and address of all other parties to the agreement
Third-Party Reporting Vendors – Although the use of a reporting service will not relieve the settlement agent of liability as a reporting person, there are vendors who can assist with data collection, secure storage, and FinCEN reporting. Some of these vendors include:
- Residential Real Estate Reporting – https://fincenrealestatereport.com/
- Settlement Reporting – https://www.settlementreporting.com/

Reporting persons are expected to maintain records and document reasonable reliance for at least five (5) years.
Best Practices: All parties to a Designation Agreement—not just the reporting person—must retain a copy of such Designation Agreement; “all parties” to a Designation Agreement means each and every party who fits a category of choice which is higher than the one that the ultimate reporting party holds.
FinCEN has the authority to audit and request records to ensure compliance.
Since this is sensitive non-public personal information, agents should store the data in a secure location.