BOOTH LAW CO. PLLC

Beginning on March 1, 2026 the Financial Crimes Enforcement Network (FinCEN) has
introduced a new Rule requiring reporting of residential real estate closings purchased by non-
individuals (business entities and trusts) without taking out credit against the property.

Yes, small businesses and trusts are now being punished and scrutinized by the federal
government for not taking out loans. This rule comes into effect as the Department of Treasury has determined that there is a greater need for “transparency” in the U.S. residential real estate market to combat and deter money laundering. Whether this added layer of reporting meaningfully advances that goal remains to be seen.

What Business Entities and Trusts Fall Under this New Rule

All business entities except for those that are publicly traded, banks, credit unions, insurance
companies, and investment companies who receive a qualifying property are subject to this Rule.
All non-testamentary trusts are also subject to this Rule. A testamentary trust that created
through a will and only effective upon the death of the testator is excluded.
What Kinds of Property Qualify?

The Rule provides that a ‘residential property’ defined as a property with a structure that can
house between one to four families, property in which the transferee intends to build a structure
to house one to four families, a housing unit within a structure, and shares in a cooperative
housing corporation.

In the instance of a transfer of land, if the transferee is unsure if they will build a residential
structure on the property or not at the time of the transaction then they are not subject to this
Rule nor will they become subject to it later upon deciding to build.
When are Reports Required?

A report is required when at least one of the transferring entities did not obtain an extension of
credit secured by the property and extended by a financial institution subject to anti-money
laundering (AML) program requirements and the Suspicious Activity Reporting Obligations.
If credit is obtained through a financial institution not subject to these obligations, the transfer
will be treated as though it is non financed and will trigger the reporting requirement.

What Information is Reported?

All of the following are required to be reported:
-The property being transferred;
-The entity or trust and the beneficial owners of the entity or trust;
– The transferor;
-The total amount paid for the property;
-The amount of each payment made;
-The method by which the payment was made;
-The name of the financial institution and account number from which the payment was
paid;
-The name of the payor.

In short, the government wants a clear picture of who bought the property, how it was paid for,
and where the money came from.

How This Impacts Farmers, Ranchers, and Landowners

The Department of the Treasury has not made it clear how this information will be used once
reported, nor have they made a determination that this information will be used in coordination
with other agencies, like the IRS or HHS. However, we do know that the information included in
the reports is not public information and will not be subject to FOIA requests.

However, the Department has indicated that gratuitous transfers made as ‘gifts’ will receive
closer scrutiny.

This has practical implications for many farmers and ranchers who hold assets in trusts, LLCs
and Corporations for both liability protection and estate planning; these transactions could now
trigger federal reporting requirements.

This means that even routine activities such as transferring your home, or a parcel of property
that happens to have a residential structure on it may be further scrutinized by Uncle Sam.

Practical considerations might include:

1. Evaluating whether a testamentary trust could be appropriate in certain estate planning
   situations.
2. Planning ahead for internal transfers between family members, trusts, and business
   entities.
3. Considering minimal financing structures, since the rule does not specify a minimum
   loan amount to avoid reporting.
4. Reviewing how residential structures are titled, including primary residences, tenant
   housing, or unused residential buildings on agricultural property.

At this stage, the long-term impact of the rule remains uncertain. What is clear is that the federal
government now expects significantly more reporting when business entities and trusts acquire
certain residential real estate without traditional financing. Whether this rule becomes a meaningful anti-money-laundering tool—or simply another layer of
paperwork—will likely become clearer with time.

For now, understanding the rule and planning accordingly may save property owners, families,
and agricultural operations from unpleasant surprises at closing.