Written by: Liam McLean; Law Clerk
What Buyers Using LLCs and Trusts Need to Know
Effective March 1, 2026, the Financial Crimes Enforcement Network (FinCEN) began requiring detailed reports on certain residential real estate transfers. If you are buying a home through a legal entity—such as an LLC, corporation, or partnership—or through a trust, and the purchase does not involve traditional bank financing, this new rule likely applies to your transaction. The rule is part of a broader federal effort to increase transparency in the U.S. real estate market and combat money laundering. Here is what you should know.
Why Does This Rule Exist?
There are many legitimate reasons to hold residential property in a trust or legal entity—estate planning, asset protection, and privacy, to name a few. However, these same structures can also be used to disguise the true owners of property and move illicit funds through real estate. Non-financed transactions, sometimes called “all-cash” purchases, have historically avoided the scrutiny that comes with bank-financed deals, where lenders are already required to maintain anti-money laundering programs and report suspicious activity. FinCEN’s new Residential Real Estate Rule closes that gap by requiring a “Real Estate Report” whenever certain conditions are met.
When Is a Report Required?
A Real Estate Report must be filed when all four of the following conditions are present:
- The property is residential real property—generally, a structure designed for occupancy by one to four families, including single-family homes, townhouses, condominiums, cooperatives, and certain vacant land where the buyer intends to build a residence.
- The transfer is non-financed—meaning it does not involve a loan from a financial institution subject to separate federal anti-money laundering and suspicious activity reporting requirements.
- The property is transferred to a legal entity or trust—such as an LLC, corporation, partnership, or revocable or irrevocable trust.
- No exception applies to the transfer.
Importantly, there is no minimum dollar threshold. Even a low-value or zero-consideration transfer—such as a gift of property to a family LLC—can trigger the reporting requirement if the other conditions are met.
Are There Any Exceptions?
Yes. Most, but not every transfer to an entity or trust triggers a report. Among the most common exceptions:
- Transfers resulting from death—whether by will, trust, intestate succession, joint survivorship, transfer-on-death deed, or beneficiary designation.
- Transfers incident to divorce or dissolution of a marriage or civil union.
- Transfers for no consideration by an individual (or spouse) to a trust of which that individual or spouse is the settlor or grantor—a common estate planning scenario.
- Transfers to a qualified intermediary in a Section 1031 like-kind exchange.
- Transfers to certain regulated entities such as banks, credit unions, insurance companies, publicly traded companies, and governmental authorities.
The exceptions are fact-specific, and the person responsible for filing the report must evaluate the circumstances of each transfer to determine whether one applies.
Who Files the Report, and What Information Is Required?
The obligation to file does not fall on the buyer. Instead, it falls on a “reporting person”—typically a real estate professional involved in the closing. FinCEN uses a cascading priority system to identify the responsible party, starting with the closing or settlement agent and moving down through other roles such as the person who files the deed, underwrites the title insurance, or disburses the greatest amount of funds. In practice, this will usually be a title company, settlement agent, or attorney handling the closing.
The report requires information about the property, the transferee entity or trust, its beneficial owners, any individuals who signed documents on the transferee’s behalf, the transferor, and payment details. Beneficial owners generally include individuals who exercise substantial control over the entity or own at least 25% of its ownership interests. For trusts, beneficial owners may include the trustee, grantor, trust protector, and certain beneficiaries.
What Does This Mean for You?
If you are purchasing residential property through an LLC, trust, or other entity without traditional bank financing, you should expect your closing agent or attorney to request additional information that may not have been required in past transactions—including personal identifying information for beneficial owners and signing individuals. For reporting persons, there is a great deal of liability. They are not permitted to file incomplete reports, and penalties for noncompliance can include civil fines reaching into the six figures and, for willful violations, criminal penalties including imprisonment. As a practical matter, if the required information is not provided, the reporting person may decline to participate in the closing.
Reports are filed electronically with FinCEN through a secure system, are not available to the general public, and are exempt from disclosure under the Freedom of Information Act. These transfers regulated by FinCEN still retain the privacy many value.
Final Thoughts
The new FinCEN reporting requirements represent a significant shift in how residential real estate transactions involving entities and trusts are documented at the federal level. For buyers who use these structures for legitimate purposes—estate planning, asset protection, investment—the rule does not change what you can do, but it does change what is disclosed and to whom. Understanding these requirements before you get to the closing table will help ensure a smoother transaction. If you have questions about how this rule may affect your next real estate purchase or your broader estate plan, consider reaching out to us at MWC Legal Group to discuss your situation.
March 24, 2026
