Are Your Virginia Closings Subject to FinCEN’s 2026 Residential Real Estate Reporting Rule?
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Beginning March 1, 2026: A New Federal Rule May Affect Certain Virginia Closings
If you are preparing to close on a residential transaction in Virginia and the buyer is a legal entity (such as an LLC, corporation, or partnership) or trust, a new federal reporting rule taking effect March 1, 2026 may apply to your transaction.
The Residential Real Estate Rule (“RRE Rule”), issued by the Financial Crimes Enforcement Network (FinCEN), creates direct reporting obligations in certain non-financed residential transfers.
This is not a rule that applies to every closing. But when it does apply, compliance is mandatory — and responsibility attaches automatically based on role.
The Rule Targets Entity or Trust Buyers in Non-Financed Transactions
The RRE Rule applies to certain transfers of residential real property when:
The buyer is a legal entity (LLC, corporation, partnership) or a trust; and
There is no lender involved that maintains an AML compliance program.
The rule commonly applies to:
All-cash purchases by LLCs or corporations
Purchases funded through private or hard-money lenders without AML oversight
Certain transfers made as gifts
The rule covers any transfer of ownership evidenced by deed—or, in the case of cooperative housing, stock, membership certificates, or similar ownership instruments.
What are the Exemptions?
Not every entity transfer is reportable. Under FinCEN’s published FAQs, the following transfers are not considered reportable:
A grant, transfer, or revocation of an easement
A transfer resulting from the death of an individual, whether pursuant to a will, the terms of a trust (including testamentary trusts), operation of law (such as intestate succession, surviving joint owners, or transfer-on-death deeds), or contractual beneficiary designation
A transfer incident to divorce or dissolution of a marriage or civil union
A transfer made to a bankruptcy estate
A transfer supervised by a court in the United States
A transfer for no consideration made by an individual, either alone or with their spouse, to a trust of which that individual, that individual’s spouse, or both, are the settlors or grantors
A transfer to a qualified intermediary for purposes of a like-kind exchange under Section 1031 of the Internal Revenue Code
A transfer for which there is no reporting person
The presence of an entity or trust buyer alone does not automatically trigger reporting. The full transactional context matters.
What Residential Properties are Included?
The rule does not turn on marketing descriptions or purchase price. It turns on how the property is structured — and in some cases, how it is intended to be used.
Under the rule, “residential real property” includes:
Real property containing a structure designed principally for occupancy by one to four families
Land intended for construction of a one-to-four family residence
Individual condominium units
Shares in a cooperative housing corporation tied to qualifying underlying property
Single-family homes, duplexes, triplexes, fourplexes, condominium units, cooperative interests, and certain vacant land acquisitions may all fall within the rule.
If the property qualifies as residential under this definition, and the buyer is an entity or trust in a non-financed transaction, reporting is required.
The Reporting Cascade: Who Files the Report?
Only one professional involved in the transaction is required to submit the report. The rule establishes a “reporting cascade” to determine who that person is.
The reporting cascade generally follows this order:
Closing or settlement agent
Settlement statement preparer
Deed filer
Title insurance underwriter
Largest fund disburser
Title evaluator
Deed or legal instrument preparer
If no party above you in the cascade applies, the reporting obligation moves down the list.
The reporting person may also be identified through a written designation agreement among persons described in the cascade.
If you are involved in one of these roles, you should determine early in the process whether reporting may fall to you.
What Information Must Be Reported?
When a transaction qualifies under the RRE Rule, the reporting person must submit information sufficient to identify:
The reporting individual or business
The residential property being transferred
The transferor
The transferee entity or trust
Individuals representing the transferee
Beneficial owners of the transferee entity or trust
For each beneficial owner, the required information includes:
Full legal name
Date of birth
Residential address
Citizenship
Taxpayer identification number
The report must also disclose:
Total consideration paid
The payment structure
Certain details regarding how funds were transferred
The rule permits reporting persons to rely on information provided by other parties, unless there is knowledge that would call that information into question.
For beneficial ownership information, reliance is permitted only if the transferee or its representative certifies in writing that the information is accurate to the best of their knowledge.
How and When the Residential Real Estate Report Is Filed
The Residential Real Estate Report must be submitted through FinCEN’s BSA E-Filing System. FinCEN provides three submission methods:
Web-Based Filing: Complete and submit the report directly online.
PDF Filing: Download the official form, complete it offline, and upload it when ready.
Batch (XML) Filing: Submit multiple reports using a software compatible with the BSA E-Filing System in a single batch file.
Deadline: The report must be filed on the last day of the month following the month in which the closing occurred, or 30 calendar days after the date of closing, whichever is later.
Additional References
