What’s Happening in a Nutshell:
If
- A transaction closes on or after December 1, 2025, and
- The buyer is a trust or legal entity other than a live human or humans, and
- The source of funds is cash or a hard money/private lender...
Then
The transaction information must be captured in a Residential Real Estate Report and submitted to the Financial Crimes Enforcement Network (FinCEN). That information includes, but is not limited to, the following:
Buyer Information
- Identification of all owners who hold beneficial ownership of 25% or more. This includes names, addresses, and SSN or passport numbers.
- CEO/CFO for LLCs and similar entities.
- Whoever has authority to act on behalf of the legal entity.
Buyer Banking Information
- The source of funds.
- Who owns or controls the account?
- How money has been transferred into and out of the account.
Seller Information
- Individual identification.
- If the seller is a trust or legal entity, the same information is required for the seller’s legal entity that is required of the buyer.
Property Details
- The legal description of the property.
- The address of the property.
- A description of the property.
The Process
- Most of the process will be managed and completed by the title company managing the escrow and recording process.
- New forms will include a Buyer Collection Form—with 111 data points—and a somewhat simpler Seller Collection Form.
- Title companies will charge for the additional work to gather and report this information.
The Backstory
FinCEN was created within the Department of the Treasury in 1988 to fight money laundering by drug cartels and other ne’er-do-wells. FinCEN works with the FBI and Department of Justice to stop the illicit movement of money through large financial and banking transactions. This new real estate transaction reporting requirement is intended to stop the use of high-value real estate transactions to transfer and launder funds illicitly. Real estate transactions are a favorite means to disguise and launder the movement of funds.
Be Prepared
If you close a transaction on or after December 1, 2025, please expect this reporting requirement. You’ll be asked by the title company for detailed information about your legal entity and anyone with beneficial ownership in it. This is not optional, and your closing could be delayed while the new forms are completed. Delaying it until after closing isn’t an option.
