Understanding the New Residential Real Estate Rule (RRER): What Buyers, Sellers, and Real Estate Professionals Need to Know
On March 1, 2026, a new federal regulation changed how certain residential real estate transactions are reported in the United States. Known as the Residential Real Estate Rule (RRER), this rule was issued by the Financial Crimes Enforcement Network (FinCEN) to increase transparency and help prevent money laundering and other illicit financial activity through real estate transactions.
While the rule is detailed and technical, its impact is significant for buyers, sellers, real estate professionals, title companies, and attorneys. Below is a straightforward overview of what the rule does, when it applies, and why it matters.
What Is the Residential Real Estate Rule (RRER)?
The Residential Real Estate Rule is a federal reporting requirement created by FinCEN, a bureau of the U.S. Department of the Treasury. FinCEN’s mission is to detect and prevent money laundering, terrorist financing, and other financial crimes.
Under the RRER, certain residential real estate transactions must be reported to FinCEN so the government can better identify who is behind high‑risk property purchases—particularly those involving legal entities and trusts rather than individuals.
What Property Does the Rule Cover?
For purposes of the RRER, “residential real property” generally includes:
Real estate in the United States that has a building designed primarily for occupancy by one to four families
Condominium units and townhomes
Land in the U.S. intended for construction of a one‑to‑four family residence
Cooperative housing shares tied to U.S. residential property
In short, most typical residential properties fall within the scope of the rule.
When Is a Transaction Reportable?
The reporting requirement is triggered when all of the following apply:
The property is residential real estate
The transfer is non‑financed
The buyer is a legal entity or a trust
A non‑financed transfer means there is no traditional mortgage or loan from a financial institution that is required to maintain an anti‑money laundering program and report suspicious activity.
Common Exceptions
Not every transaction is reportable. Some common exceptions include:
Transfers due to death (such as through a will or trust)
Transfers related to divorce
Transfers to a bankruptcy estate
Certain transfers to trusts for no consideration
Transfers where no reporting person is involved
Who Is Responsible for Filing the Report?
The rule establishes a “reporting person cascade” to determine who must file the report. In many cases, the reporting person, amongst others, may be:
The closing or settlement agent
The person who prepares the settlement statement
The person who records the deed
A title insurance company
The party who disburses the largest amount of funds
If an employee or agent performs the reporting function, their employer is legally responsible for the filing.
Designation Agreements
To simplify compliance, the rule allows parties to enter into a designation agreement, which formally assigns reporting responsibility to one party involved in the transaction. These agreements must be in writing and retained for five years.
What Information Must Be Reported?
The RRER requires detailed information, including:
About the Reporting Person
Legal name
Business role in the transaction
Business address
About the Buyer (Entity or Trust)
Legal name and address
Tax identification or registration numbers
Beneficial ownership information
About the Seller
Legal name and address
Tax identification or registration numbers
Other applicable information
Beneficial Owners
A beneficial owner is generally anyone who:
Owns or controls 25% or more of an entity, or
Exercises substantial control, such as senior officers or decision‑makers
For trusts, beneficial owners may include trustees, grantors, beneficiaries with withdrawal rights, or others with control over trust assets.
Property and Payment Details
Property address and legal description
Closing date
Payment amounts, methods, and sources
Whether private or “hard money” loans were involved
When and Where Is the Report Filed?
Reports must be filed electronically with FinCEN. The report is due by the later of 30 days after closing or the last day of the month following the closing month.
Why This Rule Matters
The Residential Real Estate Rule significantly expands compliance responsibilities for real estate professionals and parties involved in closings. Failing to properly identify a reportable transaction or collect required information could lead to regulatory scrutiny and potential penalties.
For buyers and sellers, the rule may mean providing additional personal and entity information during certain transactions—especially when trusts or LLCs are involved.
Our real estate and business law attorneys help clients understand how this new rule applies to their transactions and assist with compliance planning, documentation, and risk management. If you have questions about the Residential Real Estate Rule or how it may affect an upcoming transaction, please contact John Junod at jjunod@shuffieldlowman.com or Natali Reyes at nreyes@shuffieldlowman.com.