FinCEN Residential Real Estate Reporting Rule Now On Hold

By: David Hamerslough and Victoria B. Naidorf

The reporting requirements that went into effect on March 1, 2026 pursuant to the Financial Crimes Enforcement Network’s (FinCEN) Residential Real Estate Anti-Money-Laundering (AML) Rule are now on hold. This occurred as a ruling by a federal district court in Texas on March 19, 2026. The court decided that FinCEN had exceeded its statutory authority under the Bank Secrecy Act and that the Rule violated the Administrative Procedures Act. In response to this ruling, FinCEN issued the following statement: “In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.”

Unless and until this decision is appealed by FinCEN or the Department of Justice (DOJ) or a stay of the decision is sought pending an appeal, title/escrow companies will not be required to file real estate reports for certain non-financed transfers of residential real estate involving a transferring entity or trust.

PRDS and C.A.R. revised their purchase contracts to include clauses regarding the reporting requirements that were to have go into effect on March 1, 2026. PRDS will leave the language regarding this issue in the contract in the event that the reporting requirements are reinstated. We anticipate that C.A.R. will do so as well or address the issue in June of this year with their bi-annual forms revision.

Given the reasons and policy behind the reporting requirements, it is likely that they will continue to exist in some form in the future. If/when that occurs, the following are some observations that we have for real estate licensees to consider:

1. Recognize that the reporting requirements are triggered by a request for information from the title/escrow company. This is in contrast to a contractual contingency, which is typically triggered by a specific date following acceptance (e.g., ____ days after acceptance);
2. The only way to track a request for information by the title/escrow company is to know when the request has been made. Consider asking the title company whether notices of the initial request will be sent out to all agents/parties to the transaction and/or whether notice will be sent out if the requested information is not provided. How many times will the title/escrow company contact the party from whom the information has been requested if the information is not timely provided? Will all parties and their agents be notified of each of these requests?
3. Knowing this information will be important in order to track contractual performance, including if and when a Notice To Perform needs to be provided before the transaction can be cancelled in the event of non-performance. In view of the above issues, the PRDS purchase contract does not require that a Notice To Perform be provided in order to cancel the contract based upon non-performance by the party for whom reporting was requested. In contrast, the C.A.R. purchase contract does require a Notice To Perform.
4. Given that a title/escrow company will not close a transaction where the required information has not been provided, real estate licensees representing both the buyer and seller should monitor this issue, where applicable, to determine if escrow is going to close in a timely fashion and what options exist in the event the timely close of escrow is in jeopardy.

All of us will need to monitor if and when FinCEN or the DOJ appeal, seek a stay, or attempt to address AML issues through Congressional legislation. In addition, FinCEN may start to use geographic targeting orders (GTOs) to combat potential money laundering. Please remember that the Rule, as the reporting requirement that was to go into effect on March 1, 2026 is referred to, was significantly broader than FinCEN’s prior use of GTOs. While both the Rule and the GTOs were intended to gather information regarding real estate transactions in an effort to prevent money laundering, GTOs were limited to specific geographic areas (e.g., counties) and residential real estate transactions above a certain price point. The GTOs were largely superseded by the Rule.