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On March 19, the U.S. District Court for the Eastern District of Texas vacated FinCEN’s rule requiring reporting for certain non-financed transfers of residential real estate to entities and trusts, holding that the agency exceeded its authority under the Bank Secrecy Act. The court granted summary judgment to the plaintiff and set the rule aside under the Administrative Procedure Act.
FinCEN’s Real Estate Reporting Rule took effect on December 1, 2025, and required certain professionals involved in real estate transactions to file a Real Estate Report for any (with limited exceptions relating to transfers as a result of death or divorce) non-financed transfer of residential real property to a transferee entity or trust. The Rule’s reporting obligations fell on real estate closing and settlement agents, title insurance underwriters, and others in the closing chain, leading to real compliance burdens. The Rule applied nationwide and had no minimum dollar threshold.
In vacating the Rule, the court reasoned that the Bank Secrecy Act allows FinCEN to require reporting of suspicious transactions, but found the agency had not adequately justified treating all non-financed residential real estate transfers involving entities or trusts as suspicious. The court also rejected FinCEN’s reliance on a separate Bank Secrecy Act provision addressing compliance procedures, concluding that such provision did not independently authorize the reporting mandate imposed by the Rule.
Putting It Into Practice: For banks, title companies, settlement agents, and other participants in residential real estate transactions, the vacatur removes a compliance framework that would have required new reporting, diligence, and recordkeeping for certain non-financed transfers. The ruling may ease some near-term implementation burdens, but it does not eliminate broader anti-money laundering expectations or scrutiny of higher-risk real estate activity. Businesses active in this space should continue monitoring developments and update compliance procedures as necessary.
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