The Financial Crimes Enforcement Network (FinCEN) created the Residential Real Estate Reporting Rule (the “RRE Rule”) to fight money laundering and improve transparency. The rule takes effect on December 1, 2025, and applies to certain non-financed residential real estate transactions.

Real estate lawyers and title agents must understand which transactions require reporting and which ones fall outside the rule.

Our earlier post, Exclusions Explained: The Challenges of Identifying Excluded Transferee Entities and Trusts Under the FinCEN Residential Real Estate Reporting Rule, gave an overview of reportable and non-reportable transactions. This article looks closer at common transactions that do not require reporting.

How the Rule Defines “Non-Financed Transfer”

The RRE Rule requires a “Reporting Person” to report any non-financed transfer of residential real property to a transferee entity or trust.

A non-financed transfer happens when:

  • There is no financing, or

  • The loan comes from a lender with no SAR/AML obligations.

The rule also only applies to loans secured by the property being transferred. If the loan is unsecured, the transaction is treated as non-financed and may be reportable.

Transactions That Are Not Reportable

1. Transactions Financed by Traditional Lenders

If the transfer is financed by a bank or financial institution that follows AML and SAR rules, the transaction is not reportable.

However:

  • If the loan comes from the seller or a lender not subject to SAR/AML rules, the transfer may be reportable.

  • If the loan is unsecured, even from a regulated bank, the transaction counts as non-financed and could be reportable.

2. Transactions with Individual Buyers

The rule focuses on identifying beneficial owners of entities (LLCs, corporations, trusts). If the buyer is an individual acting in their own name, the transaction does not need to be reported.

3. Leases and Rental Agreements

Leases and rental contracts transfer possession, not ownership. Since the rule applies only to ownership transfers, leases and rentals are not reportable.

4. Other Excluded Transfers

Several common situations also fall outside the scope of the RRE Rule:

  • Easements: Grants, transfers, or revocations of easements do not involve ownership.

  • Transfers Due to Death: Property passed by will, trust, law, or contract after death is not reportable.

  • Divorce Transfers: Transfers from divorce or dissolution of marriage are excluded.

  • Bankruptcy Transfers: Ownership changes that occur during bankruptcy (voluntary or involuntary) are not reportable.

  • Court-Supervised Transfers: Transactions under court supervision do not require reporting.

  • Transfers to a Trust: If an individual transfers property (without consideration) into a trust where they or their spouse are the grantors, the transfer is excluded.

  • 1031 Exchanges: Transfers to a qualified intermediary under IRS rules are excluded.

  • No Reporting Person: The rule defines a “cascade of responsibility” to ensure there is always a reporting person. In practice, this exception does not apply.

Examples

Example 1 – Financed Sale (Not Reportable):
Mr. Brown sells his home to Jones, LLC for $200,000. Jones, LLC pays $40,000 down and finances the rest with a mortgage from a large U.S. bank.
👉 Not reportable. The loan comes from a bank with AML and SAR obligations.

Example 2 – Seller Financing (Reportable):
Mr. Brown sells his home to Jones, LLC for $200,000. Jones, LLC pays $40,000 down and gives Mr. Brown a promissory note for the balance.
👉 Reportable. Mr. Brown is not a financial institution, so the loan counts as non-financed.

Example 3 – Unsecured Loan (Reportable):
Mrs. Jones sells property to ACME, LLC. ACME borrows the funds from a national bank, but the loan is unsecured.
👉 Reportable. The unsecured loan makes this a non-financed transaction.

Example 4 – Transfer Due to Death (Not Reportable):
Mrs. Jones dies, and her property passes to a corporation under her will.
👉 Not reportable. Transfers due to death are excluded.

You can find more examples like these in my book: FinCEN Reporting for Residential Real Estate.  Check out the book if you want to dig deeper into your understanding of the RRE Rule.

Conclusion

The FinCEN RRE Rule is designed to increase transparency, but it does not cover every transaction. Many common transfers—like those involving individuals, leases, court actions, or estate settlements—are excluded.

For real estate professionals, understanding these distinctions will help ensure compliance and avoid unnecessary filings.