Beginning March 1, 2026, residential real estate lawyers and title agents will begin reporting under the Financial Crimes Enforcement Network (FinCEN) residential real estate reporting rule—known as the RRE Rule.

The RRE Rule requires the proper reporting person to file a beneficial ownership report for every reportable non-financed transfer of residential real property to a transferee entity or transferee trust.

Many professionals in residential real estate are asking how the RRE Rule will change their daily work. One of the most important details to understand is who qualifies as the reporting person and what responsibilities come with that role.

Determining the Reporting Person

In each transaction, the reporting person is determined through the cascade of responsibility or through a written designation agreement.
That agreement must be signed by both:

  1. The entity identified through the cascade of responsibility, and

  2. The entity that agrees to assume the reporting obligations.

FinCEN created the cascade of responsibility to ensure that every transaction always has a clear, default filer.

The Cascade of Responsibility (31 CFR 1010.320(c))

Subsection (c) of the RRE Rule defines the order used to determine the reporting person:

  1. Closing or settlement agent — The person listed as the closing or settlement agent on the closing or settlement statement.

  2. Preparer of the statement — If no one is listed in step 1, the person who prepares the closing or settlement statement.

  3. Recorder — If neither 1 nor 2 applies, the person who files the deed or other instrument transferring ownership.

  4. Title insurer — If none of the above apply, the person who underwrites an owner’s title insurance policy for the transferee, such as a title insurance company.

  5. Funds disburser — If still no one qualifies, the person who disburses the greatest amount of funds in connection with the transfer (including from an escrow, trust, or lawyers’ trust account).

  6. Title evaluator — If no one qualifies under the first five levels, the person who provides an evaluation of the title status.

  7. Preparer of the deed — Finally, if none of the above apply, the person who prepares the deed or other legal instrument transferring ownership (including the stock certificate for a cooperative housing corporation).

In nearly every transaction, the first level applies—the closing or settlement agent will be the reporting person.


If no agent appears on the closing statement, move to the next level and continue down the cascade until a qualifying person is identified.

Because every transfer of residential real property involves some legal instrument of transfer, the cascade will almost always produce a reporting person.

Key Clarifications About the Reporting Person

The RRE Rule adds three important clarifications:

  1. Employees and agents
    If an individual would otherwise be the reporting person but acts only as an employee, agent, or partner within the scope of their role, the individual is not the reporting person. Instead, their employer, principal, or partnership holds that responsibility. (31 CFR 1010.320(c)(2))

  2. Financial institutions
    Any financial institution required to maintain an anti-money-laundering (AML) program under 31 CFR Part 1010 cannot be a reporting person.

  3. Designation agreements
    Parties may designate a different person—other than the one identified by the cascade—by executing a compliant designation agreement.

 

What Is a Compliant Designation Agreement?

When parties wish to name a different reporting person, they must follow FinCEN’s requirements for a compliant designation agreement.
The agreement must be in writing and include:

  • The date of the agreement

  • The name and address of the transferor

  • The name and address of the transferee entity or transferee trust

  • Information describing the transferred residential real property as required by 31 CFR 1010.320(g)

  • The name and address of the person designated as the reporting person

  • The name and address of all other parties to the agreement

Property Details Required (31 CFR 1010.320(g))

To describe the transferred property, include:

  1. The street address, if any

  2. The legal description (for example, section, lot, and block)

  3. The date of closing

 

Why It Matters

Understanding how the reporting person is determined—and how a designation agreement can change that designation—is essential for compliance. Correct identification helps avoid errors, delays, and possible penalties.

Conclusion

Every residential real estate lawyer and title agent should know how to determine the reporting person and how to create a compliant designation agreement when needed.

For more detailed guidance, grab a copy of FinCEN Reporting for Residential Real Estate: A Guide for Lawyers and Other Real Estate Professionals by Jonathan B. Wilson.

Users who decide to utilize the RREreport filing service, powered by FinCEN Report Company, will be able to use the service’s online tools to determine the reporting person for each transaction.  If the parties wish to designate a different entity to serve in that role, the RREreport service includes a compliance form of designation agreement that the parties can use.