FinCEN Residential Real Estate Reporting Rule: What Vermont Buyers and Sellers Need to Know
Beginning March 1, 2026, new federal anti–money laundering regulations issued by the Financial Crimes Enforcement Network (FinCEN) will require reporting of certain residential real estate transactions. These rules are commonly referred to as the FinCEN Residential Real Estate Reporting Rule. The rule is designed to combat money laundering and illicit financial activity in the real estate market by requiring disclosure of the beneficial owners behind certain property purchases made without institutional financing. For buyers, sellers, and real estate professionals in Vermont, these requirements may add a new step to the closing process. At Peet Law Group, we are helping clients understand how the rule works and how to avoid delays at closing.
When the FinCEN Reporting Rule Applies
A report will generally be required when all three of the following conditions are present.
The rule applies to most residential property types, including:
• 1–4 family homes
• Condominiums
• Cooperative units
• Vacant land intended for residential development
Commercial real estate transactions are not covered by this rule.
Reporting requirements apply when the buyer is not an individual but instead a legal entity or trust. Examples include:
• Limited Liability Companies (LLCs)
• Corporations
• Partnerships
• Trusts
These structures are commonly used for investment or liability protection purposes. The new rule requires disclosure of the beneficial owners behind these entities when certain transactions occur.
The rule primarily targets all-cash purchases. A transaction will likely trigger reporting if there is no loan from a traditional bank or mortgage lender.
Transactions may still be considered “non-financed” under the rule even if there is:
• Private financing
• Hard-money loans
• Seller financing
Because these arrangements do not involve a regulated financial institution performing anti-money-laundering checks, FinCEN requires the closing professional to report the transaction.
When a transaction triggers the rule, information about the beneficial owners of the purchasing entity must be reported to FinCEN. Beneficial ownership information generally includes identifying details about the individuals who ultimately own or control the entity purchasing the property. Seller information required for reporting is relatively limited, but sellers should still be prepared to provide basic identifying details to the closing agent if the rule applies. This information must be gathered before closing so that the required report can be submitted to FinCEN.
In most Vermont real estate transactions, the closing attorney will be responsible for preparing and submitting the FinCEN report.
However, both the buyer and seller must cooperate in providing the required information. Without timely disclosure, the closing process could be delayed.
Because of this, real estate agents should notify their clients early in the transaction if the purchase may trigger FinCEN reporting.
To avoid last-minute problems, it is advisable for purchase contracts to include a provision requiring both parties to provide the necessary FinCEN information to the closing agent at least two business days before closing. Including this requirement in the contract helps ensure that:
• The closing attorney has sufficient time to prepare the report
• The transaction is not delayed at the closing table
• Both parties understand their obligations under federal law
Real estate professionals may wish to incorporate a FinCEN reporting addendum into their purchase and sale agreements.
Many Vermont transactions will not trigger reporting under the rule. For example, purchases by individuals using a conventional mortgage will typically fall outside the requirements. However, reporting is more likely in transactions involving:
• Investment properties purchased through LLCs
• Cash purchases of vacation homes or second homes
• Purchases of residential development land through entities or trusts
Given the prevalence of LLC ownership in real estate investment, it is important for buyers and sellers to understand whether the rule applies before they reach the closing stage.
If you are involved in a residential transaction where the buyer is an entity and there is no traditional financing, it is wise to address FinCEN reporting early in the process. Buyers should be prepared to disclose beneficial ownership information. Sellers should be aware that the transaction may involve additional federal reporting requirements.
Vermont Real Estate Closing Attorneys Peet Law Group assists buyers, sellers, and real estate professionals throughout Vermont with residential and commercial closings. Our attorneys monitor new regulatory developments such as the FinCEN Residential Real Estate Reporting Rule and help clients navigate the additional requirements.
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