Starting March 1, 2026, a new federal rule will take effect that every California real estate professional, buyer, and seller should be aware of—especially here on the Westside of Los Angeles, where it’s common to see all-cash purchases, trust-based ownership, and LLCs used in real estate transactions. The Financial Crimes Enforcement Network (FinCEN) is introducing the Residential Real Estate Reporting Rule, a permanent nationwide regulation that requires the reporting of certain non-financed property transfers. While that might sound technical, here’s what it means in plain English: if you're buying residential property in cash or through a legal entity like an LLC or a trust, and there’s no mortgage from a federally regulated bank involved, your transaction may need to be reported to the federal government.
This rule applies to all non-financed transfers of residential real estate—including single-family homes, condos, duplexes, co-ops, and even vacant land intended for residential use. In markets like Pacific Palisades, Brentwood, Santa Monica, and Venice, this is particularly relevant. These are areas where buyers often pay in cash or use estate-planning structures to hold property, and this new rule brings added compliance responsibilities to those deals.
So, who’s responsible for filing the report? That’s where FinCEN’s “reporting cascade” comes into play. It prioritizes certain professionals involved in the transaction—starting with the closing or settlement agent, then moving down the list to the person who prepared the closing statement, the person who records the deed, the title insurance underwriter, the escrow agent or attorney disbursing the funds, and so on. Only one person is responsible for filing, but the professionals involved can enter into a written agreement to assign that responsibility clearly. This is important in California, where several parties are typically involved in the close of escrow.
Now, what exactly must be reported? The reporting person will need to file a Real Estate Report (RER) through FinCEN’s BSA E-Filing System. The report must include information on the property being transferred, the parties involved, and—most notably—the identities of the individuals behind the trust or legal entity receiving the property. This includes beneficial owners who either control 25% or more of the entity or exercise substantial control over it. For trusts, this includes the trustee, anyone with authority to dispose of trust assets, beneficiaries with the right to withdraw substantially all income or principal, and the grantor or settlor if the trust is revocable. For each of these individuals, the report must include their full legal name, date of birth, residential address, country of citizenship, and tax ID number (or a passport number if no U.S. tax ID is available).
There’s a filing deadline as well—reports must be submitted either by the last day of the month following the closing or within 30 days after closing, whichever is later. That gives the reporting party a 30–60 day window, but it’s critical to stay ahead of the timeline, especially given the potential consequences. Failing to comply with this rule can lead to serious penalties, including civil fines of up to $108,489 per violation and even criminal charges that could carry up to five years in prison. This isn’t something to overlook or assume someone else is handling—it needs to be clarified during escrow who is taking responsibility for the filing.
The good news? Not all transactions are subject to the rule. Transfers due to death or divorce, those involving bankruptcy or court supervision, gifts to certain types of trusts, or transfers that are part of a 1031 exchange using a qualified intermediary are all exempt. Still, in practice, many high-end Westside real estate deals may fall under the new reporting requirements.
So, what does this mean for buyers and sellers in our area? If you’re planning to buy property through a family trust, move a property into an LLC, or make an all-cash purchase in neighborhoods like Mar Vista, Westchester, or Marina del Rey, now’s the time to get ahead of this. Talk with your real estate agent, escrow team, attorney, or financial advisor to ensure you understand the steps involved. As your agent, part of my job is helping you navigate not only the market but also the evolving legal and regulatory landscape that comes with owning property in Los Angeles.
This new FinCEN rule is all about transparency, and while it adds a few extra steps to the process, it’s manageable with the right team in place. If you have questions about how this might affect your upcoming transaction—or if your estate planning involves real estate on the Westside—I’m here to help you sort through it all. Whether you’re buying a second home in Santa Monica through your trust or preparing to gift a property to your kids, let’s have a conversation about how this change may impact your next move.