The Financial Crimes Enforcement Network (FinCEN) has suspended its enforcement of new reporting requirements for certain non-financed residential real estate transactions (RRE Rules). The RRE Rules, which are summarized in our prior E-Brief (here), went into effect on March 1, 2026. However, on March 19, 2026, a federal judge in the U.S. District Court for the Eastern District of Texas held that the RRE Rules were improperly issued.
The Flowers Title Co. Decision
The March 19 order came in Flowers Title Co., LLC v. Bessent, in which the court issued an order that “sets aside and vacates” the RRE Rules, holding that the RRE Rules exceeded FinCEN’s statutory authority under the Bank Secrecy Act. The court’s “order of vacatur” is a remedy provided under the Administrative Procedure Act, that nullifies agency actions the court finds unlawful. As such, while this order remains in place, the RRE Rules are unenforceable. Importantly, vacatur as a remedy is distinct from nationwide (or universal) injunctions. The ability of federal courts to issue nationwide injunctions was significantly limited by the U.S. Supreme Court in its decision in Trump v. CASA, Inc., 606 U.S. 831 (2025). Since vacatur is a separate remedy, the Flowers Title Co. decision applies nationwide and sets aside and nullifies the RRE Rules for so long as the order remains in place.
Current Reporting Status
In response to that court order, FinCEN issued an “alert” on its website, stating:
In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.
As a result, title companies, closing agents, attorneys, and other covered persons previously subject to the RRE Rules are not currently obligated to collect or report beneficial ownership information in connection with non-financed residential transfers that would otherwise have triggered a filing requirement.
Looking Ahead
While the RRE Rules are currently nullified, the suspension may be temporary. The federal government could appeal the ruling in Flowers Title Co., and seek a “stay” of the district court’s order, which could reinstate the reporting requirements temporarily, pending a final ruling. If reversed on appeal, the RRE Rules could be fully reinstated. Moreover, other district courts that have addressed challenges to the RRE Rules have reached opposite conclusions, with at least two courts upholding the RRE Rules. See Fidelity Nat’l Fin., Inc. v. Bessent, Case No. 3:25-cv-0054-WWB-SJH (M.D. Fla. Feb. 19, 2026); and Corley v. U.S. Department of the Treasury, Case No. 5:25-cv-00086-H (N.D. Tex. Feb. 25, 2026). The conflicting decisions across different federal districts may increase the likelihood of a further appellate review and could ultimately present a question for the U.S. Supreme Court.
Given this uncertainty, we recommend that real estate professionals maintain their compliance processes and documentation in preparation for a potential reinstatement of the RRE Rules. We will continue to monitor the status of the RRE Rules and provide further updates.
Please contact any of the attorneys in the Real Estate Practice Group at Woods Aitken if you have any questions regarding the FinCEN residential real estate reporting rules. We encourage you to subscribe to our E-Briefs for the latest news, tips, and updates.