Illicit actors often use non-financed (all-cash) residential real estate purchases—especially those involving legal entities or trusts—to avoid scrutiny and hide beneficial ownership. This rule helps law enforcement identify who is behind these transactions and prevents anonymous laundering of illicit funds through real estate.

A transfer is reportable if all of the following apply:

• The property is residential real property located in the United States
• The transfer is non-financed
• The property is transferred to a legal entity or trust

Transfers made directly to an individual are not covered by the AML rule.

Residential real property includes:

• Single-family homes
• Townhouses
• Condominiums and cooperatives (including units in large buildings)
• Apartment buildings designed for occupancy by one to four families
• Vacant or unimproved land intended for construction of a one-to-four-family residence.

A non-financed transfer is one that does not involve an extension of credit. Specifically, the transaction does not involve funds from an FDIC-insured financial institution, NCUA (credit union) or NAICS (savings bank) member. Non-financed transactions include all-cash, private, individual lenders and seller-carryback loans.

A transfer is reportable when all four conditions are met:

1. The real property is residential;
2. The transfer is non-financed;
3. The property is transferred to certain type of entity or trust; and
4. An exception does not apply.

There is no minimum purchase price and gift transfers may also be reportable.

In most cases, transfers made directly to an individual are not covered by the AML tule.

A transferee entity is defined as any person other than a transferee trust or an individual. For example, a transferee entity may be a corporation, partnership, estate, association, or limited liability company. Statutory trusts, which are trusts created or authorized under the Uniform Statutory Trust Entity Act or as enacted by a state, are also considered transferee entities, rather than transferee trusts, for the purposes of this reporting requirement. There are 16 kinds of entities that are exempt from the definition of a transferee entity. A transferee trust is any legal arrangement created when a grantor or settlor places assets under the control of a trustee for the benefit of one or more beneficiaries or for a specified purpose, whether formed under the United States or a foreign jurisdiction. A transferee trust also includes legal arrangements that are similar to such legal arrangements in either structure or function. However, certain types of trusts are exempted from the definition of a transferee trust.

An individual is a beneficial owner if they:

• Exercise substantial control over the entity, or
• Own or control 25% or more of the ownership interests

This definition aligns with FinCEN’s Beneficial Ownership Information (BOI) rule.

Beneficial owners of a trust may include:

• Trustees or individuals with authority over trust assets
• Beneficiaries entitled to all or substantially all trust assets
• Grantors or settlors of revocable trusts
• Beneficial owners of entities or trusts holding these roles

Yes. Common exemptions include transfers involving:

• Easements
• Death of an individual (estate, trust, operation of law)
• Divorce or dissolution of marriage or civil union
• Bankruptcy estates
• Court-supervised transfers
• Transfers by an individual (alone or with spouse) to their own trust
• 1031 like-kind exchanges (to a qualified intermediary)
• Transactions where no reporting person is involved

The person responsible for filing a Real Estate Report is known as the “reporting person,” one of a limited number of persons who play specified roles in the reportable transfer. Only one person in a given transaction is deemed to be the reporting person, and that person is required to report. The reporting person can be identified in one of two ways:

1. Reporting Cascade:
   • A list of seven different functions that a real estate business or professional may perform in a reportable transfer of residential real property (see below). If a person is performing the first function described in the cascade, then that person would be the reporting person. If no person performing the first function described in the cascade is involved in the transfer, then the reporting person would be the person that performs the second described function, if any, and so on down the cascade.
   • If none of the functions set out in the cascade are performed for a given reportable transfer of residential real property, a Real Estate Report is not required to be filed.
2. Designation Agreement:
   • A person that performs a function described in the reporting cascade may choose to enter into a written agreement that designates another person that performs a function described in the reporting cascade as the reporting person

To comply with FinCEN reporting obligations, Pioneer Title Co. may require identifying information for any beneficial owner of a transferee entity or a transferee trust: name, date of birth, residential address, citizenship, and taxpayer identification number. We must report the total consideration paid for the property, along with certain information about any payments made by the transferee entity or transferee trust. Additional documentation or clarification may be requested if required to complete verification or reporting.

The report must be filed by the later of:

• The last day of the month following the month of the transfer, or
• 30 calendar days after closing

Failure to comply with reporting obligations can result in civil and criminal penalties under the federal Bank Secrecy Act (BSA).

Pioneer Title utilizes Real Estate Report, a third-party reporting service from Advalis, Inc. Due to the increased time, verification, documentation, and reporting required to comply with FinCEN AML regulations, an additional compliance fee of $200.00 will apply to transactions subject to these reporting requirements. This fee, imposed by all title companies, reflects the administrative regulatory burden associated with federal compliance and will be disclosed on your settlement statement.

Yes. While a copy of the report itself does not need to be retained, reporting persons must keep for five years:

• Certifications of beneficial ownership information
• Written designation agreements (if applicable)

Yes. All information collected for AML compliance is handled in accordance with applicable privacy laws and is used exclusively for regulatory reporting purposes. Pioneer Title Co. does not use this information for marketing or any non-compliance-related purpose.