What are these rules? Why were they enacted?
The Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of the Treasury, has long had real estate reporting rules known as Geographic Targeting Orders (GTOs) which were enacted to assist the government in identifying the use of illicit funds to purchase real property with cash through an entity to hide the proceeds of illegal activity. As “bad actors” found way around the GTOs, FinCEN found it necessary to expand the scope of its data gathering to identify illegal activity. Effective March 1, 2026, the new FinCEN rules will replace the old GTOs, and escrow companies will be required to collect data from real estate principals and report that information to FinCEN.
What are the key differences between the old GTOs and the new FinCEN rules?
Additional contract concerns.
Will escrow close a transaction if the requested information is not provided or incomplete? Why?
Most likely, “No.” The law provides criminal and civil penalties for escrow’s failure to comply with reporting.
Can a seller refuse to accept an offer made by an all-cash entity or trust buyer?
A seller may consider the buyer’s FinCEN status, and the potential impact on the seller and the transaction, just like any other term on an offer, as part of the seller’s decision of whether to accept, reject, or counter an offer.
What happens if a buyer or seller (or beneficial owner or signing party for an entity), does not provide the requested information to escrow?
The non-complying party could be in breach of contract. The other party can issue a Notice to Perform and then cancel if the information is still not provided.
Can an individual buyer avoid these rules by transferring to an entity or trust after close of escrow?
Certain post-sale transfers to trusts for no consideration are not reportable, but not all. Ask your attorney.
See Quick Guide dated 10/2025, titled, “FinCEN Real Estate Reporting Requirement” for more information.
