NEW: UPDATE ON BOI REQUIREMENTS

UPDATED 3/31/26: If you have property that you are thinking about, or are in the process of, transferring to an LLC, or other entity, FinCEN’s new BOI reporting requirement may impact you.

Rule: Beginning March 1, 2026 FinCEN’s residential real estate rule went into effect.  This changes reporting requirements for certain residential real estate transactions to legal entities or trusts.

The rule requires reporting to FinCEN when residential real estate is transferred to a legal entity or a trust in certain situations, particularly when the transaction does not involve traditional mortgage backed financing.

Transactions That May Trigger Report: 

1. A residential property that is purchased with cash; and
2. The property is placed into an LLC or similar entity or
3. A property that was already owned by an individual is transferred into an LLC.

For Example:  

If John purchases a rental property in his personal name and later the property into John’s Rental Properties LLC, the transfer to the LLC could trigger a reporting requirement under the new rule.

Who reports the transfer:  The hierarchy of who is responsible for reporting the transfer consist of:

1. The Closing Agent;
2. The person that prepares the closing statement;
3. The persona that files the deed;
4. The person that underwrites the title insurance policy for the transferee;
5. The person that disburses the greatest amount of funds in connection with the transfer;
6. The person that provides an evaluation of the status of the title;
7. The person that prepares the deed.

Note:  In many real estate transactions, a title company or settlement agent will handle the reporting.  However, in some cases such as private transfers without a title company, the responsibility may fall on another professional involved in the transaction.

The contracting parties in the transaction may also enter into a designation agreement specifying who is responsible for submitting the BOI report to FinCEN.

Penalties:  The penalty for non-compliance are fines of $1,394 per day, and criminal penalties of up to 5 years in federal prison an additional fine of up to $250,000

Exception:  Not all transfers of property to a trust or entity require reporting.  For example:

1. Transfers due to death (testamentary transfers);
2. Transfers ordered by a court;
3. Transfers to trusts, where the person transferring the property is also the Grantor (creator) of the trust that the property is being transferred to.

Traditional estate planning transfers into a revocable living trust will still fall within these exceptions.

If you are considering or in the process of transferring residential real estate to your LLC, trust, or other entity consult with your estate planning or title attorney to determine if a BOI report will also be required.

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UPDATED 3/27/25: As you may know, there was a new rule that went into effect in 2024: the Corporate Transparency Act. The act requires those who are considered a “beneficial owner” of a particular type of entity (like a limited liability company or corporation) to file a Beneficial Ownership Information (BOI) report. See our previous blog post on BOI reporting for more details.

The Corporate Transparency Act initially required an estimated 32.6 million companies to file BOI reports to the Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. However, there have been several significant changes. 

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide order prohibiting the federal government from enforcing the act. As long as that injunction order remained in force, companies were not required to report beneficial ownership information with FinCEN.

On December 23, 2024, the Fifth Circuit Court of Appeals stayed the nationwide preliminary injunction, which reinstated the filing requirement. 

On December 26, 2024, a new court order was issued that reinstated the nationwide preliminary injunction. 

On January 23, 2025, the U.S. Supreme Court said it will allow the government to implement the Corporate Transparency Act. This didn’t reinstate the filing deadline of January 13.

On February 18, 2025, a federal judge lifted the preliminary nationwide injunction on filing, which means that filing is once again required. FinCEN has extended the filing deadline to March 21.

On March 26, 2025, FinCEN published an interim final rule that narrowed reporting requirements to foreign reporting companies only. U.S. citizens, residents, and businesses “are exempted from the reporting requirements and do not have to report BOI to FinCEN, or update or correct BOI previously reported to FinCEN.” In addition, foreign entities are not required to report U.S. beneficial owners.

More information is available on the FinCEN website, https://www.fincen.gov/boi-faqs.

DISCLAIMER: We do not assume responsibility for your company’s ongoing compliance obligations under the Corporate Transparency Act. We recommend that you remain compliant with reporting requirements. If you have questions regarding your obligation to report beneficial ownership information with FinCEN, please contact your CPA or business attorney.

This post was created by Michael Dietz, estate planning associate at JM LAW, PLLC.