A major development has emerged since my recent post about the Financial Crimes Enforcement Network’s (FinCEN) Residential Real Estate Reporting Rule that was scheduled to take effect on March 1, 2026. A federal judge in Texas has now struck down the rule in its entirety, holding that the Treasury Department exceeded its authority under the Bank Secrecy Act.

What the Court Decided

According to reporting by Mallory Culhane, Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas ruled that Treasury’s 2024 rule was unlawful and must be vacated.

The rule would have required reporting on any non‑financed residential real estate transaction occurring within the United States or its territories where ownership was transferred to an entity or trust, with limited exceptions. Flowers Title Cos. challenged the rule, arguing that FinCEN lacked statutory authority to impose such broad reporting obligations.

Judge Kernodle agreed, finding that:

• The Bank Secrecy Act allows FinCEN to require reports of suspicious transactions, but does not permit the agency to deem an entire category of transactions suspicious by default.
• FinCEN’s reliance on data from geographic targeting orders—where roughly 42% of certain non‑financed transfers were associated with suspicious activity reports—did not justify treating all non‑financed entity purchases as inherently suspect.
• Accepting FinCEN’s interpretation would give the agency “far‑reaching powers no one has contemplated,” going beyond what Congress authorized.

The court also concluded that the statute does not give FinCEN authority to require the specific reports at issue, and that the agency’s interpretation would effectively circumvent the express limits Congress placed on its power to mandate reporting of suspicious transactions.

The case is Flowers Title Cos. LLC v. Bessent, No. 6:25‑cv‑00127 (E.D. Tex. Mar. 19, 2026).

What This Means for Sellers

In my earlier post, I cautioned sellers that the new rule could introduce delays at closing— particularly when buyers were entities or trusts—because title companies would need to collect additional information and verify beneficial ownership before completing the transaction.

With the rule now vacated:

• Sellers are unlikely to experience those anticipated delays.
• Standard closing timelines should remain largely unchanged.
• No new seller‑side documentation or verification requirements will be imposed under this rule.

For sellers, this is a meaningful reduction in the administrative friction many were preparing for as the effective date approached.

What This Means for Buyers (Especially Cash Buyers and Entities)

Under the now‑vacated rule, buyers purchasing with cash, or buyers using LLCs, corporations, partnerships, or trusts, would have been required to disclose:

• Beneficial owners
• Control persons
• Detailed entity information
• Identification documents and related records

With the rule struck down:

• Buyers avoid these additional disclosures that would have been triggered solely by the structure of the transaction.
• Entity purchasers do not need to provide beneficial ownership documentation at closing under this vacated rule.
• Cash buyers face no new federal reporting requirements tied specifically to this rule.

In short, the status quo is restored for privacy‑minded buyers who prefer to use entities or trusts for acquisitions.

What This Means for Title Companies

Title companies were preparing for a significant operational shift in response to the 2024 rule, including:

• New data‑collection workflows at or before closing
• Verification procedures for beneficial owners and control persons
• Secure systems for transmitting reports to FinCEN
• Additional staffing and training to manage compliance

With the rule vacated:

• These back‑office reporting processes will not be required under the 2024 rule as written.
• Title companies can continue operating under existing federal requirements.
• No new reporting infrastructure needs to be built or implemented for this specific rule.

For the title industry, the ruling removes what would have been one of the most substantial compliance expansions in recent years.

Looking Ahead

FinCEN may choose to appeal the decision, pursue a narrower rulemaking, or explore other approaches to address money laundering risks in residential real estate. For now, however, the 2024 rule is fully vacated, and the additional reporting burdens that were scheduled to begin in 2026 are not in effect.

Buyers, sellers, and title companies can continue to operate under the current framework while the legal and regulatory landscape continues to evolve.

I will continue to monitor developments in this case and any future FinCEN actions, and I will update this space as new information becomes available.