This is an update to the client alert previously published on March 3, 2026

On March 19, 2026, a federal district court struck down FinCEN’s new “Residential Real Estate Rule” as beyond the scope of its authority under federal law.[1] The Rule, which FinCEN began enforcing March 1, requires certain professionals involved in real estate conveyances to submit detailed reports regarding non-financed transfers of residential real estate to legal entities or trusts. In Flowers Title Companies, LLC v. Bessent et al, the U.S. District Court for the Eastern District of Texas, Tyler Division, found that the final Rule violates FinCEN’s authority to require and maintain procedures for reporting suspicious transactions under the Bank Secrecy Act and Administrative Procedure Act. The Court called the government’s arguments “vague, conclusory and unpersuasive,” determining, among other things, that the Rule “declare[s] an entire category of residential real estate transactions to be ‘suspicious’ with no proof or sufficient explanation why.”[2] Based on its analysis, the Court universally vacated and set aside the Rule.[3]

What does this mean for the real estate industry and otherwise reportable transfers under the Rule?

In light of the Court’s decision, FinCEN is not currently enforcing the Rule or imposing liability on individuals who fail to file the required reports while the vacation order remains in force.[4] However, industry professionals can likely anticipate the government to appeal, which may result in a stay of the vacation order and reinstatement of the Rule. As such, appellate activity and FinCEN guidance over the next several weeks will continue to adapt as courts determine the validity of the Rule.

Potential “reporting persons” under the Rule may benefit from continuing to analyze and conduct potentially reportable transfers in line with the requirements of the Rule (other than submitting reports) in the event FinCEN successfully appeals the Court’s decision.

Winthrop & Weinstine’s Real Estate attorneys continue to track this topic as it evolves. For more information, feel free to reach out to our Real Estate team, or your regular Winthrop contact.

[1] See Flowers Title Companies, LLC v. Bessent et al, Case No. 6:2025cv00127 – Doc. 34 (E.D. Tex. 2026).

[2] Id. at 10–11 (original quotations).

[3] Id. at 17-18.

[4] Financial Crimes Enforcement Network, Residential Real Estate Rule, https://www.fincen.gov/rre (last visited Mar. 24, 2026).

March 26, 2026