Federal Judge Strikes Down FinCEN’s RRE Rule: What Title & Escrow Companies Need to Know 

In March 2026, a federal judge vacated the FinCEN RRE Rule, the anti-money laundering regulation that would have required title and escrow companies to report most non-financed residential transfers to legal entities and trusts. The ruling suspended a requirement that FinCEN itself estimated would touch 800,000 to 850,000 transactions a year, at an industry-wide compliance cost of $428.4 million to $690.4 million in the first year alone. But the story did not end with the March ruling. FinCEN has appealed, a parallel case in Florida reached the opposite conclusion, and the government’s latest court filing landed just days ago. Here is what happened, what it means for your closing table today, and what to watch for next. 

The Residential Real Estate Rule was finalized by FinCEN as part of a broader effort to close a long-standing gap in U.S. anti-money laundering law: real estate, unlike banks and broker-dealers, had never been subject to routine federal transaction reporting. Under the rule, title insurance companies and settlement agents acting as the closing or settlement agent on non-financed transfers of residential real estate to legal entities or trusts would have been required to file a Real Estate Report identifying the beneficial owners behind the buyer. 

For an industry that already carries significant compliance weight under ALTA Best Practices and state escrow regulations, the FinCEN RRE Rule represented a new federal reporting layer, with civil and criminal penalties for noncompliance. Title company owners and compliance officers spent much of 2025 building intake procedures, training staff, and budgeting for the rule’s December 2025 effective date. Then came the litigation. 

The Ruling: Flowers Title Companies v. Bessent 

On March 19, 2026, Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas vacated the RRE Rule nationwide in Flowers Title Companies, LLC v. Bessent, on two independent grounds. 

First, the court rejected FinCEN’s core justification: that non-financed residential transfers to legal entities or trusts are categorically suspicious. Judge Kernodle called the agency’s explanation “vague, conclusory, and unpersuasive,” noting that plenty of legitimate reasons exist for a buyer to use an LLC or a trust. Second, the court held that the Bank Secrecy Act authorizes FinCEN to set “reporting procedures,” not to create a freestanding substantive reporting obligation covering an entire category of ordinary transactions. Reading the statute FinCEN’s way, the court noted, would make its narrower, more targeted suspicious-activity authority superfluous. 

Because the vacatur applies nationwide, the practical effect was immediate. FinCEN confirmed on its own FAQ page that reporting persons are not required to file Real Estate Reports and face no liability for not doing so while the court’s order stands. Operations effectively returned to the pre-December 2025 environment, with FinCEN’s Geographic Targeting Orders remaining the primary federal reporting tool for real estate in the areas and price bands they cover. 

 

What This Means for Your Company Right Now 

For title and escrow companies, three things are true as of this writing. 

First, there is no active federal filing obligation under the FinCEN RRE Rule. You do not need to submit Real Estate Reports for non-financed residential transfers while the vacate remains in effect. 

Second, there is no retroactive exposure. FinCEN has confirmed that if the rule is later reinstated, reporting persons will not be required to backfill reports for transactions that closed while the court’s order was in force. 

Third, none of this is final. The ruling is on appeal, and a reversal, even a partial one, could restore the reporting requirement with limited advance notice. Treating this as a permanent repeal, rather than a pause, is the mistake compliance advisors are warning against most. 

 

Why the Appeal Is Not Over: The Circuit Split Brewing 

FinCEN and the Department of Justice filed a notice of appeal to the Fifth Circuit Court of Appeals on May 11, 2026, and the DOJ filed its opening appellate brief on August 17, 2026, arguing the rule fits squarely within FinCEN’s authority under the Bank Secrecy Act’s reporting-procedures provision. 

At the same time, a separate challenge in Florida reached a different outcome. In Fidelity National Financial, Inc. v. Bessent, a magistrate judge in the Middle District of Florida recommended upholding the RRE Rule in December 2025, and Fidelity has since appealed that recommendation to the Eleventh Circuit. 

Two federal circuits could end up ruling on the same rule in opposite directions, a pattern compliance teams may recognize from the Corporate Transparency Act litigation of the past few years. If that happens, the Supreme Court becomes a real possibility, and title and escrow companies should expect the FinCEN RRE Rule’s status to remain unsettled well into 2027. 

 

Staying Ready While the Rule Is in Limbo 

The practical advice from compliance attorneys tracking this case is consistent: do not dismantle what you built. Even without an active filing requirement, maintaining your intake process for beneficial ownership information keeps your team ready if the rule is reinstated, and it supports the broader audit and reconciliation discipline examiners and underwriters expect regardless of how this case resolves. 

Rynoh’s FinCEN Compliance Reporting tools were built for exactly this kind of shifting regulatory ground, keeping beneficial ownership data organized and audit-ready without adding manual work to your team’s day. Paired with Rynoh Recon: rynoh.com/live/ for daily three-way reconciliation, your compliance posture does not have to depend on which way the next court ruling goes. 

Frequently Asked Questions 

Is the FinCEN RRE Rule currently in effect? 

No. As of this writing, the FinCEN RRE Rule is vacated nationwide following the March 19, 2026 ruling in Flowers Title Companies, LLC v. Bessent. Title and escrow companies are not required to file Real Estate Reports with FinCEN, and FinCEN has confirmed there is no liability for not filing while the court’s order remains in force. 

Could the FinCEN RRE Rule come back? 

Yes. FinCEN and the Department of Justice are appealing the ruling to the Fifth Circuit and filed their opening brief on August 17, 2026. A separate case in Florida upheld the rule, creating the conditions for a circuit split that could eventually reach the Supreme Court. 

Will companies have to file retroactive reports if the rule is reinstated? 

No. FinCEN has stated that reporting persons will not be required to retroactively file Real Estate Reports for transactions that closed while the vacatur was in effect, even if the rule is later reinstated on appeal. 

What should title and escrow companies do while the rule is on hold? 

Most compliance advisors recommend continuing to collect beneficial ownership information on qualifying transactions, even without an active filing requirement. This keeps your team ready for reinstatement and supports the broader recordkeeping and audit standards your underwriters and state regulators already expect. 

The FinCEN RRE Rule is vacated today, but “today” is doing a lot of work in that sentence. With an active Fifth Circuit appeal, a conflicting ruling out of Florida, and briefing still underway, this is not a closed chapter for title and escrow companies. The safest posture is to keep your compliance infrastructure intact and your team informed as the appeal moves forward. 

Rynoh helps title and escrow companies stay audit-ready no matter how FinCEN reporting requirements evolve. Schedule a demo: rynoh.com/try-rynohlive/  and see how RynohRecon and FinCEN Compliance Reporting keep your firm prepared.