Farm Law
Farmers already face an onslaught of challenges: fluctuating markets, unpredictable weather, labor shortages, equipment breakdowns, regulatory demands, and tight finances. Federal financial crime regulations do not usually rank high on their list of concerns.
Today, we are focusing on exactly that – a new rule from the Financial Crimes Enforcement Network (FinCEN).
The positive news is that FinCEN’s Residential Real Estate Reporting Rule (RRE Rule), which takes effect March 1, 2026, is unlikely to impact most routine farm operations.
That said, it is worth raising awareness about these new requirements and alerting farmers to potential new fees and requirements that could arise in connection wither their next residential real estate transaction.
Background
You may recall the name FinCEN from last year’s significant developments surrounding the beneficial ownership information (BOI) reporting requirements for owners of domestic companies under the Corporate Transparency Act. That issue generated considerable attention and debate.
Now, FinCEN is back in the headlines, this time targeting residential real estate transactions. The RRE Rule was finalized to increase transparency in non-financed transfers of residential property. Simply, the rule aims to curb money laundering by mandating the reporting of beneficial ownership information (BOI) for the owners of businesses (such as LLCs or corporations) or trusts involved as buyers or “transferees” of residential property without a traditional mortgage or bank financing.
Law enforcement officials believe that all-cash or other non-financed transactions can sometimes serve as vehicles for concealing illicit funds. By requiring the reporting of BOI, they aim to uncover the true individuals behind these legal entities or trusts, ultimately helping to identify, disrupt, and prevent such money laundering schemes.
When Does the RRE Rule Take Effect?
March 1, 2026.
What Transactions Must Be Reported?
Transfers of property are reportable when they meet all of the following criteria:
- The property is residential.
- This includes single-family homes, townhouses, condominiums, cooperatives, and apartment buildings designed for 1-4 families.
- The transfer is non-financed.
- This means there is no mortgage or loan from a financial institution that is already subject to anti-money laundering laws.
- The purchaser of the property is a legal business entity or trust.
- This rule does not apply to purchases made by individuals.
- No exemption applies (see below).
Who Files the Report?
The best news about this new reporting rule? The buyer (or “transferee”) of the property is not responsible for reporting the BOI to FinCEN (unless they happen to be one of the specific professionals listed in the cascade below).
Instead, FinCEN assigns reporting responsibility through a structured “reporting cascade.” This hierarchy identifies common real estate professionals involved in property transfers and ranks them in order of priority. The obligation falls on the first applicable professional in the sequence. Professionals can also enter into a written designation agreement to shift the responsibility among themselves for added flexibility and/or convenience.
The cascade order is as follows:
- The person listed as the closing or settlement agent on the closing or settlement statement.
- If none, the person who prepared the closing or settlement statement.
- If none, the person who records the deed.
- If none, the title insurance underwriter.
- If none, the person who disburses the greatest amount of funds in connection with the transfer.
- If none, the person who evaluates or provides the title evaluation (e.g., Title Examiner, Attorney, Title Agent/Company).
- If none, the person who prepared the deed.
When Must the Report Be Filed?
The Real Estate Report must be filed within:
- 30 calendar days after closing; or
- By the last day of the next month following the month closing, whichever gives the most time.
What Information is Reported?
The reporting person must provide information about the transfer of residential property identifying the following:
- The reporting person
- The entity or trust receiving ownership of the property
- The beneficial owners of the purchasing entity or trust
- This includes a beneficial owner’s full legal name, date of birth, current residential address, citizenship, and a unique identifying number (an IRS TIN or passport number)
- Individuals signing the documents on behalf of the purchasing entity or trust
- The seller
- The residential property being transferred
- Total consideration and information about any payments made
Which Transactions Are Exempt?
FinCEN carved out several exemptions for “lower-risk transfers.” Those transactions that do not need to be reported include:
- Transfers of easements;
- Transfers resulting from death, pursuant to the terms of a will, trust, operation of law, or contractual provision like a transfer on death deed;
- Transfers as a result of divorce or dissolution;
- Transfers to a bankruptcy estate;
- Transfers already being supervised by a U.S. court;
- No-consideration transfers of property by an individual (or married couple) to a trust of which they are the grantor or settlor;
- Transfers to a qualified intermediary for purposes of a like-kind exchange under Section 1031 of the Internal Revenue Code; and
- Transfers for which there is no reporting person.
What is the Impact of This Rule on Residential Transfers?
For those transactions subject to the RRE Rule, the most noticeable impact is likely to be an additional fee (or an increase in fees) tied to the transfer of the property.
The designated reporting person will most likely charge a fee to cover the time and effort required to collect the necessary beneficial ownership information and prepare/submit the report to FinCEN.
What Does This Mean for Farmers?
For the vast majority of farmers, this rule will not apply. First, farmland is not classified as residential property and falls outside the scope of the rule. Second, most farm acquisitions involve financing. Third, routine estate planning transfers are exempt from any reporting obligations. In short, typical transactions like purchasing, selling, or passing down farmland, including the farmhouse itself, are highly unlikely to trigger any new reporting requirements.
The Narrow Scenario Where Farmers Might See an Impact.
That said, there is one specific scenario where a farmer or rural property owner might trigger the RRE Rule. If a farmer chooses to subdivide their property and separately survey off the farmhouse (treating it as distinct residential real estate) and then attempt to gift or transfer that farmhouse to an LLC, then the farmer likely has a reportable transfer on his or her hands. In this narrow case, the transfer likely would not qualify for any of the rule’s exemptions, such as those for routine estate planning gifts to trusts created by the individual, and would therefore require the designated reporting person to collect beneficial ownership information for the parties involved and file it with FinCEN.
Key Takeaway
In summary, FinCEN’s RRE Rule is not likely to affect the majority of farmers. That changes, however, in certain cases involving non-financed transfers of residential property (such as gifting a home to an LLC or conveying it to a trust where the seller/transferor is not the settlor or grantor of that trust). In those situations, do not be caught off guard if an additional reporting-related fee shows up at closing.
To be clear, it is not a fine or punishment for anything done wrong, it is simply the expense of doing business under the federal government’s new reporting requirements.
As with any transaction, proactive planning and clear communication with your attorney, accountant, or other trusted advisors can help ensure everything proceeds efficiently and without unexpected hiccups.
Tags: FinCEN, Property, Federal Law, Ag Law, Farm Law, Estate Planning, Gifting, LLC, trusts
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We are back with another edition of the Ag Law Harvest, where we bring you rulings, laws, and regulations that affect the agricultural industry. This month's Ag Law Harvest is bringing the heat with H-2A wage rule injunctions, cultivated meat ban challenges, sales and use tax issues, and an emergency order from the EPA.
Federal Judge in Georgia Blocks H-2A Wage Rule for Named Plaintiffs. A Georgia federal judge has limited the U.S. Department of Labor's enforcement of a rule titled "Improving Protections for Workers in Temporary Agricultural Employment in the United States" (the “Final Rule”). This rule, challenged by 17 states led by Kansas and Georgia, as well as by Miles Berry Farm and the Georgia Fruit and Vegetable Growers Association (the “Plaintiffs”), is claimed to be unconstitutional. The Plaintiffs argued that the Final Rule violates the 1935 National Labor Relations Act (the “Act”) by granting H-2A farmworkers greater organizing and collective bargaining rights than those afforded to U.S. citizen agricultural workers, effectively bypassing the Act. The U.S. District Court in Georgia sided with the plaintiffs, ruling that the Department of Labor's Final Rule improperly creates a right that Congress did not intend and did not create by statute. The court emphasized that administrative agencies, including the DOL, cannot create laws or rights that Congress has not established. The court criticized the DOL for overstepping its authority, stating that while the DOL can assist Congress, it cannot assume the role of Congress. The court granted a preliminary injunction prohibiting the DOL from enforcing the Final Rule, but only for the Plaintiffs. Thus, the preliminary injunction will only apply in Georgia, Kansas, South Carolina, Arkansas, Florida, Idaho, Indiana, Iowa, Louisiana, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Tennessee, Texas, and Virginia. The injunction will also apply to Miles Berry Farm and the Georgia Fruit and Vegetable Growers Association. We will keep you updated as the case goes up on appeal and how this ruling affects other H-2A lawsuits across the country.
Florida Cultivated Meat Ban Challenged. A California business has filed a federal lawsuit against the state of Florida, challenging a law that bans the sale of cultivated meat. The company argues that Florida's prohibition is unconstitutional, claiming it violates their right to engage in interstate commerce by restricting their ability to sell their products across state lines. Upside Foods, Inc., the California based company, alleges that Florida Senate Bill 1084 (“SB 1084”), which bans the manufacture, distribution, and sale of cultivated meat, violates the U.S. Constitution’s Supremacy Clause because SB 1084 “is expressly preempted by federal laws regulating meat and poultry products.” Furthermore, Upside Foods alleges that SB 1084 violates the U.S. Constitution’s Dormant Commerce Clause because SB 1084 “was enacted with the express purpose of insulating Florida agricultural businesses from innovative, out-of-state competition like UPSIDE.” Upside Foods has asked the district court in Florida to declare SB 1084 unconstitutional and to issue an injunction preventing SB 1084’s enforcement. Proponents of SB 1084 argue that the law protects Floridians, however, Upside Foods alleges that the Florida ban isn’t meant to protect the public, rather it was passed to “protect in-state agricultural interests from out-of-state competition.”
Board of Tax Appeals Finds Utility Vehicle Not Exempt Under Agricultural Sales Tax Exemption. Claugus Family Farm LP (CFF), an Ohio timber farm, purchased a 2015 Mercedes-Benz utility vehicle and claimed it was exempt from sales tax under Ohio’s Agricultural Sales Tax Exemption. After an audit, the Ohio Department of Taxation assessed the sales tax on the vehicle. CFF petitioned for reassessment, but the Ohio Tax Commissioner determined that CFF did not provide enough evidence to prove the vehicle was primarily used for farming as required by law. CFF then appealed to the Ohio Board of Tax Appeals, arguing that the vehicle was mainly used for farming operations, such as transporting people around the farm, monitoring tree health, applying pesticides, maintaining equipment, and carrying supplies. CFF claimed the vehicle was used 95% of the time on farming activities. Upon review, the Board of Tax Appeals noted that “the use of vehicles for transportation around a farm, as well as general uses such as delivering parts and cutting and hauling of wood and brush, do not constitute direct farming activities.” The Board held that the vehicle was used primarily for these purposes and not directly in farming and thus found the vehicle to be subject to Ohio’s sales and use tax.
EPA Emergency Order Suspends Use of Pesticide DCPA/Dacthal. On August 7, 2024, the U.S. Environmental Protection Agency (“EPA”) issued an Emergency Order immediately suspending the registration and use of all pesticides containing dimethyl tetrachloroterephthalate (“DCPA” or “Dacthal”). The EPA cited the danger the substance poses to pregnant women and unborn babies. The agency determined that the continued sale, distribution, or use of DCPA products during the cancellation process would present an imminent hazard, justifying the emergency suspension without a prior hearing. Despite efforts by AMVAC Chemical Corporation, the sole registrant of DCPA products, to address these concerns, the EPA concluded that no practicable mitigations could make the use of DCPA safe.
Tags: ag law harvest, H-2A, pesticides, EPA, Cultivated Meat, U.S. Constitution, Ohio Sales Tax, Agricultural Sales Tax Exemption, Ag Law, Farm Law
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