Quick Answer
FinCEN's Residential Real Estate Reporting Rule, 31 C.F.R. 1031.320, was set to apply to certain non-financed transfers of residential real estate beginning March 1, 2026. On March 19, 2026, a federal court in the Eastern District of Texas ruled in Flowers Title Companies, LLC v. Bessent that the rule is unenforceable, and FinCEN has indicated that reporting will not be required while that order remains in place. Michigan community associations are not automatically exempt if the rule is later revived. It could reach, for example, an association's cash sale of a unit acquired by foreclosure to an LLC or trust. Because the situation is changing, check FinCEN's current guidance before closing any such sale.
What the Rule Covers
According to Michigan association attorneys, the rule applies to certain non-financed transfers of residential real estate to a legal entity or trust where no exemption applies. Covered property includes one-to-four-family structures, land on which the buyer intends to build such a structure, individual units in such a structure, and shares in a cooperative housing corporation. Exempt transfers include easements, transfers at death or incident to divorce, transfers to a bankruptcy estate, court-supervised transfers, and transfers for which there is no reporting person.
Where Associations Could Be Affected
- Resale after non-judicial foreclosure. Michigan associations commonly collect delinquent assessments through foreclosure by advertisement. If the association takes title and later sells for cash to an LLC, corporation or trust, the sale could be a covered transfer, because it is not court-supervised.
- Sale of association-owned property. Unused common land or units or lots deeded to the association might be covered if sold for cash to an entity or trust.
- Cooperative share transfers. These are less common in Michigan, but a cash transfer to an entity or trust could be covered.
In many closings a title company will handle reporting, but an association should confirm who the reporting person is rather than assume.
Current Status
The court ruling in March 2026 prevents enforcement for now, and FinCEN has said it will not require reporting while the order stands. That could change on appeal or through new rulemaking, so check the FinCEN residential real estate page for current instructions. The ruling does not affect the separate Corporate Transparency Act exemption described in our CTA article, under which domestic entities such as Michigan nonprofit associations are not currently required to report beneficial owners.
Board Action Checklist
- List any properties the association owns or may acquire through foreclosure or deed in lieu.
- Before selling, ask the title company in writing whether any FinCEN report is required and who files it.
- Check FinCEN's current guidance on the day of closing.
- Keep sale documents and buyer information organized in case reporting is later required.
- Review your collection policy so foreclosures and resales follow written procedures. See our enforcement procedures guide.
How APM Helps
APM coordinates with attorneys and title companies on association property sales and keeps records for lender, title and regulatory questions. See our Michigan resources or contact us.
Sources: 31 C.F.R. 1031.320 and the March 19, 2026 decision in Flowers Title Companies, LLC v. Bessent (E.D. Tex.), as described by Michigan community association counsel; FinCEN guidance. This is a federal rule that has been in legal flux, and this article is general information, not legal advice. Last verified October 24, 2026.
Ready to work with Association Property Managers?
Get a free, itemized proposal for your community — delivered within 3 business days.
Request a Free Proposal
