Co-ops Must Report Certain Share Transfers to FinCEN

A rule that takes effect on March 1, 2026 requires that residential co-ops (but not condominiums or HOAs) must file a report with the federal Financial Crimes Enforcement Network (“FinCEN”) when co-op shares are sold to a corporation, limited liability company, or other legal entity without financing from a bank or other traditional lender. 

The new rule, codified in 31 C.F.R. § 1031.320, imposes new reporting requirements in connection with many transactions involving the sale of residential property. In general, the new rule applies broadly to transactions where residential property is sold to certain legal entities, and requires detailed reporting to FinCEN.

Insofar as it relates to co-ops, when shares of a co-op are sold to a legal entity without financing from a bank or other traditional lender, the new rule requires the co-op that issues the new share certificate file a report with FinCEN. That report must include extensive information about a reportable share transfer transaction, including:

• The identity of the transferee entity;
• Information about the beneficial owner(s) of the transferee entity;
• Information about the transferor;
• Information about the residence associated with the shares; and
• Amount paid for the shares.

For professionally managed co-ops, the managing agent who prepares the new share certificate and transfer documents should file the required report on behalf of the co-op.

Cooperatives should consult with their legal counsel to update their transfer procedures to ensure compliance with this new rule, as penalties for non‑compliance are severe: civil penalties of up to $10,000 or $100,000 for a pattern of negligent violations, criminal penalties of up to 5 years imprisonment and a fine up to $250,000, or both.

Burke, Warren, MacKay & Serritella P.C. stands ready to help cooperatives develop and implement procedures to comply with the new rule.