​By Attorney Kelly Jesson

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has adopted a new residential real estate reporting requirement, effective March 1, 2026, targeting non-financed transfers of residential property. Purchases involving bank financing already fall under anti-money laundering regulations, but if a bank is not involved, there’s very little oversight at all.  The new law is designed to prevent the use of entities and trusts to conceal illicit funds.

The reporting requirement applies when residential real property is transferred to a legal entity, such as an LLC, corporation, or trust and no bank or other institutional financing is involved.  The rule applies regardless of purchase price and captures transfers made without payment.

Luckily, certain transfers are excluded. An individual transferring property into their own revocable or irrevocable grantor trust does not require reporting. Transfers resulting from death (like transfer from a life estate) or inheritance (like transfer from probating a will) also do not trigger reporting.

Unfortunately, transfers from individuals to their own LLCs for asset protection purposes DOES trigger the rule.  So what might this mean for you?  FinCEN requires the disclosure of the names, dates of birth, addresses, citizenship, and taxpayer identification numbers of the transferee and the “beneficial owners” behind an entity. To be a beneficial owner, an individual must directly or indirectly exercise “substantial control” over the entity or own or control at least 25 percent of the entity’s ownership interests. This definition is the same as the definition of a beneficial owner in FinCEN’s Beneficial Ownership Information Reporting (BOIR) Rule that was repealed last year.

Reports must be filed through FinCEN’s Bank Secrecy Act e-filing system by the later of the last day of the month following the transfer or 30 calendar days after the transfer. It only applies to transfers occurring after March 1, 2026, so there’s no retroactivity, unlike the prior BOIR rule that was repealed.

Like the old BOIR rule, FinCEN assigns responsibility to the “reporting person;” generally the professional most directly responsible for the closing or recording of the deed. This means that we will be asking our clients engaging in such transactions to certify their information.  Costs for closings and recordings is likely to go up.

Don’t overlook this rule or try to do it yourself: the penalty for failing to file the required report could be as high as $1,394 for each violation, and an additional civil money penalty of up to $108,489 for a pattern of negligent activity.  Willful violations of the final rule could result in a term of imprisonment of not more than five years or a criminal fine of not more than $250,000, or both.

Please contact Jesson & Rains for more information!  We will continue to draft deeds for our clients for asset protection purposes and comply with the federal regulations.

​By Mercedes DeFeo

Don’t give your hard-earned business equity away to your employees like candy to trick-or-treaters! There is another way to compensate them for their contributions.  Phantom shares may sound spooky, but it is really the opposite.

Interest in a corporation is identified by “stock” or “shares,” while interest in an LLC is called “units” or “interest.”  For purposes of this article, Phantom Shares mean both corporate stock and LLC interests.  All business owners have certain rights, so if you give away equity, you are giving up some control in your business.

Phantom shares, also known as phantom stock or phantom units, are a way to compensate employees based on the overall value and performance of your business (normally, the profits), similar to how shareholders and LLC members are compensated via distributions and dividends. Phantom shareholders differ from regular shareholders because they are not given any of the rights a business owner would have.

Phantom Shares are awarded via a Phantom Award Agreement. Sometimes there might be a Phantom Share Plan if you wanted to set up a uniform system for awarding phantom shares to multiple employees in the company.  The Plan outlines the rules for distributing phantom shares to participants, such as eligibility, how the phantom share value will be determined, and how the shares vest. Depending on the plan, phantom shares may be considered deferred compensation, so it's important to involve your CPA.

Through the plan, you can specify a minimum number of days employed before an employee can participate, if value of phantom shares is based on the date your employee starts participating or if value appreciates as the company grows, whether the vesting of phantom shares is based upon continued employment with the company or if termination impacts payout, etc.  If you give an employee equity, you can’t take it back if their employment terminates...you have to buy it back!  Now that’s scary!

Phantom shares are a great way to create motivation and drive in your employees to give their all towards the success of your business, without you being haunted by the idea of losing control over it.

Happy Halloween from Jesson & Rains!

By Attorney Edward Jesson

Being located in Charlotte, North Carolina, many of our clients end up doing business in both North and South Carolina. This often leads to the question, do I need to register my business with the South Carolina Secretary of State? 

The answer is dependent on the facts of each situation. South Carolina law states that an out of state business must register to do business in South Carolina if that businesses’ activities in South Carolina are substantial, continuous, and regular. For example, in instances where a business has a physical location in South Carolina, has employees who work in South Carolina, or performs ongoing business in South Carolina, the answer is most likely “yes,” you do need to register your business with the South Carolina Secretary of State. On the other hand, if you are just doing a one-off business transaction in South Carolina, shipping items to South Carolina, or using independent contractors that are located in South Carolina, your North Carolina business likely does not need to register with the South Carolina Secretary of State.

If your business does need to register in South Carolina, you must file paperwork with the South Carolina Secretary of State in order to obtain your “Certificate of Authority.” You must also appoint a registered agent who is physically located in South Carolina who can accept official documents from the state (and service of process if you were to get sued in South Carolina).

Various municipalities in South Carolina also require your business to obtain a business license—the process and cost of which varies greatly from city to city and town to town.

If you are thinking about transacting business in South Carolina with your North Carolina business (or vice versa), the attorneys at Jesson & Rains can assist in making sure you are doing so legally and complying with various different rules that apply when you are doing business across state lines.