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The names of some wealthy property owners in New York City will soon be made public under a new state law signed last month by Gov. Andrew Cuomo. In response to reports of illegal home conversions in Rockland County, state lawmakers drafted a bill to prevent buyers from purchasing homes through limited-liability companies. The new law requires the name and address of each member of the LLC for both buyers and sellers in New York State. According to the Wall Street Journal, the change in law may affect buyers of Manhattan real estate who wish to remain undisclosed.
The new law applies only to one- to four-family dwelling units (co-ops are exempt) and requires that the joint tax return identifies “all the members, managers, and any other authorized persons of the company.” The bill, sponsored by State Sen. James Skoufis, seeks to curb the practice of using an LLC to buy property across the five boroughs as well as statewide to increase transparency in real estate transactions.
Roughly 30 percent of condos built since 2008 are owned through an LLC. Owners will use an LLC to keep real estate dealings private or to protect assets during a lawsuit. Currently, the city requires information on LLC members but remains confidential.
“Finally, this new law will rip the mask off of these anonymous LLCs that continue to purchase massive amounts of real estate in the Hudson Valley,” Skoufis said in a press release last month. “Neighbors have a fundamental right to know who owns the home next-door to them.”
The WSJ found that there are roughly 61,000 one- to four-family properties owned by LLCs in New York City, many at luxury condo buildings in Manhattan. According to the newspaper, 85 percent of buyers at 220 Central Park South bought units using an LLC, which includes the $240 million apartment picked up by Ken Griffin in January.
Donna Olshan, who runs her own brokerage, told the WSJ that state lawmakers are “strangling New York real estate,” citing other new laws that reduced the deductibility of state and local taxes and the new mansion tax.
The city’s Department of Finance told the WSJ that the agency will soon release interim guidelines to make the new requirements more clear.
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