By: Ilana Siyance
The state may have found a way to keep landowners of certain residential properties from shielding their identities.
When groups of investors want to remain anonymous in order to buy or sell properties in New York, they form limited liability corporations (LLC’s). This cryptic ownership can make it impossible for the law to impose code violations onto the offenders. That may soon change, thanks to a new law signed by Governor Andrew M. Cuomo last Friday. According to the Real Deal, the law, which is effective immediately, requires LLCs in NYS involved in real estate transactions to disclose the identities of all owners, managers and agents associated with the company.
The measure was sponsored in the Senate by James Skoufis (D, Woodbury), who chairs the Senate investigations committee, and by Assemblyman Kenneth Zebrowski, (D, New City). “The mask will finally be pulled off of these anonymous real estate LLCs. This is an issue that is prevalent all across the Hudson Valley,” Skoufis said. “It presents challenges to municipalities.” LLCs can make it hard for authorities to detecting money laundering, and to hold landlords accountable for infringements.
The law will apply across the state, but not in NYC, which already has a rule which was implemented in 2015 by the city’s Department of Finance. LLCs have peaked in popularity in New York over the past 20 years, offering a cover of secrecy for buyers who do not wish to divulge their identity, including wealthy foreigners and high-profile celebrities. “But, of course, the loopholes are found by those businesses that don’t want to do the right thing and they start to hide behind these things,” said Zebrowski. “You should not be able to hide behind an LLC when you are owning a residential or commercial property. You should not be able to hide an LLC when you are having people live in your property in dilapidated conditions and you should not be able to hide behind an LLC when you are putting people’s lives at risk, and that is what this bill will hopefully tackle.”
It is unclear if identifying information will become available as public information. “It seems that the only parties who will be impacted, will be parties who are trying to hide their identities from the taxing authorities,” said Richard Cohen, a partner at the New York law firm Cohen & Cohen. The information “should not be a matter of public record on ACRIS and will only be available to the taxing authorities, as they contain sensitive information such as Social Security numbers and taxpayer identification numbers,” said Joshua Cohen, of Cohen & Cohen.
The law, which is an effort to shed light and transparency on to real estate deals, has its quarks though. Critics say the measure is limited in scope as it only applies to properties containing one to four units, and disclosures are only required in joint tax filings, which are not public.
