A Corporate Veil Lifted - 27 East

Real Estate News

Real Estate News / 1506626

A Corporate Veil Lifted

authorStaff Writer on Aug 12, 2019

The use of limited liability companies to veil ownership of a Hamptons home has increasingly been a way for property owners to shield themselves from tax complications, potential lawsuits and gossipy neighbors.

While privacy may not be the only goal of employing an LLC, it can be an important one for captains of industry, celebrities and controversial figures (Donald Trump Jr. recently purchased a Bridgehampton home under an LLC created by a Trump organization attorney) who would rather not attract protesters or Page Six.

But policies in some East End municipalities may shatter that cloak, in the interests of vetting the potential for conflicts of interest by officials ruling on a variety of land-use requests.

In the villages of Sagaponack, Southampton and East Hampton the municipality requires that the managing partner or owner of an LLC be disclosed when an application is made to the village’s planning, architectural or zoning appeals boards.

An LLC would typically be created by an attorney and, sometimes, that attorney and his or her office address is all that is listed in the LLC’s formative documents. Not all LLCs are arranged as such and often the true owner is listed directly in the documents. But if individuals wish to remain anonymous, they can do so through a deliberately arranged LLC.

The concern therein, of course, is that municipal officials may not be able to tell when the true owner of a property seeking some sort of permission from the village or town is someone with a familial or financial connection to one of those who will sit in judgment of that request. If they are, the official with a connection would be expected to remove themselves from considering the application, in accordance with public policy ethics guidelines intended to remove conflicts of interest.

In Sagaponack, where the purchase of properties under the cover of an LLC has become so much the norm that residents have taken to calling someone “an LLC” when they encounter a person who strikes them as an entitled Johnny-come-lately to the tiny affluent village, the disclosure requirement is new this spring.

“Looking at real estate transactions I would say the majority in the village now are LLCs — because we have so many very important people,” Sagaponack Mayor Donald Louchheim said, tongue in cheek. “We are not trying to out people or publicize that somebody is buying in Sagaponack, but we have to do our due diligence as far as ensuring ethical dealings.”

Attorneys say the policy is not one that has been typically applied to municipal applications in the past. Rather, a duly authorized representative of the LLC may simply make the application on the owner’s behalf. Southampton Town had once pressed the issue of disclosing corporate details when LLCs made applications years ago, though the issue of conflicts of interest was not at the heart of it and the town has backed away from the practice in recent years.

Some wondered how the new policy in Sagaponack, where LLCs abound, will go over when some more privacy-seeking owners also come seeking permissions. One attorney saw a potential workaround.

“The goal to avoid conflicts is a worthy goal and there’s probably some way to resolve that without necessarily identifying the principals,” said Water Mill attorney David Gilmartin. “A statement from counsel that there is no conflict with the principal could be incorporated. They would have to investigate whether there is any type of conflict and give an opinion that the village could rely on.”

To date, just one applicant to the Sagaponack Village Board, which also handles the town’s planning applications, has been asked to disclose the background of its corporate ownership.

The mayor said the managing member’s name was disclosed — without objection.

You May Also Like:

Turn Of The Century Further Lane Residence Fetches $11 Million

A 2.4-acre East Hampton compound featuring a renovated turn of the 20th century home recently ... 10 Aug 2020 by Staff Writer

Attorney General Announces $10 Million In Housing Counseling Funds To Stave Off Foreclosure

New York State’s Homeowner Protection Program, or HOPP, now has $10 million in grant funding available for housing counseling and legal services to help protect homeowners from foreclosure in the COVID-19 pandemic. Attorney General Letitia James said in a statement Friday that HOPP connects homeowners to free, qualified mortgage-assistance relief services across New York. Ms. James noted that the Federal Housing Finance Agency reported that 170,000 homeowners asked for mortgage forbearance in the first quarter of 2020 compared to 7,000 requests in the fourth quarter of 2019. The funding supports a network of more than 80 housing counselors and legal ... 3 Aug 2020 by Staff Writer

State Legislature Passes Bill To Deter Discrimination Among Real Estate Agents

The New York State Legislature has passed legislation protecting state residents from discrimination by real estate agents, and now the bill heads to Governor Andrew Cuomo’s desk to be signed into law. Assemblyman Fred W. Thiele Jr. of Sag Harbor said in a statement this week that the bill is designed to help end discriminatory practices in the real estate industry that disproportionately affect minority homebuyers. The legislation makes clear that real estate brokers and salespersons may be fined and their licenses suspended or revoked for subjecting prospective homebuyers to discriminatory practices. Mr. Thiele’s office noted in press release that ... by Staff Writer

Rachael Ray, John Cusimano Sell Southampton Home And Land

Quick-and-easy-cooking television personality Rachael Ray and her husband, attorney and musician John Cusimano, have sold ... 31 Jul 2020 by Staff Writer

Parking Variance Request Ignites Debates Over Residential-To-Office Conversions In Sag Harbor

A request for a parking variance to convert a third-floor Main Street apartment into office ... 28 Jul 2020 by Brendan J. OReilly

Sag Harbor Architectural Review Board Sends ‘Imposing’ Madison Street Proposal Back To The Drawing Board

The Sag Harbor Village Board of Historic Preservation and Architectural Review sent plans for a ... 27 Jul 2020 by Brendan J. OReilly

Manhattan Broker Lisa Maysonet Now Working In The Hamptons

Lisa Maysonet, a top Manhattan real estate broker with Sotheby’s International Realty, is now working ... 25 Jul 2020 by Staff Writer

Officials: Updated Southampton Housing Plan Will Go Beyond Affordable Housing

Southampton Town’s updated housing plan will go beyond addressing the need for affordable housing and ... 24 Jul 2020 by Brendan J. OReilly

Second-Quarter Hamptons Home Sales Dip 13 Percent

Amid the height of the coronavirus pandemic in New York and the state mandates that ... by Brendan J. OReilly

Community Preservation Fund Revenue Up 39 Percent In First Half Of 2020

The Peconic Bay Region Community Preservation Fund collected 39 percent more revenue in the first ... 21 Jul 2020 by Staff Writer

Welcome to our new website!

To see what’s new, click “Start the Tour” to take a tour.

We welcome your feedback. Please click the
“contact/advertise” link in the menu bar to email us.

Start the Tour
Landscape view not supported