Limited liability companies buying or selling homes in New York State now have to disclose the identities of their owners, managers and agents under a new state law.
Governor Andrew Cuomo signed the legislation into law in September and it became effective immediately. It applies to properties with between one and four living units, inclusive of houses, apartments and condos. If the property has mixed residential and commercial uses, such as a retail shop with an apartment on the second story, the law still applies.
Names and addresses must be disclosed on the joint tax return that the buyers and sellers must file after a real estate transaction. The rule has been in practice in New York City since 2015 and now applies statewide.
The law lifts a veil of anonymity that some homebuyers use to, among other reasons, maintain their privacy. However, it is only the state that now gets to know who the real owners are — the information is not readily available to the public or the press.
The law arose due to concerns about abandoned homes with unidentifiable owners. With only an LLC to go by, code enforcement officers may not be able to locate property owners to address code violations, including safety concerns.
Under the new state law, if one of the owners of an LLC is another LLC, then all of the officers, directors and managers of that second LLC must also be disclosed until “ultimate ownership” by all “natural persons” is disclosed.
Sagaponack Village recently enacted a law that requires that property owners’ identities are disclosed when they have business before village regulatory boards, to ensure that no conflicts of interest exist. Southampton and East Hampton villages also have such a law. Because planning, architectural review and zoning appeals applications are public documents, the identities of owners may become public knowledge.
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