(NEW YORK, NEW YORK)— A tiff between neighbors in Rockland County, New York has resulted in a mandate that would have a ripple effect on real estate in Manhattan, The Wall Street Journal reports. Owners who have used an LLC to purchase a residential property would have their personal identities revealed.
According The Wall Street Journal, Rockland County residents pushed for the law when they felt their neighbors were possibly violating building codes, creating illegal subdivisions or home conversions. Many were doing so under the mask of LLCs. While it is not impossible to find a shell company’s human owner, it requires serious and lengthy investigation that often exceeds the resources of local governments. The legislation aims to eliminate this barrier to more effectively deter wrong-doing. The law, recently signed into effect by Governor Andrew Cuomo, will make an LLC’s owner’s identity readily available under New York’s Freedom of Information Law, according to Curbed NY.
Critics of the law say that it would unfairly impact the rich and famous, who often use LLCs to protect their privacy. Donna Olshan, founder of her own luxury real estate firm, told The Wall Street Journal, “At the end of the day they are strangling New York real estate.” Olshan, an oft-quoted real estate expert in the press, primarily works in the $4 million plus market and has a vested interest in seeing her primary clientele base, many of whom use LLCs themselves, continue to buy into the luxury housing market in New York. Curbed reports that since 2008, 30 percent of condo sales in New York were purchased using an LLC; in 2015, The New York Times reported that over 50 percent of buyers in $5 million plus market in New York City used an LLC.
Proponents of the law argue that many of the same wealthy buyers who rely on LLCs for personal privacy also abuse the protections they afford to violate laws and avoid accountability. All of the law’s sponsors have emphasized that its primary benefits would be to strengthen the enforcement of building codes, but Senator James Skoufis (D-Hudson Valley) also pointed out the softer social benefits. In a system that has sometimes rewarded and protected unsavory and disgraced buyers from incurring social shame or bad press, Skoufis argued, in a press release quoted in The Photo News, “Neighbors have a fundamental right to know who owns the home next-door to them.”