A new bill for LLC transparency legislation was introduced by NY State Senator Brad Hoylman and Assembly Member Emily Gallagher that would require the names and addresses of the persons behind LLCs and shell companies used to purchase condos to be shared with the NYS Department of State.
A Limited Liability Company (LLC) has been a structure that uber-wealthy individuals, celebrities and others seeking anonymity have put into place for many years, as a means to maintain privacy. An LLC is also looked to as a way to maintain some level of protection for individuals who want to reduce their risks and avoid personal liability for debts run up by their companies. However, as many of us know, the LLC structure is often abused by some as a means to avoid paying taxes.
With the Russian invasion of Ukraine creating global distress, much attention has been given to identifying where Russian oligarchs and their families own NYC properties, with efforts intensifying to unmask New York City real estate connected to the Kremlin. Yet this most likely accounts for only a portion of what actually exists. It is safe to assume that there are many international elites who are hiding their assets in high-end luxury NYC real estate, which could turn out to be a problem for them if this new bill were to pass.
While this legislation will be useful to the State to uncover the assets of international purchasers of NYC real estate, it could very well impact luxury sales. If buyers no longer have privacy behind an LLC or a shield on investments to keep money away from potential creditors, this may very well be a deterrent for them to purchase real estate in New York in the future. Foreign buyers, particularly, may decide to look elsewhere, and this, of course, could ultimately impact market value.
Needless to say, all eyes will be on whether the bill makes it to the Governor’s desk. For now, my thoughts are with the people of Ukraine and any of you who may have family, friends and loved ones there.