A state bill signed into law by Gov. Andrew Cuomo in September may bring major changes to how the uberwealthy (or the ubersecretive) approach real estate transactions in New York City.
According to the Wall Street Journal, the bill, sponsored by State Sen. James Skoufis and Assemblymember Ken Zebrowski, is intended to keep homeowners from purchasing real estate through limited liability companies—a common practice for celebrities, the extremely rich, and those who wish to keep their transactions secret for privacy (and sometimes shady) reasons. Zebrowski told the WSJ that the bill “was designed to ensure compliance with building codes, especially in rental properties and properties with non-conforming uses such as illegal basement apartments.”
But there is one part of the bill that is raising red flags. “Every buyer’s name will be publicly available under the state’s Freedom of Information Law,” according to the WSJ.
Cue the doomsday predictions from industry insiders: “At the end of the day they are strangling New York real estate,” Donna Olshan, the owner of an eponymous brokerage who tracks luxury real estate, told the WSJ, citing the recently implemented mansion tax and changes to federal tax law, in addition to this new piece of legislation.
According to a WSJ analysis of city records, there are around 61,000 one- to four-family homes that were purchased through LLCs. It’s a practice favored by condo buyers over co-op ones, with 30 percent of all condo sales since 2008 purchased through LLCs.
Many of those are in the big and pricey buildings along Billionaires’ Row, including One57 and 220 Central Park South. But the practice has come under scrutiny for a number of reasons. Scandal-plagued buyers can purchase apartments anonymously, for example, and park ill-gotten gains in real estate.
The legislation was spurred by the uptick in LLCs purchasing real estate in the Hudson Valley, but was co-sponsored in both the Senate and Assembly by New York City legislators, including Sen. Alessandra Biaggi, Sen. Andrew Gounardes, and assemblymembers William Colton and Tremaine Wright.
“Neighbors have a fundamental right to know who owns the home next-door to them,” Skouris said when the legislation was signed into law.