It started as a tiff between suspicious neighbors in upstate Rockland County. But it now threatens to have a chilling effect on the already-cool luxury condo market in New York City. It’s a new state law that requires the names of real-estate purchasers to be made available under the Freedom of Information Act, the Wall Street Journal reports, a rule that will effectively end the practice of super-wealthy, super-secretive and – and, possibly, super-corrupt – buyers from hiding behind the anonymous veil of limited-liability companies, or LLCs.
Predictably, New York City real-estate brokers are not thrilled. “At the end of the day they are strangling New York real estate,” says Donna Olshan, owner of an eponymous brokerage who tracks luxury real estate, citing recent changes to the mansion tax, real-estate transfer taxes, and federal tax law, in addition to this new piece of legislation.
Almost one-third of condos purchased since 2008 were bought through LLCs, according to a Journal analysis of city records. Many of those are in the big and pricey towers along Billionaires’ Row, including One57 and 220 Central Park South.
The new state law was spurred by the uptick in LLCs purchasing real estate in the Hudson Valley, which led to the twin concerns that these buyers were making illegal home conversions or subdivisions, and it’s more difficult for local authorities to enforce the rules when properties are owned through LLCs. State Senator James Skoufis, a Democrat from the Hudson Valley who co-sponsored the original bill, says, “Neighbors have a fundamental right to know who owns the home next-door to them.”
Maybe so. But in some eyes, the new law will have an unintended and undesirable side-effect in New York City. “It will effectively kill real-estate finance,” predicts Stuart Saft, a partner at the law firm Holland & Knight.
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