Will she or won't she?
New York real estate interests are holding their breath as the Dec. 31 deadline looms for Gov. Kathy Hochul to sign or shelve the controversial LLC Transparency Act. The bill has roused passionate emotions, pro and con, among housing advocates, labor unions, lawyers, real estate brokers, district attorneys, developers, even condo boards, many of which have units in their buildings owned by anonymous limited liability companies.
The state's LLC Transparency Act (bill S995B) would shed even more light on real estate ownership than the federal Corporate Transparency Act, which goes into effect in February. The federal law requires limited liability companies and certain other corporate entities to reveal the names of their "beneficial owners." Those names will then be filed with the U.S. Treasury Department for law-enforcement purposes but won't be available to the pubic. The New York State law, on the other hand, will put the names of beneficial owners on a public data base.
About 12% of properties in New York City — and 37% in Manhattan — are owned by LLCs, according to an estimate from Reinvent Albany, a good-government organization that supports the bill.
“Sunlight is the best disinfectant,” state Sen. Brad Hoylman-Sigal, a Manhattan Democrat who sponsored the bill, tells Gothamist. “And we've seen examples of money laundering, wage theft, abuses by bad landlords and terrorism that demand full transparency of these entities.
Assemblymember Emily Gallagher, a Brooklyn Democrat who sponsored the bill in the Assembly, says lack of transparency causes problems across a broad swath of industries — from LLC-owned nursing homes, to contractors hiding behind anonymity when locked in battles over unpaid wages or injuries on the job. “Unfortunately," Gallagher says, "LLCs have become a shortcut to having a business that has very little accountability."
Real estate brokers, especially those who cater to rich, publicity-shy foreign investors, see things a bit differently. Nikki Field, a broker at Sotheby’s International Realty, tells Brick Underground that she finds the New York bill “alarming.” Nearly three-fourths of her clients are international, and many international and luxury deals involve an LLC, unless the buyer is looking at a co-op. “In 2021," Fields says, "those of us who specialize in international buyers supported the federal law as a welcome restriction to weed out the dirty money. We wanted that clarity.” But, she adds, the New York law raises concerns for international and domestic buyers. "Once these deals are publicly recorded the press will be all over them. This will absolutely deter the international buyer.”
Translation: the bill is not popular on Billionaire's Row and other high-end neighborhoods.
Adds Kobi Lahav, director of sales at Living NY, “The ability to remain anonymous is important. It should shield you from liability and unwanted contact. I don’t know why New York state would want to go farther than the federal law.”
With just 27 days left in the hour glass, Hochul has given no indication if she'll sign the LLC Transparency Act or let it die a quiet death. "All will be known by the stroke of midnight on Dec. 31," she says.
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