September 26, 2019

New York Now Requires Names of All Members of LLCs Selling or Buying Residential Property

Holland & Knight Alert
Stuart M. Saft

The New York State Tax Law and the New York City Administrative Code have been amended to require the name and address of every member of a limited liability company (LLC) that acquires or sells residential real estate in New York State. The two new laws are New York State Tax Law §1409 and New York Administrative Code §11-2105.

The new laws require disclosure of the name of every natural person who owns a membership interest, directly or indirectly, in an LLC that is the grantor or grantee of residential property containing one to four units. Accordingly, if any member of the grantor or grantee is itself a business entity of any type, the names of the principals of that business entity will also need to be disclosed. This reporting requirement continues indefinitely until all private persons underlying any business entity within the ownership structure are identified. If the principals of the LLC are identified not as members, but as shareholders, directors, officers and partners, their identities must also be disclosed. The reporting requirement also extends to parties who are not principals of the grantor or grantee. The names of any managers and authorized persons of the grantor or grantee must also be disclosed. A business address for every party identified above must be provided.

The laws apply to conveyances where the grantor or grantee of a deed for residential real property containing one to four family dwelling units is a limited liability company. The laws are being interpreted by county clerks and title insurance companies as applying to condominiums, and require disclosure of every individual having an interest in every tier of the grantor and grantees' organizational chart until the name of every individual with an interest has been disclosed.

Many believe that the laws were enacted with the intention of covering just the sale of one to four family homes, but due to confusing draftsmanship the law has been interpreted as affecting every transaction involving a residential unit, including the sale of cooperatives and condominiums. The law went into effect on Sept. 13, 2019, when it was signed by Gov. Andrew Cuomo, and cannot be changed or clarified until the Legislature returns in January 2020. Even after the Legislature returns, it may not have any desire to change the law.

Accordingly, since the laws only apply to LLCs, consideration should be given to converting LLCs to limited partnerships, which is the ownership structure that was utilized prior to the invention of the LLC. Purchasers seeking anonymity could purchase their homes and apartments in trusts rather than LLCs.

Please do not hesitate to contact the author if you have any questions regarding these new laws or how you can comply with them.     


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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