Why should New York care who buys property in the state?
For years, the ultra-wealthy have enjoyed anonymity when they purchase real estate in New York. Celebrity owners and those who inhabit the area known as "Billionaires' Row" have long favored the use of limited liability companies (LLCs) to purchase and hold property.
However, that's not the only advantage buying through an LLC offers. Wealthy buyers have been known to quietly buy property under the name of a specially formed LLC just so they have a place to park assets they don't want located due to their legal problems. Others essentially use the LLC as a nameless, faceless front that makes it nearly impossible to hold anyone personally liable for building code violations, illegal sublets and fines.
A new law signed by Governor Andrew Cuomo seeks to prevent that. The law was openly aimed at unmasking such buyers in the Hudson Valley, as the issue has been particularly problematic there. As one legislator said, "This new law will help protect the quality of life in our neighborhoods by injecting much-needed transparency into an area of real estate that currently operates in the shadows."
The new law doesn't thrill everyone, naturally. Since it makes every buyer's name available through New York's Freedom of Information (FOI) law, many industry insiders feel that it will hurt the New York real estate industry. Combined with the recent mansion tax and other changes in federal taxation rules, experts believe that luxury real estate sales in the area are likely to suffer.
This could be a perfect time, however, for some investors who have stayed away from the market before. It's important to understand that no market is perfect for everyone. If you are thinking about investing in New York residential real estate, talk about your concerns and aspirations with an attorney to find out how the new laws could affect you.