The revelation that Sean Hannity quietly amassed a significant real estate portfolio has drawn attention to the vehicle that’s become a fixture in such transactions: limited liability companies.
Hannity used multiple LLCs to purchase at least 877 residential units across Alabama, Florida, Georgia, New York, North Carolina, Texas and Vermont. He’s not alone: In the last 30 years or so, property owners have increasingly turned to LLCs to keep their names from appearing in public records and to avoid personal liability. According Census Bureau’s Rental Housing Finance Survey, 92 percent of rental properties across the U.S. were owned by individuals in 1991. By 2015, that number was down to 74 percent, mostly due to the emergence of LLCs.
LLCs have a history of making money laundering easier, leading to some reforms. The Treasury Department initially launched the LLC disclosure rule in March 2016 in an attempt to crack down on the flow of illicit funds in high-volume markets. In August, the Treasury Department extended disclosure rules to deals involving wire transfers.
“The lawyer in me that represents clients says ‘privacy, secrecy, keep my people out of the papers,’ ” William Callison, a Denver-based lawyer who specializes in LLC and affordable housing law, told the Times. “The policy guy in me says, ‘Well, wait a second.’ ”
He added, “Because good things happen in the light, and bad things happen in the dark.” [NYT] — Kathryn Brenzel