Regulators quietly change stance on condos in LLC law

Guidance previously said the law applied to residential condos, causing panic in New York City

TRD New York /
Nov.November 07, 2019 04:30 PM
This week, the State Department of Taxation and Finance issued a new memo that notably made no mention of condos. (Credit: iStock)

This week, the State Department of Taxation and Finance issued a new memo that notably made no mention of condos. (Credit: iStock)

A state law prohibiting anonymous property ownership through LLCs has been quietly altered after pushback from the industry.

The law, passed in September, required LLCs involved in residential real estate transactions to disclose the identities of all owners, managers and agents associated with the company. The language in the original bill suggested the law was limited to buildings containing one to four units, however a state guidance issued later that month said it applied to residential condominiums — triggering widespread panic in New York City, where LLCs are common in property transactions, particularly among celebrities.

This week, the State Department of Taxation and Finance issued a new memo that notably made no mention of condos. Screen shots from the department’s original guidance, both in October and today, show the mention of condos has been quietly deleted.

(CLICK TO ENLARGE)

(CLICK TO ENLARGE)

“The Department’s initial understanding of the new law was generated based on the agency’s preliminary reading of the bill language and how it interacted with other relevant sections of the law,” a representative of the state tax department said in an email. “Since that time, the bill sponsors have clarified their intent.”

“The law is intended to apply to sales of a residential building with 1 to 4 dwellings, not the sale of individual condo units.”

The apparent walk back follows pushback from the industry. A number of real estate attorneys and other industry professionals appealed to the state to modify the law after the original guidance came out.

“The original legislation never said condos and somewhere along the line, someone decided condos should be included,” said Stuart Saft, a partner at Holland & Knight LLP.

“Those of us in the field contacted the state and the city and the title insurance companies, and pointed out that the language that was in the initial guidance wasn’t in the statute and wasn’t what was meant to be covered.”

In an interview with The Real Deal in October, Democratic State Sen. Liz Krueger, who co-sponsored the bill, acknowledged that when she initially read a memo about the bill before it passed, she thought it would simply codify measures already in place in New York City and apply them statewide. But after Gov. Andrew Cuomo signed it into law September 13, she was surprised to see the law interpreted to include all residential condos in New York.

Write to Sylvia Varnham O’Regan at [email protected]


Related Articles

arrow_forward_ios
HFZ Capital’s condo the XI has sold 38 of its 236 units (iStock)

HFZ’s Chelsea condo now effective, with 16% of units sold

HFZ’s Chelsea condo now effective, with 16% of units sold
Zillow's Rich Barton (iStock)

Zillow launches brokerage to boost iBuying

Zillow launches brokerage to boost iBuying
421 Broome Street (Google Maps)

Soho penthouse buy sets record despite price chop

Soho penthouse buy sets record despite price chop
Oxford Property Group CEO Adam Mahfouda and (inset) the late Bianka Yankov (Mahfouda courtesy of Propco Holdings, iStock, Linkedin)

Oxford Property Group acquires Spire, expands to nearly 800 agents

Oxford Property Group acquires Spire, expands to nearly 800 agents
Brooklyn’s Sunset Park is in the midst of a severe housing crisis and in desperate need of affordable housing. (Photo by Jim.henderson via Wikipedia)

Sunset Park faces severe affordable housing shortage: report

Sunset Park faces severe affordable housing shortage: report
209 Dean Street and 315 Adelphi Street (Google Maps)

Sprawling Brooklyn townhouses drive week’s priciest deals

Sprawling Brooklyn townhouses drive week’s priciest deals
The number of single-family homes on the market hit historic lows in July, driving prices up (iStock)

US housing supply reaches nearly 40-year low

US housing supply reaches nearly 40-year low
Gov. Andrew Cuomo with Judge Lawrence Marks and Judge Daniele Chinea (Getty, Linkedin, iStock)

Flip-flop on eviction ban extension highlights state’s chaotic response

Flip-flop on eviction ban extension highlights state’s chaotic response
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...