NYC lifts “veil of secrecy,” requires shell companies to reveal names of members

More than half of last year's condo- and co-op sales were to LLCs

From left: Jacques Jiha and the Time Warner Center
From left: Jacques Jiha and the Time Warner Center

Thanks to new disclosure requirements by the city, anonymously buying luxury property through shell companies is going to be a much trickier endeavor.

Under the new rules, the names of the members of shell companies that are buying and selling real estate have to be released to the city, according to the New York Times. The changes to the policy aim to remove “a veil of secrecy” that surrounds sales of luxury real estate, City finance commissioner Jacques Jiha told the newspaper.

An investigation that focused on the Related Companies’ Time Warner Center by the newspaper in February, which reported on the increased use of limited liability companies when it comes to buying property, spurred the city to make the change.

The goal of the increased transparency is to find those property owners who could be avoiding paying city income taxes by saying they legally reside outside of New York City, the newspaper reported. Roughly 89,000 condos and co-ops are owned by people whose primary residence is outside of the city.

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“I think it’s an unfair, inappropriate position for the Department of Finance to say to people who invest in real estate, ‘Gotcha,'” Jay Neveloff, an attorney and a member of REBNY, told the newspaper. “There’s no doubt there are bad people who buy real estate with money they’ve gotten from criminal activities. It’s got to be a tiny minority.”

More than half of last year’s condo sales for $5 million or more were to limited liability companies. The new rules went into effect in May. [NYT]Claire Moses