Lawmakers advance bill to unmask property owners behind LLCs

It may soon get a lot easier to figure out who owns what in New York. 

State lawmakers have signed off on the LLC Transparency Act, a measure that requires the names of owners behind limited liability companies to be added to a public database. The measure was approved by the Senate earlier this month and by the Assembly on Tuesday, meaning it now heads to the governor’s desk. 

The bill would require companies to provide the state with basic, but often elusive, information about the people behind LLCs, including their names and the addresses of their businesses. The database, maintained by the Department of State, would also collect historical information about the LLC, including any name changes. 

The bill’s sponsors have said the measure is aimed at curbing a number of nefarious activities that are easier to pull off with anonymity, such as money laundering, tax evasion and code violations that go unaddressed by untrackable landlords. The bill was first introduced last year as elected officials sought to expose Russian oligarchs who own real estate in New York. 

Assembly member Emily Gallagher, one of the bill’s sponsors, said the measure will help identify bad actors in real estate without vilifying the entire industry. She said it could also better equip lawmakers to craft legislation that helps small property owners by allowing them to refute allegations that they secretly own hundreds of apartments. 

“Right now, we’re really playing a shadow game,” she said, 

The bill applies to all LLCs and foreign limited liability companies registered in the state, with some exceptions and a potential waiver for certain privacy concerns. Holland & Knight’s Stuart Saft warned that the bill will drive investment away from the state and make owners vulnerable to identity theft.

“New York is again shooting itself in the foot,” he said. “This information should absolutely not be made public.”

The measure has the backing of the New York City District Council of Carpenters, which praised it for ensuring “that unscrupulous contractors are no longer able to hide behind anonymous LLCs.” The bill will presumably make it easier to track individuals behind multiple LLCs, enabling construction unions and others to paint a fuller picture of a contractor’s history of work site  injuries, violations and the like. 

Gallagher noted that the measure could also help root out organized crime’s influence in construction — given the role LLCs have played in facilitating kickbacks and other schemes. 

An earlier version of this bill simply made ownership information available through public records requests. This iteration calls for a publicly searchable database. 

Federal rules already require title insurance companies to provide the U.S. Treasury with ownership information about shell companies involved in all-cash residential deals worth $300,000 or more in New York City and a dozen other large metro areas across the country.

In 2019, New York approved a measure that required LLCs involved in certain residential real estate transactions — properties with one to four units — to disclose the identities of all owners and managers in tax filings.

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The newly approved measure requires disclosure of information about “beneficial owners,” those who “substantially control” an LLC or have an at least 25 percent stake in the entity. If approved by the governor, the new rules would kick in one year after being signed into law.