New York's Effort for Transparency May Hurt High End Condo Market
Last month, Governor Andrew Cuomo signed a bill requiring limited liability companies entering into residential real estate transactions to disclose the identities of their individual members. The bill originated in the 39th Senate District of Rockland County, New York, where reports of illegal home conversions in the area prompted lawmakers to address the issue legislatively.
However, this new law has some unintended consequences especially for the luxury real estate market in Manhattan. With roughly 30 percent of condos purchased since 2008 owned through an LLC, buyers of luxury real estate accustomed to this practice might be less likely to enter into these transactions under the threat of identity exposure. “It will effectively kill real-estate finance,” predicts real estate attorney Stuart M. Saft of law firm Holland & Knight and Chairman of the Council of New York Cooperatives & Condominiums (CYNC).
The new law removes the protection of privacy previously given the rich and famous clientele through those anonymous transactions. The famous may be reluctant to have their purchases publicly available through New York’s Freedom of Information Law (FOIL).
The new law, it should be noted, applies to all one- to four-family dwelling units, except for co-ops. Will luxury buyers who value privacy over location take their real estate dollars to other states?