Important Information for New York State Buyers AND Sellers of Residential Real Estate Held by an LLC!

By | September 23, 2019

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Title Insurance Companies Have Been Mandated by an Amendment to a New York State Law, to Determine the Actual LLC Owners in ANY Residential Real Estate Transaction For Both the Buyer and the Seller, Regardless of Price or Locality!

Residential real estate: One to Four Family Dwelling

Summary (Courtesy of NYSLTA):

New Law Requires

Full Disclosure of LLC Members

On Friday, September 13, 2019, Governor Cuomo signed a bill that went into effect immediately, A7190/S1730 amends §1409 of the Tax Law and §11-2105 of the Administrative Code of the City of New York.

The law requires that when a grantor or grantee residential property is an LLC, all members be identified.

If a member of the LLC is another LLC or other business entity, the “members, managers or authorized persons” of said LLC or entity must be listed. This must continue until ultimate ownership by a natural person is achieved.

New York State Assembly Bill Summary

A07190 Summary:

BILL NO A07190
SAME AS SAME AS S01730
SPONSOR Zebrowski
COSPNSR Colton, Wright, Davila, Cook
MLTSPNSR
Amd §1409, Tax L; amd §11-2105, NYC Ad Cd
Requires the real property transfer tax return relating to residential property sold or purchased by a limited liability company to include information on the ownership of such company.

 


A07190 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)

 
BILL NUMBER: A7190
 
SPONSOR: Zebrowski
 
TITLE OF BILL:  An act to amend the tax law and the administrative
code of the city of New York, in relation to real property transfer tax
returns of limited liability companies
 
 
PURPOSE OR GENERAL IDEA OF BILL:
 
This bill requires limited liability companies to disclose the individ-
ual members of the company when it files a joint tax return for any sale
of real residential property that it is named the grantor or grantee in.
This only applies to residential property containing one-to four-family
dwelling units and requires that the joint tax return be accompanied
with a list identifying all the members, managers, and any other author-
ized persons of the company. This practice has been successfully imple-
mented in New York City as of 2015.  This bill seeks to codify the prac-
tice in New York City and apply it on a statewide level.
 
 
SUMMARY OF PROVISIONS:
 
Section 1 of the bill adds a new subdivision (h) of Section 11-2105 of
the administrative code of the city of Now York to require any limited
liability company who is the grantor or grantee of a deed for residen-
tial real property containing one- to four-family dwelling units to
accompany the filing of any joint tax return a list identifying all the
members, managers, and any other authorized persons.
 
Sect on 2 of the bill incorporates the same provisions into section 1409
of the tax law into paragraph (a) for statewide application.

Section 3 of the bill establishes that this act will take effect imme-
diately.
 
 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (1F APPLICABLE):
 
 
JUSTIFICATION:
 
The issue of transparency that this bill addresses is important because
when real estate transactions take place involving an LLC, those behind
the companies are often unable to be identified. This bill seeks to
address the anonymity and related concerns by requiring limited liabil-
ity companies that engage in residential property sales to disclose
their members when filing a joint property tax return.  This practice
has been successfully implemented in New York City as of 2015. This bill
seeks to codify the practice in the city and apply it on a statewide
level.
 
 
PRIOR LEGISLATIVE HISTORY:
 
Skoufis: 06/15/16 passed assembly.
Carlucci: 6/15/16 referred to Rules
Skoufis: 01/03/18 ordered to third reading
Carlucci: 1/03/18 referred to Investigations and Government Operations
 
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
 
None.
 
 
EFFECTIVE DATE:
The bill takes effect immediately.

Text of the full Bill can be found here.

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