LLC’s now must be transparent when buying and selling properties

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NEWBURGH – When groups of investors want to remain anonymous in order to buy or sell properties in New York, they form limited liability corporations (LLC’s), making it impossible for the law to enforce code violations.

That will change now that Governor Cuomo, Monday, signed legislation requiring those LLC’s to publicly list all parties involved and thus, shedding the light of transparency on the deals.

The measure was sponsored in the Senate by James Skoufis (D, Woodbury), who chairs the Senate investigations committee, which has been concentrating on code enforcement issues, and Assemblyman Kenneth Zebrowski, (D, New City).

They announced the new law while standing in front of a condemned two-family house 230 City Terrace in the City of Newburgh.

Its owners are listed as T&J Estate Properties LLC and even though it was condemned by the city in March and has code violations since April 2017 including 19 this year alone, city hall cannot even find out who is behind the ownership.

Now, any LLC-owned building with one to four apartments, must disclose everyone involved when there is a purchase or sale, noted Skoufis.

“The mask will finally be pulled off of these anonymous real estate LLCs. This is an issue that is prevalent all across the Hudson Valley,” he said. “It presents challenges to municipalities.”

From left, Assemblyman Jonathan Jacobson, Senator James Skoufis and Assemblyman Kenneth Zebrowski

Skoufis also singled out the Village of South Blooming Grove, where limited liability corporations have been “buying up property left and right.”

Zebrowski said when LLC’s were originally established to help small businesses get up and running as easily as possible.

“But, of course, the loopholes are found by those businesses that don’t want to do the right thing and they start to hide behind these things,” he said. “You should not be able to hide behind an LLC when you are owning a residential or commercial property. You should not be able to hide an LLC when you are having people live in your property in dilapidated conditions and you should not be able to hide behind an LLC when you are putting people’s lives at risk, and that is what this bill will hopefully tackle.”

Assemblyman Jonathan Jacobson (D, Newburgh), said the city has been attempted to create a landlord registry and the LLC loophole has made that difficult.

The new law takes effect immediately.

 

 

 




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