see faq on the nysboe website
only fools believe that a law says what it means or appears to say
looks like ny state has gone hong kong on laws?
-----Original Message-----
From: Adi Dynar <adi.dynar@ncla.legal>
Sent: Fri, Nov 8, 2019 11:28 PM
Subject: Automatic reply: here is one for you
Dear friend,
I am out of the office until Tuesday, November 12. I will have spotty and unreliable Internet access, so please expect tardy responses from me to your messages.
Warm regards,
Adi
Adi Dynar
Litigation Counsel
New Civil Liberties Alliance
Condo Buyers Can Keep Purchases Secret, N.Y. Tax Officials Say in Reversal
Policy shift follows new analysis of state disclosure law and pressure from real-estate community
New York state tax officials are restoring a measure of secrecy for condo owners who buy units without disclosing their names publicly through limited-liability companies, in a reversal of a policy that drew fire from the real-estate industry.
In September, the tax department stunned the real-estate industry by requiring that LLCs list the names and addresses of all individuals with ownership interests in condo deals and sales of one-to-four family homes across the state.
It cited a new state law signed by Gov. Andrew Cuomo in September, designed to address complaints about building and zoning violations in suburban Rockland County. The law makes the names of owners public under the state’s Freedom of Information Law.
Under the new law, buyers through LLCs would lose the anonymity that many had come to expect. That sent a chill through billionaires, celebrities and other condo buyers seeking privacy. Many wealthy owners prefer to buy through LLCs, sometimes known as shell companies. Some want privacy, and others want to protect assets from potential lawsuits.
But facing concern from the real-estate community, the tax department said in a new guidance on Monday that the new disclosure law applied only to one-to-four family homes and dropped any mention of condominiums.
“The law is intended to apply to sales of a residential building with 1 to 4 dwellings, not the sale of individual condo units, and the guidance reflects that,” said James Gazzale, a state tax-department spokesman.
“The Department’s initial understanding of the new law was generated based on the agency’s preliminary reading of the bill language and how it interacted with other relevant sections of the law,” he added. “Since that time, the bill sponsors have clarified their intent.”
While federal officials say some buyers use LLCs to launder money or hide ill-gotten gains, many New York City condo buyers rely on these structures for routine purchases. There are about 61,000 one-to-four family properties owned by LLCs in New York City, a Wall Street Journal analysis of city tax records found, including 12% of all condos and 5% of houses.
The policy shift didn’t result from any plan to fix a mistake in the law, but from a new analysis of text, Mr. Gazzale said. This followed outrage from the real-estate industry, which said the law could damage an already weak residential market in Manhattan, where sales have been sliding and inventory rising over several years.
The law was drafted to address complaints by residents in Rockland County that new neighbors were making allegedly illegal home conversions or subdivisions. If a property is owned through an LLC, it is more difficult to get local authorities to enforce the rules.
The law said it applied to deeds in the state for residential “real property” containing one-to-four family units that were bought through a LLC. Since condos are considered real property, the state interpreted the law to apply to individual-condo sales as well.
New York City’s finance department rushed to change its transfer-tax forms to comply with the new law and prepared for an onslaught of requests under the Freedom of Information Law.
The real-estate industry was particularly concerned that the law would throw a wrench into condo-development projects, since it required the disclosure of all individuals behind all layers of corporate ownership. That could extend to hundreds or thousands of investors in funds invested in a single project.
The Real Estate Board of New York, which represents the industry, pressed the governor’s office to act. Stuart Saft, a real-estate lawyer specializing in condominium development drafted a memo, outlining why the tax department’s initial interpretation was wrong and arguing that the language shouldn’t apply to condominiums. Mr. Saft had said the new law would “effectively kill real-estate finance.”
The state guidance released on Monday says the law applies to sale of residential “buildings.” That term excludes individual condo units, which are typically subdivisions of a residential building rather than an entire building.
A spokeswoman for State Sen. James Skoufis, a Democrat and sponsor of the disclosure law, said that in discussions with the governor’s office, the sponsors explained that their intent was to improve disclosure rules outside New York City.
“After understanding our legislative intent, the Governor’s Office and the Department of Taxation and Finance decided to update their guidance language,” she said.
Hall Willkie, president of Brown Harris Stevens, a New York-based real-estate brokerage company, said condo buyers who buy property through LLCs are already subject to extensive disclosure through federal treasury rules and city requirements. He said the new law requiring public disclosure “would have had a dampening effect on people buying in the name of an LLC.”
Write to Josh Barbanel at josh.barbanel@wsj.com
Corrections & Amplifications
The first name of Stuart Saft, a Manhattan real-estate lawyer, was misspelled as Stewart in an earlier version of this article. (Nov. 8, 2019)
The first name of Stuart Saft, a Manhattan real-estate lawyer, was misspelled as Stewart in an earlier version of this article. (Nov. 8, 2019)
No comments:
Post a Comment