Gov. Kathy Hochul signed into law this week legislation designed to make limited liability companies more transparent, much to the chagrin of supporters who opposed Hochul’s cutting from the bill a searchable public database with LLC ownership information.

The amended LLC Transparency Act will now reveal only to law enforcement officials and government agencies the identities of owners of LLCs to help them prevent unlawful activity, including wage theft, money laundering and tenant mistreatment.

“For far too long, bad actors have been protected by the loose disclosure requirements of LLC ownership,” Hochul said. “The new LLC Transparency Act will give law enforcement and state regulators the tools they need to hold bad actors accountable.”

Sponsored by Assemblywoman Emily Gallagher and Sen. Brad Hoylman-Sigal, the bill is expected to help curtail money laundering in Manhattan’s high-end residential real estate market by revealing ownership details and promoting transparency. The bill was also supported by some district attorneys, and a coalition of tenants’ rights, social justice, labor unions and watchdog groups, as well as the government-reform group Reinvent Albany. But New York City’s real estate industry, which is a major campaign donor to Hochul and other top state politicians, opposed letting the public know the identity of LLC owners.

Citing privacy concerns, Hochul issued a “chapter amendment” that the Legislature’s leaders approved, which will keep the database of LLC owners from the public.

“The core element of the LLC Transparency Act was the public database of the owners of limited liability companies,” said John Kaehny, the executive director of Reinvent Albany.

“Without a public database of LLC owners, the public will never know if LLC owners are following the law or the state of New York is enforcing it,” said Kaehny.

While talking to The Buffalo News last week, Kaehny had expressed concerns over Hochul possibly amending the bill.

“It will be extremely hard from the outside to be able to monitor the progress because it’s a private database,” he said.

If Hochul had not issued the chapter amendment, New York would have been the first state to require public disclosure of the owners of LLCs, in addition to making the information available to government agencies.

“We think that New York had a big chance to do something right here and the governor squandered that opportunity,” Kaehny said.

IMPORTANT NOTE - The content of this post was emailed to NYSLTA Members on October 30, 2019.

That email included an addendum to the TP-584, which was inaccurate.  The file attached to this page is a corrected version and may be used anywhere in NY state, including NY City.

The purpose of this memo is to clarify the impact of the changes to Section 1409(a) of the New York Tax Law, which became effective September 13, 2019.

As you are aware, the new legislation requires the real property transfer tax return (the TP 584 and the TP584-NYC) relating to residential property (containing one- to four-family dwelling units) sold or purchased by a “Limited Liability Company” (LLC) to disclose information on the ownership of such company.

The legislation requires that the TP584 and the TP584-NYC MUST be accompanied by documentation that identifies the names and addresses of all members, managers and other authorized persons of the LLC.

Further, if any member of the LLC is another LLC or other business entity, all shareholders, directors, officers, members, managers, partners and authorized persons of said LLC or business entity must be listed by name and address until “full disclosure of ultimate ownership by natural persons is achieved. 

We realize that in some cases (e.g. a publicly traded corporation) this requirement will be practically impossible to comply with; we have been unofficially advised that we should submit the addendum with a statement that the entity is a publicly traded corporation and that the Clerk’s should accept the deed for recordation.

Therefore,

• If you are recording a deed; AND
• it is for residential real property containing a one- to four- family dwelling unit, AND
• a grantor or a grantee is an LLC

an addendum must be attached to the TP584 or the TP584-NYC identifying the names and addresses of all LLC members.

Although the State has not promulgated an “official” addendum to the TP forms, we attach a link to a form which has been accepted by the County Clerks.

Click the link below for a sample addendum which can be completed and submitted to fulfill the above requirements.

The Department of Taxation & Finance provides some guidance and examples here: https://www.tax.ny.gov/bus/transfer/rptidx.htm#conveyances

The NYSLTA has been actively engaged with the Dept of Taxation & Finance, the County Clerks, and the State, City and County Bar Associations regarding the foregoing.

Additionally, we have reached out to the sponsors of the legislation to provide input when an amendment is under consideration.

Further memos with guidance will be issued by NYSLTA, if and when the New York State Department of Taxation and Finance issues same.