New York Landlords Cannot Conceal Their True Identity Behind Shell Corporations

Many visitors to New York have had the experience of eating in a restaurant where the tables were immaculate and the food was beautifully presented and reasonably priced, but something didn’t feel right.  The restaurant was too quiet; there were few, if any, other customers.  How does a restaurant like that stay open unless it is a front for a money-laundering operation?  In other words, if the delicious and affordable, but eerily empty, restaurant, was a money laundering operation, it was not a very successful one, since even an unsuspecting tourist had suspicions about what the restaurant owners were up to.  One would think that the ideal money laundering operation would be a car wash, dive bar, or hole in the wall sandwich shop, where customers pay cash, and the money comes in and goes out so fast that you can scarcely keep track of it, even if you make a sincere effort at accurate accounting.  By this logic, it stands to reason that real estate is a terrible front for money laundering.  A house or apartment building just sits there; it is the opposite of a moving target.  Despite this, until recently, ownership of rental properties was a common way for entrepreneurs to conceal their relationship to some of their assets, by titling the real estate properties in the name of limited liability companies (LLCs), but a law that went into effect this year makes it more difficult to do this.  To find out more about the laws surrounding real estate purchases by LLCs and other corporate entities, contact a Bronx real estate attorney.

The New York Limited Liability Company Transparency Act

The New York Limited Liability Company Transparency Act (NYLTA) became law on March 1, 2024, and its provisions will go into effect at the beginning of 2026.  It requires beneficial owners of business entities and of real estate properties to disclose their identities to the New York Department of State.  Beneficial owners who are exempt must certify, under penalty of perjury, that they are exempt from the reporting requirement.

A beneficial owner is someone who has at least 25 percent ownership interest in a company or commercial real estate property.  You can still qualify as a beneficial owner if your ownership interest is less than 25 percent but you exercise substantial control over the operations of the company or the property.  NYLTA is similar to the federal Corporate Transparency Act in terms of its definition of beneficial ownership.  As with so many other laws, it is easier to qualify for an exemption to the disclosure requirements if you are a big company with deep pockets.  A real estate lawyer can help you comply with the law and avoid unnecessary expense.

Schedule a Confidential Consultation With a Bronx Real Estate Attorney

A real estate lawyer can help you avoid the risk of incurring penalties by failing to disclose your status as a beneficial owner of a real estate LLC.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

jdsupra.com/legalnews/corporate-transparency-wave-new-york-9627548/