Eliza Theiss NYC-based boutique law firm Pardalis & Nohavicka brings the latest legal updates from the world of real estate to PropertyShark. Pardalis & Nohavicka handles an eclectic array of matters, representing individuals and business owners in civil litigation, criminal cases and business transactions, currently litigating and representing clients throughout the United States and around the world.
The New York City real estate world is slowly evolving its regulations to create a more transparent market.
For example, in the past, buyers of one- to four-family dwellings could make a purchase under a limited liability company (LLC) without disclosing certain confidential information, such as specific members of the entity. But, why would individuals buy or sell under an LLC?
One reason to use an LLC is to lessen the amount of liability on the individual members of the LLC itself. Additionally, LLC users also have multiple tax benefits, including pass-through taxation. This means that any profit generated by the property passes through to the owner only – not through the members on their own or the entity itself – and could be claimed as individual income, therefore avoiding double-taxation. This arrangement was created to make it easier for businesses to form and operate, as well as to provide flexibility in the formation and management of an LLC.
The issues with the former system were reported by Senator James Skoufis after research was conducted by the Investigations and Government Operations Committee. The committee found that it was difficult to hold people responsible for violations and mistreatment of tenants and communities – because it was challenging to track down specific individuals.
After discussions in the state legislature, Governor Andrew Cuomo signed a new bill to change regulations as a promotion of transparency within the real estate industry. Effective September 13, 2019, the new New York State Tax Law and New York Administrative Code now require limited liability companies to disclose the names of individuals who own any membership interest in an LLC of a residential property.
This includes the names of any directors, managers, officers and shareholders involved in the purchase or sale of a property. In addition, a business address must be provided for every individual. These laws cannot be changed and will be effective until the legislative session resumes in January 2020. And, even after this reanalysis of the bill, it could still remain active and perfectly intact.
The goal of these changes is to make it easier to confirm a property owner’s name and address; the public can see who is buying or selling a home in their surrounding area, and municipalities will also be able to enforce codes and rules in a more efficient manner. The new laws will affect mostly buyers of real property such as condominiums or single-family homes, since most co-ops do not allow for LLC purchases, even if their resistance has slightly waned in the last few years.
While these regulations have been successfully implemented in New York City, the bill seeks to expand this to the state level. While 2019 is bringing about significant legal changes in the real estate industry, these new regulations are targeted at landlords and buyers in hopes of fostering a new wave of accountability and honesty to the real estate market on a statewide level.
About:
Taso Pardalis is a founding partner of the Law Offices of Pardalis and Nohavicka, a leading full- service NYC law firm with offices in Manhattan, Queens and WeWork. Taso may be a well-known attorney with many cases making headlines in major media outlets, but at heart, he is a true entrepreneur that believes in supporting the small business community. His areas of concentration are: Intellectual Property, Trademarks, Corporate, Business Law and Real Estate Law.
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Real Estate and Corporate Transactions Attorney Nataly Goldstein is a graduate of Cardozo School of Law, where she served as President of the Real Estate Law Association. She is experienced in both residential and commercial real estate transactions, as well as representing large banks, such as Wells Fargo and Citibank.
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Sofia Stefanou is a law clerk at Pardalis & Nohavicka. She is currently a student at NYU’s Schack School of Real Estate. Sofia is a member of NYU’s Undergraduate Real Estate Club, Women in Real Estate Club, and Hellenic Heritage Association. She is currently a member of the real estate law team at Pardalis & Nohavicka.
