NYC real estate secrecy annihilated by LLC crackdown
A dispute about home conversions that started in New York’s Rockland County will have unintended consequences for Manhattan, according to a leading real estate broker.
“It's devastating,” Dolly Lenz, founder of Dolly Lenz Real Estate told FOX Business’ Maria Bartiromo. “One thing after another, one bad news piece after another, and now LLC’s may be unmasked.”
The bill, signed into law by New York Gov. Andrew Cuomo in September, aims to keep homeowners from purchasing real estate through limited liability companies, or LLCs, which are commonly used by buyers to keep purchases secret. Under the law anyone can file a Freedom of Information Law request to find out who owns an LLC.
This tactic was used by the majority of buyers at 2020 Central Park South the building where Ken Griffey bough the most expensive apartment in the country for $20 million. More than 85% of the buyers purchased units through a LLC to have security or secrecy, she said.
It prevents a security concern for buyers who want to protect their identity and address especially in popular and affluent neighborhoods, like the West Village, said Jenny Lenz, who is the managing director of Dolly Lenz Real Estate.
“Someone could really sit on your stoop right outside your door and stalk you,” she said.
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This comes on the heels of the mansion tax hike that applies to home sales of more than $1 million to a maximum of 3.9%, which is up from a flat-rate of 1%. The tax rates vary from 1.25% for $2 million in sales, to 3.9% for sales of $25 million and higher.
Lenz believes New York's real estate will weaken as a result.
“We're finding – ok-- all the very highest-end rentals are gone,” said Dolly. “We have clients looking. $85 thousand a month — $90 thousand month — $95 thousand per month rentals because they're saying I'm going to take a pause.”
FOX Business’ Brittany De Lea contributed to this report.