What Does the New York LLC Crackdown Mean for NYC Condos?

Real Estate transaction are about to become more public. A law passed by New York Legislature aimed at battling issues upstate, now has New York City Condos under scrutiny as well. State Legislature signed a bill into effect in September that requires LLCs to disclose their identity in transaction involving one to four-unit buildings. The goal was to help crackdown on home abandonments in towns in the Hudson Valley by helping identify owners behind LLCs of abandoned homes.

Since Governor Cuomo signed the bill into law on September 13th, it is now being interpreted to include all residential condos in New York. The state Department of Taxation and Finance released guidance on September 27th that specified that residential condos were included in the “one to four family dwelling unit” definition.

What Does this Mean for NYC Real Estate?

Simply put, under current guidance and interpretation, Buyers cannot remain anonymous.

The New York City real estate industry is still looking to uncover the exact implications for our market, however, direction is indicating that the law’s reach is far greater than originally anticipated.

Under current guidance, Buyers would no longer be able to purchase Condos in an LLC to remain anonymous and would have to disclose identity. Disclosures would be subject to Freedom of Information Law (FOIL) requests which can be filed by anyone to find out who owns an LLC. This means journalists and other parties could get names behind LLCs, thus revealing identity to the Press.

This implication has privacy concerns as many wealthy buyers and celebrities in the New York City market purchase in an LLC to protect their identity and privacy. Having to disclose means that this privacy has gone out the door, and parties can now pinpoint the exact address of any buyer.

There is also some concern in regard to implications this could have on real estate development in New York. Most new development projects are under an LLC by the Sponsor. This is sometimes a Real Estate Investment Trust which could have many investors. Developers may simply not want to take on the burden of having to disclose possibly hundreds of names of everyone involved in a particular project.

This new legislative change comes on the heals of the Progressive Mansion Tax which was enacted July 1st, and has had a negative impact on the Luxury market in Manhattan.

How New York City's New Rent Laws Could Impact You

You may have heard chatter over Rent Laws in New York City over the recent weeks, and wondering what is it all about? City Council recently met to conduct their annual meeting in Lower Manhattan to discuss this years rent guidelines. With over 65% of New York’s 8 million people being renters, these regulations will likely impact you or somebody you know. With mixed opinions on the board's decisions, let's dive into precisely what the board decided. 

Rent Regulation

One of the most significant disagreements to be resolved in this years meeting was the issue of rent regulation. Previously if a tenant were to live in a rent regulated apartment and their income was to surpass a certain amount, the apartment would become deregulated.

Now, if you live in a regulated apartment, your apartment will continue to remain regulated despite your financial situation. Additionally, the laws called for more apartments to be part of the rent-regulated system. Additionally, and notably landlords now only have the power to add up to $89 to an apartments rent in between tenants after a renovation, previously landlords had the ability to add up to $1000.

For Renters

For regular renters, this meeting was a harbinger of good as well. It was a common occurrence for troublesome tenants to be put on a “blacklist” by their landlord; this is now considered a misdemeanor. Additionally, more restrictions have been placed on evictions, giving the tenants more time to leave their apartment if evicted and creating a fine between $1,000 and $10,000 for illegal evictions on the part of the landlord. 

Other ways the new laws impact Renters include:

• Security Deposits must be returned to the Tenant within 14 days of vacating the unit

• At least 30 days’ must be given to Tenants if the Landlord intends to raise the rent by more than 5%

• Tenants have 30 days to fix lease violations, up from 10

• Application fees are limited to $20, even when a background check is included

However, the news was not so good if you are a renter of a rent-stabilized apartment with the board voting 5-4 to raise rents for the 3rd consecutive year. The increase will go into effect on renewal leases started on or after October 1st, 2019, and September 30, 2020. The increase will come at a 1.5% increase for one-year leases and 2.5% for two-year leases. While this is still an increase, it is rather small compared to the 14% increase that New York had seen in the ’80s.

The new regulations affect a wide variety of renters and landlords in positive and negative ways. Feedback from Landlords is that these laws are disincentivizing them to upkeep existing apartments given there may be a cap on how much they can increase rent after a renovation. However, tenant advocates see the laws in a positive light, saying that some of them were desperately called for. 

You Need a Good Real Estate Attorney - Here's 8 Things to Consider

In a competitive or not, there are so many factors that could contribute to a real estate deal falling through. Be proactive and have all your ducks in a row so you vastly decrease the odds of a deal falling through. 

One crucial component of the real estate transaction is the attorney. An excellent real estate attorney can make the deal process that much easier and enjoyable while a bad attorney can be a complete deal killer. Thus, you need a a good real estate attorney. We've outlined 8 things to keep top of mind when it comes to attorneys and real estate transactions. Remember, if you do not have a preferred attorney, your real estate agent will be able to refer you to some of the best with which they work often. Get quotes from 3 or 4 to make your ultimate decision. 

1. Find an attorney that deals exclusively with the NYC market

Because the NYC market is so unique compared to other markets, it is important to select an attorney that deals exclusively with the market to ensure he or she understands all the nuances. This excludes attorneys who do most of their work in Long Island, NJ, etc.

2. Find an attorney that deals exclusively with real estate

This excludes personal injury attorneys, patent attorneys, etc. Furthermore, if you're buying a co-op, try to find one that specializes in co-ops as they are a property unique to New York City. Likewise, for condo purchases look for attorneys that have an accomplished track record with condo purchases. Some attorneys can easily facilitate both. 

3. Find an attorney that is comfortable operating in a modern environment

Business moves at a rapid pace thanks to technology. Your clients will expect the same. Snail mail, hand deliveries, etc are not effective anymore and will hold up an entire deal.

4. Find an attorney that has time to work on your transaction

One who does the work part time, or is perpetually on vacation, etc, can kill deals, and it is not in your best interest to hire them. 

5. Do not be cheap with the attorney

You will get what you pay for. The negotiation of the contract and the filing of paperwork with the government is the most important part of legitimate and full ownership of real estate. 

6. Unless the attorney meets the above criteria, do not give your transactions to family members or friends

7. Timely Execution

A good seller's attorney should draft a standard contract within one to two business days.  The buyer's attorney should be able to complete the due diligence and add any comments within another three to four business days. Ideally, this full negotiation should not take longer than a week.

8. A good attorney maintains focus of all parties

A good attorney should be able to keep the client calm and focused on completing the transaction. They should be able to use judgment on what is, and is not, significant if a problem arises with the unit/walkthrough/etc - i.e. not closing because of a leaky faucet, etc.