New York state has enacted new disclosure requirements that could apply to any limited liability company (LLC) that transfers or acquires certain residential real property in New York by deed, which could have a dramatic effect on all residential condo developers. Chapter 297 of the Laws of 2019. Absent any guidance to the contrary, if an LLC is the grantor or the grantee on any NYC residential condominium (or 1- to 4-family house) deed on or after Sept. 13, 2019, the LLC may have to attach to its NYC transfer tax return a list of all of the LLC’s direct and indirect owners, going up an unlimited number of tiers until the disclosure of all indirect owners who are individuals, as well as all of the LLC’s and its owners’ managers, officers, and authorized persons, and sometimes their managers, officers, owners, and so on. N.Y.C. Admin. Code § 11-2105.h; New York City Department of Finance, Real Property Transfer Tax (RPTT).

Example: Kramerica Industries LLC converts and renovates a NYC apartment building into residential condominium units, which are then sold. Kramerica Industries LLC is owned 100% by Kramerica Industries Corp., the common stock of which is owned 95% by Pendant Publishing Inc. and 5% by Newman. Kramerica Industries LLC has an incentive fee payable to Cosmo Kramer. Mickey Abbott is a non-member manager of Kramerica Industries LLC, Kramer’s lawyer Jackie Chiles is the President of Kramerica Industries Corp., and Mr. Lippman is the CEO of Pendant Publishing Inc. In addition, Japanese investors contributed several thousand yen to acquire Kramerica Industries Corp.’s preferred stock. The NYC transfer tax returns for each of the sold condominium units may have to disclose the name and business addresses of Kramerica Industries LLC, Kramerica Industries Corp, Pendant Publishing Inc. and its direct and indirect public shareholders, Newman, Mickey Abbott, Jackie Chiles, Mr. Lippman, and all of the Japanese investors.

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