Clarkstown Enforces Transparency for LLC-Owned Residential Properties Amid Controversy

A unanimous decision was reached by the Town Council of Clarkstown, mandating transparency from LLCs (Limited Liability Companies) and corporations that own residential real estate. This new legislation requires beneficial owners to submit extensive personal details to the town’s building department within 90 days from its effective date.

The intent behind the law is to identify property owners and ensure accountability. The council suggests a direct relation between anonymous ownership via LLCs and occurrences such as code violations, heightened rent prices, and evictions. This challenges longstanding norms and raises questions about property ownership.

Under this law, any “beneficial owner” holding more than 5% ownership in an LLC must register. This is in stark contrast to state and federal laws where the threshold is set at 25%. Additionally, while the initial draft allowed unrestricted public access to owner data, privacy concerns led to a revision, ensuring protection of social security numbers and financial details.

Compared to New York’s proposal that restricts disclosure to names and addresses, Clarkstown’s law is more stringent. This local mandate precedes the impending Corporate Transparency Act on a federal level, which will come into play by January 2024.

Town Attorney Craig Johns affirmed the law’s prospective nature. However, the wording indicates its applicability to all LLC-owned residential entities, not just recent acquisitions. Consequences for noncompliance in Clarkstown are significant, with fines starting at $3,500 weekly, in addition to covering the town’s legal expenses.

Supervisor George Hoehmann was keen on passing the legislation immediately, and despite minimal public hearing, the council was largely in agreement.

A major concern of critics is the potential misuse of the disclosed information. They argue that revealing personal data of LLC members, who may not be directly linked to code violations, could lead to harassment and identity theft. Further, there are fears about the broader impact on the local property market, as the law could discourage potential investors and developers preferring anonymity.

However, proponents, including local resident Laura Bidon of Clarkstown CUPON, believe that this move will benefit the town. She expressed concerns over LLCs transforming residential properties into rentals, some even violating town codes.

There is anticipation that Clarkstown will further expand the scope of this law next month, extending its reach to LLCs seeking building permits or approval from land-use boards.

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