The New York law applies to LLC owners of residential properties of up to four units. But some attorneys worry that because the law refers to "property containing one- to four-family dwelling units," it could be construed to mean any residential buildings as long as some units are one-family.
"Nobody knows what to do," said Stuart Saft, a Manhattan real estate attorney who is now suggesting his clients switch to other forms of companies like trusts or limited partnerships to avoid the law's "confusing draftsmanship."
The state bar association warned attorneys about the confusion, noting that disclosing all related parties could create a vast amount of information that would not fit on the current form used by counties to report real estate transactions to the state.
However, New York's county clerks, who are expected to record the new information, will interpret the law as intended, to apply only to LLC owners of fewer than five units, said Mark Lavigne, deputy director of the New York State Association of Counties.
"There won't really be a change in our process," LaVigne said.
And Saft said attorneys have no problems with the stated intent of the law, which replicates an existing New York City law.
"There should be a point of contact with the landlord, absolutely," Saft said. "The intent is to deal with the homes that went into default and getting them cleaned up. That's fine."
'One More Tool'
The New York law can "bring transparency to real estate transactions involving LLCs and remove a level of anonymity that allows owners to avoid liability," said Democratic state Sen. Alessandra Biaggi, a co-sponsor.
The bill passed the state Senate 42-20 with mostly Democratic support. All 20 "no" votes were Republicans, none of whom responded when contacted by Stateline.