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States try to ferret out unnamed landlords

Tim Henderson, Stateline.org on

Published in Business News

The law was signed by Democratic Gov. Andrew Cuomo in September and took effect immediately.

It mimics a provision already in place for New York City since 2011 and followed a legislative investigation into housing complaints that concentrated on the state capital, Albany, and the Hudson Valley communities of Newburgh, Mount Vernon and Ramapo. Each struggles to handle thousands of building complaints every year, inspectors testified at a public hearing in May.

When LLCs own property, "many municipalities struggle to locate the responsible party, the individual to serve with a notice of violation or an order to comply," the investigation's report concluded. "This loophole must be addressed at the state level."

Robert Magee, Albany deputy corporation counsel, noted that LLCs can be owned by other LLCs, adding to the confusion.

"It's an uphill battle trying to pin down ownership of these LLCs and who's responsible," Magee told Stateline. "A lot of times it's an LLC owned by an LLC and you have to follow that all the way down. We need all the help we can get, and this helps."

Horton said the new law could help Newburgh's effort to bring back beautiful but run-down houses in the city. It also could help tenants such as the single mother and five children who were left homeless when the city condemned their rental house in March.

 

The owner, identified only by an LLC name with an address in Hartsdale, N.Y., did not show up in court to face code issues ranging from gas leaks to rotted floors. The deed to the property shows only the LLC name, an unintelligible doodle for a signature, and a different address in Mt. Vernon, N.Y., for a now-foreclosed house.

"This is one more tool we can use," Horton said. "We need to make sure a building is safe, and this inability to find the landlord delays it. It can take days and meantime maybe somebody has no heat."

Property Milking

LLCs were born in Wyoming in the 1970s to fund risky drilling operations without exposing investors to lawsuits.

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