How a New York Law Prevents Hollywood Stars From Hiding Real Estate
No more concealing the identities behind limited liability corporations. The state's governor, Andrew Cuomo, wants to know who is purchasing what despite "workarounds": "Luxury real estate is an attractive punching bag."
Gov. Andrew Cuomo has thrown a wrench into New York City's real estate game of secret celebrity buyers. In November, a new state law went into effect lowering the threshold at which buyers who hide behind limited liability corporations (LLCs) must disclose their identity. It's supposed to weed out "dark money" tied to the world's stable of Bond villains — Russian oligarchs, arms dealers and deposed third-world dictators — who have long circulated in Manhattan's luxury condo market. But an unintended consequence is the law's impact on Hollywood A-listers.
As a result, top brokers are dreaming up new ways to protect a client's privacy, including assigning an overseer whose name and address are associated with the LLC. "I'm working with a celebrity couple right now who just bought a townhouse in the Village, which they're buying under an LLC; the overseer is their attorney," says Martin Eiden, who works in Compass' sports and entertainment group. He adds: "There's always a workaround."
According to Frederick Peters, CEO of Warburg Realty, the use of LLCs has increased with the growth of celebrity real estate gossip. "In the '80s, nobody used an LLC," Peters says, adding that 20 percent of his firm's clients now do. He suspects too that the new disclosure requirements, along with a more recent hike in the state's "mansion tax," have a political subtext. "The attention brought to our market by Ken Griffin's $238 million purchase created a Marie Antoinette moment," says Peters. "Luxury real estate is an attractive punching bag. Are these new laws political? Absolutely. Is it also about the state's need to find funds to help fix the subway system? Absolutely."
This story first appeared in the April 11 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.