LIEB BLOG

How current events impact business & real estate

Showing posts with label Real property. Show all posts
Showing posts with label Real property. Show all posts

Monday, January 10, 2022

Suffolk County Renters: BEWARE!

Suffolk County renters: BEWARE! Those looking to rent in Suffolk County, New York should proceed with caution when searching for a rental home. 


In an effort to protect Suffolk County tenant/residents from rental fraud, the County Legislature has amended Local Law No. 30-2021. Rental fraud is committed when a person or entity leases a residential or commercial property to another, when that person or entity does not have an ownership interest in the property or authorization from the owner to lease the property. Properties that are vacant or foreclosed upon are typically the kinds of properties that are used for rental fraud. 


The law now states that "persons seeking to rent or lease real property MAY [emphasis added] demonstrate ... ownership interest or authorization to rent, lease or sublet real property." Ownership interest for real property can be demonstrated to a potential tenant via a fully signed and valid deed or a fully signed lease agreement. Similarly, a person can demonstrate they have authorization from the property owner to rent or lease the property by providing a potential tenant with proof of agency. 


The problem with this new law is that the Legislature does not actually require those looking to lease out their real property to prove that they are indeed the owner of the property. If the Legislature actually wants to protect potential tenants from rental fraud, they need to revise this law immediately and require that persons seeking to rent out real property provide proof of ownership or agency authorization incident to such rental.


Those who commit rental fraud and are caught will face penalties subject to a fine of up to $1,000.00 and/or up to six months imprisonment. Do you think the punishment fits the crime? 


In the meantime, potential tenants can and should take additional steps to protect themselves where the Legislature has fallen short. As rental fraud has become a hot topic in Suffolk, potential tenants should do their research, as well as request proof of ownership from those who are leasing properties. If a lessor refuses or cannot provide proof of ownership or agency authorization, it may be best to continue the house hunt.




Monday, September 23, 2019

Law Alert: LLC Owners ID Must be Disclosed in Real Estate Deals

ATTENTION LLC Owners

LLC sellers & buyers of residential property (1-4 family houses) will no longer be able to hide their identities.

Transfer tax returns submitted by LLCs, as required when transferring real estate, will no longer be accepted by the clerk's office unless submitted with the names and addresses of all members, managers, shareholders, directors, officers, partners, and other authorized agents.

Check out the full bill here and understand that you can no longer hide your identity in a residential real estate deal in the State of New York.

Wednesday, January 13, 2016

FIRPTA Withholding Tax Rate Increased 5%

On December 18, 2015, the Protecting Americans from Tax Hikes Act (PATH) was signed into law, amending, among other things, the Foreign Investment in Real Property Tax Act (FIRPTA). The most significant change is that there has been an increase in the withholding rate from 10% to 15%. What this means is that the buyer’s attorney will withhold 15% from the purchase price to a foreign seller and submit this amount directly to the IRS. The foreign seller will now walk away with 15% less (rather than 10%) from sales of U.S. real property interests but may be entitled to a refund, at least in part, if its income tax is less than the 15% that was withheld from the purchase price.

The increase to 15% also applies to distributions by certain domestic corporations to foreign shareholders and distributions by domestic or foreign partnerships, trusts, or estates. However, the 10% withholding rate still applies to personal residences that have a purchase price of less than $1 million.

The increased withholding tax rate ensures tax compliance by a foreign person or entity by offsetting any tax owed on a sale of real property. Planning ahead can allow a foreign seller to either reduce the time that the withheld funds are held in escrow, or eliminate the requirement to withhold any sale proceeds.

The seller’s attorney can make an application to the IRS for a Withholding Certificate, requesting a reduction in the percentage withheld from the sale, based upon a showing that the seller’s maximum tax liability is below 15% of the purchase price. If this Withholding Certificate is approved, the buyer’s attorney, instead of the IRS, holds the funds in escrow; which can greatly expedite the seller’s access to the funds. Alternatively, a foreign seller may be exempt from withholding all together. This determination depends upon a list of reasons; a common reason is if the property is a personal residence and the purchase price is $300,000 or less.

The increased withholding tax rate is effective for dispositions occurring on or about February 16, 2016, which is 60 days after PATH was signed into law.