Interesting developments: LLC on Rye

There have been some interesting developments regarding two recent entries.

In my entry on Real Estate Chatter, I stated that the sellers in the burbs are starting to get their asses handed to them. This article on Rye sheds some light on the situation.

But Rye's real estate is not immune to market shifts, and with the market slowing somewhat in recent months and houses taking longer to sell — compared with last year, when some sellers were receiving multiple bids on their properties — price reductions can be found on homes for sale in Rye, as in the rest of the county. For example, the price was lowered last week on the four-bedroom colonial, going for $1.385 million from $1.425 million. Similarly, the six-bedroom, which has an asking price now of $8.5 million, originally had a $9.5 million price tag.

In my entry on LLC the mark of the bubble beast, I got this interesting email from our friends at REBNY about a new law that is being pushed in the Legislative branch.

Here is the summary of the law and here is a link to the text.

S06831 Summary:
BILL NO S06831B

SAME AS Same as A10399-A

SPONSOR

COSPNSR

MLTSPNSR

Amd SS102, 206, 802, 1203 & 1306, Lim Lil L; amd SS121-101, 121-201, 121-902,
121-1500, 121-1502 & 121-1507, Partn L; amd S8-1.8, EPT L; amd S406, N-PC L

Requires notices relating to business entities to be published for 6 weeks;
eliminates the listing of certain owners of a business entity in the affidavit
of publication and the application for authority; requires business entities to
comply within 1 year.

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S06831 Actions:
BILL NO S06831B

02/28/2006 REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
03/22/2006 1ST REPORT CAL.608
03/27/2006 2ND REPORT CAL.
03/28/2006 ADVANCED TO THIRD READING
05/10/2006 AMENDED ON THIRD READING 6831A
05/16/2006 AMENDED ON THIRD READING 6831B

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REBNY's perspective is the following.

Early in this year’s legislative session, a law was enacted, to be effective June 1, that would require the publication of the ten members with the largest interest in an LLC and imposed a penalty for failure to publish that potentially could undermine the entity’s liability protection.

Later in this session, a new bill was introduced that dramatically changed the penalty. The new amendment would have made the members of the LLC jointly and severally liable for failure to publish.

Through our efforts, including the strong support of key REBNY members and members of the Bar Association, we have negotiated a modification to the LLC amendment that would restore the liability protection and would eliminate the requirement to publish the ten names. The new version of the amendments to the LLC legislation is S6831B.

I think this is just another indication of the efforts to reign in the use of the LLC. Besides CYA, one of the reasons why people use an LLC is that they want to stay in the shadows while being reaping the benefits of a business venture. Is it a coincidence this is happening now? I don't think so. With the rampant amount of real estate deals that could go to hell in a handbasket, the government is making an effort to establish as much accountability as possible to all parties. If the worst happens and that soft landing becomes a crash and burn, our fearless leaders want to make sure that everyone feels the heat.

Is this something to be concerned about? Not really. Even if the LLC is completely defanged by the law and refused by lenders, investors would simply find another legal entity to protect their investments in. The people who would get really screwed would be ones who don't have good lawyers.