If you rent from a landlord, you may have noticed that you’re asked to make your rental payments out to an LLC– a Limited Liability Company– such as “123 Main Street LLC”. This would strike any casual observer as odd because we know that the ultimate beneficiary would be the landlord.
The reason is that LLCs are used to shield a landlord’s personal assets if the building comes under legal scrutiny for matters such as rent overcharge and illegal deregulation. Tenants seeking damages in this area therefore must sue the company, not the individual. Landlords who are concerned that they might be exposed to litigation regarding rent overcharges therefore often hide their properties inside an LLC to limit exposure.
LLCs also offer the benefit of hiding the identity of the landlord because the names of the principal officers are often hard to access. For tenants seeking to learn the identities of their landlords, however, the law has changed recently in a direction that helps improve the availability of accurate information. New York State Gov. Kathy Hochul signed the LLC Transparency Act in December 2023, creating a database of the beneficial owners of LLCs that is accessible to government agencies and law enforcement, meaning that certain forms of tenant litigation can result in the names of landlords being accessed by the courts if needed.
While the act was aimed at combating money laundering, it also has the added benefit of reducing landlords’ abilities to use LLCs as a shield against legal scrutiny. Tenants who are interested in the details of the LLC that they pay rent to can check the NYS Department of State’s entity database at this link here.
Leave a Reply