People who purchase property through a Limited Liability Company (LLC) often do so to maintain privacy and limit personal liability in the event of lawsuits, divorces, or other legal matters. Owning property under an LLC is a common strategy for celebrities, high-profile individuals, and anyone who values discretion, as the LLC, not the individual, is publicly listed as the owner.
However, there’s a simple yet common mistake that many people make when forming an LLC, which can inadvertently expose their identity to the public.
How Property Ownership Records Are Publicly Available
New York City’s Automated City Register Information System (ACRIS) and similar public property record databases across the country allow anyone to search property records. These records provide detailed information, including the property owner (in this case, the LLC), taxes, mortgages, and even the names of signatories on official documents.
If you’re purchasing property under an LLC and want to maintain privacy, your anonymity can be compromised if you make the following mistake.
The Common Mistake That Can Expose Your Identity
When forming an LLC, many people mistakenly use the property’s address as the LLC’s official address. Furthermore, if you sign legal documents related to the purchase (e.g., mortgage papers, deed transfers) under your name as the authorized representative of the LLC, this information becomes publicly accessible through property records. These two factors can reveal your identity, defeating the purpose of purchasing property under an LLC.
How to Protect Your Privacy When Using an LLC to Purchase Property
There are simple yet effective ways to protect your privacy and ensure your identity remains confidential when buying property under an LLC:
- Use a Separate Mailing Address for the LLC
Instead of using the property’s address as the LLC’s official address, consider using your attorney’s address (after consulting with them) or setting up a business mailbox. A service like the UPS Store offers street addresses, not P.O. boxes, which can serve as your LLC’s mailing address while keeping your personal details private. - Designate a Manager for the LLC
Appoint a third-party manager for the LLC with signing authority. This designated person doesn’t need to be a member or owner of the LLC, but by giving them signing authority, your name stays off the official documents filed in public records. You could appoint your attorney, an accountant, or another trusted advisor to act as the LLC’s representative for public-facing documents. - Work with Professionals Familiar with Privacy Concerns
Engage a real estate attorney or accountant experienced in privacy protection when forming your LLC. They can help structure the LLC in a way that maintains your anonymity and ensures that your name doesn’t appear in public records. - File the LLC in a State That Offers Enhanced Privacy Protections
Some states, such as Delaware, Wyoming, and Nevada, offer additional privacy protections for LLC owners. You can form the LLC in one of these states and then register it to do business in the state where you’re purchasing property (such as New York). This can provide an additional layer of privacy.
Why Privacy Matters for Property Owners
Protecting your identity as a property owner is crucial for various reasons:
- Security and Safety: High-profile individuals often seek privacy to prevent unwanted attention or security risks.
- Financial Privacy: Keeping ownership details confidential helps prevent others from knowing the extent of your real estate holdings, protecting your financial privacy.
- Litigation Protection: In cases of lawsuits, keeping your identity private can reduce the chances of your property becoming an easy target for litigation.
Final Thoughts
Purchasing property through an LLC is an excellent way to safeguard your privacy—if done correctly. By avoiding the common mistake of using the property’s address for the LLC and being mindful of who is signing public documents, you can keep your identity confidential. It’s also essential to consult with a knowledgeable attorney or professional to ensure your LLC is set up properly and meets your privacy needs.
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