The Art of Anonymity

Apr 18, 2013 by

For reasons of privacy and security, many individuals prefer to acquire real property anonymously. Taking title to real property in this manner has in fact become an increasingly common trend in multi-million dollar real estate transfers, particularly in California and other locales with high concentrations of vacation homes such as Hawaii. While certain trusts can work as vehicles for such acquisitions under an alias, we have found the Limited Liability Company (“LLC”) to be a preferable vehicle for very high-end principle residences and for many other investment or vacation properties. While the LLC offers certain tax benefits, the near universal reason for its use in this respect is to assume property without the prying eyes of the media or general public. In order for an LLC to effectively protect parties to a real estate transaction, attorneys, realtors and escrow officers must take the utmost precaution to name the LLC in a manner so as not to identify the owners and to maintain an address for the LLC separate and distinct from the owners. I have found that general names such as the address of the property, e.g., “100 Main St., LLC” to be effective, as well as using only the attorney’s address or a P.O. Box as the address for mailing tax statements and the like. Likewise, as the LLC Operating Agreement must be provided to the Recorder with the transferring deed, care must be made not to identify the owners as members or managers. Rather, a separate entity or named trust must be identified as the stakeholder and the attorney drafting the OA is a preferred choice for the person identified as the first Manager. Failure to comply with any of these precautions will serve to effectively destroy the anonymity of the purchase, sorely disappoint the owners and cause untold distress in matters of privacy and security. Accordingly, extreme care must be taken by the owners and their consulting professionals when making efforts to acquire real estate anonymously.

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