New federal legislation makes it more difficult to buy homes anonymously via an LLC

Upcoming changes in Federal regulations will make it more difficult to anonymously create limited liability companies. This may have an unexpected impact on how certain homeowners choose to hold the titles of their property.

Under the Corporate Transparency Act, which was included under the broader legislation of the National Defense Authorization Act for Fiscal Year 2021, the federal government is imposing a higher degree of scrutiny on LLCs making it more difficult for people to create and direct them anonymously. This will impact a specific subset of homeowner who use anonymously owned companies to hold their home titles.

Usually, the only people who will hold the title of their homes via an anonymous shell company are celebrities or high-net-worth individuals looking to maintain a heightened degree of privacy. This is done to avoid having to list their real names and addresses on country registries that are public and often very easily accessible online.

For most people, however, there is very little reason not to hold their home title in their own name or jointly with a spouse. This ensures rights of survivorship and is the most straightforward option in terms of estate planning.

The change is being enacted in order to counteract money laundering and other criminal activities that exploit the relative anonymity under current law. The new legislation will require people who have 25% or more ownership of certain businesses and corporations to report their personal information to file with the Financial Crimes Enforcement Network. This will make it somewhat more difficult to own a home with complete anonymity.

At the end of the day, this change will barely be noticed by the average homeowner. The vast majority of people hold the titles to their homes under their own names and will not be affected by the new law. And even those who had been using shell companies to heighten their privacy still have alternate means such as owning homes through a trust.

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