tax-law real-estate limited-liability-company new-york-city
NYC Warranty Deed - minimum documentation required for transfer to LLC
<p>I have the need to transfer an apartment my wife and I own Fee Simple to a Multi-member LLC whose members are currently the two of us. I have prepared a standard Warranty Deed to do the transfer and we are both in agreement.</p>
<p>While other states I have done this with require simply an executed notarized Warranty Deed (MD, CO), NYC's ACRIS system requires a long list of documents, not all of which seem to apply to this transfer:</p>
<p>22 pages of forms:</p>
<ul>
<li>Affidavit of smoke detector (notarized 1)</li>
<li>Tax form 584</li>
<li>Tax form IT-2663 (for non-residents in our case)</li>
<li>Water utility form</li>
<li>Transfer form 5217 (notarized 2)</li>
<li>LLC member list</li>
<li>Warranty Deed (notarized 3)</li>
</ul>
<p>The final three items make sense. The others seem like an undue burden given the tax owed is $0 as there is no &quot;purchase&quot; happening. Finally NYC charges by the page, so with Notary charges, the cost comes to almost $300.</p>
<p>I wonder if anyone has a sense of the &quot;Minimum paperwork&quot; required for acceptance in this case, which I would imagine is quite common.</p>
<h3>Update</h3>
<p>We completed the transfer using ACRIS, and in the end paid the $300 and filed all forms above (including the important TP-584.1 with Schedule F &quot;Mere change of form of ownership&quot; which I had forgotten initially).</p>
<p>This transaction cost is still much less than if done by a third party professional.</p>
<p>Some tips:</p>
<ul>
<li>Ensure signatures are written in black ink (ACRIS uses a system to automatically process forms, which has trouble with blue ink).</li>
<li>The rejecteddocuments@finance.nyc.gov admins were very helpful resolving reasons for my initial rejection.</li>
<li>If rejected you do not need to re-pay, simply create a new &quot;Cover Page&quot; and retrieve your old &quot;Tax transaction&quot; on the first screen. All fields are repopulated and on the last screen you can upload your amended documents and resubmit.
<ul>
<li>In Computer-Science terms, the &quot;Tax transaction&quot; is the primary key. The ACRIS Cover Page serves as an instance of submission.</li>
</ul>
</li>
</ul>
<p>I still do not know the minimal document list needed, so will leave the question open.</p>
<p>@ohwilleke's answer below is informative, but addresses only the recorded document (Warranty Deed or alternatives), and only partially the &quot;minimial documentation required&quot; (as he also points out), so will leave this question as unanswered.</p>
<p>Best of luck to others. I believe law is for citizens, and should be comprehensible and its processes and practice be accessible, especially for simple transactions such as this. I appreciate the existence of this StackExchange, and hope it grows!</p>
<p>NOTES</p>
<ol>
<li>ACRIS reference, follow &quot;Record New Document&quot; section here  <a href="https://portal.311.nyc.gov/article/?kanumber=KA-01665" rel="nofollow noreferrer">https://portal.311.nyc.gov/article/?kanumber=KA-01665</a></li>
</ol>

<p>This is only a partial answer.</p>
<h3>Types of deeds and what they mean</h3>
<p>Normally, a related party transfer to a limited liability company would be done via a quitclaim deed (more often) or a bargain and sale deed (less often), rather than a warranty deed.</p>
<p>The quitclaim deed transfers whatever you own with respect to the property but makes no promises that you own it or that it is free of liens and encumbrances. A quitclaim deed does not convey after-acquired property except when an exception to the general rule applies.</p>
<p>A bargain and sale deed conveys what is described with a promise that the person executing the deed had not encumbered (e.g. mortgaged) or sold the property at any time after it came to be titled in their name that are not described in the deed, but does not promise that the person that they obtained the property from had good title or that their title was free of liens or encumbrances. A bargain and sale deed preserves title insurance policy protections from the previous owner, while a quitclaim deed does not. I don't know what affect a bargain and sale deed has with respect to after-acquired property.</p>
<p>Warranty deeds are not normally used for this purpose. Warranty deeds are normally used in arms-length sales for fair market value between unrelated parties and are normally processed by title insurance companies who insure the buyer and anyone financing the buyer's purchase of the property with a mortgage against the possibility that the seller didn't have good title to the property sold or had undisclosed liens or encumbrances. A warranty deed contains a promise that the seller owns all real property described in the deed subject only to the liens and encumbrances stated in the deed. A warranty deed also conveys after-acquired property.</p>
<h3>ACRIS</h3>
<p>You <a href="https://www.nyc.gov/site/finance/taxes/property-recording-documents.page" rel="nofollow noreferrer">don't have to use the ACRIS system</a>. You can bring the document to the appropriate city office and have it recorded there on paper in person, rather than electronically.</p>
<h3>Other forms you must file</h3>
<blockquote>
<p>Quitclaim deeds filed in New York City use Real Property Transfer
Report (Form RP-5217NYC) and a Combined Real Estate Transfer Tax
Return, Credit Line Mortgage Certificate, and Certification of
Exemption from the Payment of Estimated Personal Income Tax (Form
TP-584), both of which are filed with the county clerk.</p>
</blockquote>
<p>(<a href="https://www.legalzoom.com/articles/new-york-state-requirements-for-a-quitclaim-deed#:%7E:text=owns%20the%20property.-,How%20to%20file%20a%20quitclaim%20deed%20in%20New%20York,where%20the%20property%20is%20located." rel="nofollow noreferrer">Source</a>)</p>
<p>Tax form 584 has a box to check for transfers such as this one that result in no tax being owed. You check box &quot;f&quot; in two places and attach Schedule F. You may also need to fill out Schedule A.</p>
<blockquote>
<p><a href="https://assembly.state.ny.us/leg/?default_fld=&amp;bn=S01730&amp;term=2019&amp;Summary=Y&amp;Actions=Y&amp;Text=Y&amp;Committee&amp;nbspVotes=Y&amp;Floor&amp;nbspVotes=Y" rel="nofollow noreferrer">Section 1409(a) of the New York Tax Law</a> has been amended, effective
September 13, 2019, in relation to real property transfer tax returns
of limited liability companies (LLC). . . .</p>
<p>The amended legislation “requires the real property transfer tax
return relating to residential property sold or purchased by a limited
liability company to include information on the ownership of such
company.” S1730 Sponsor Memo</p>
<p>The amendment only applies to the conveyance of residential real
property containing one- to four-family dwelling units when the
grantor or grantee is an LLC.</p>
<p>If you are recording a deed:</p>
<p>of a residential real property containing a one- to four- family
dwelling unit, and</p>
<p>a grantor or a grantee is an LLC</p>
<p>If the grantor or grantee is an LLC and the member of the grantor or
grantee LLC is not a single natural person, then all members,
managers, or any other authorized persons must be listed and included
on a separate page behind the TP-584. “Other” should be chosen as
Grantor or Grantee type on the TP-584 in Schedule A.</p>
<p>If a member of the LLC is another LLC or other business entity, all
shareholders, directors, officers, members, managers, partners and
authorized persons of said LLC or business entity must be listed by
name and business address until “full disclosure of ultimate ownership
by natural persons is achieved.”</p>
</blockquote>
<p>(<a href="https://www.westchesterclerk.com/news/2019-news/396-notice-re-conveyances-with-llcs-as-grantors-or-grantees" rel="nofollow noreferrer">Source</a>) The language of the amended statute makes clear that the form must be used even when no tax is actually due in the transaction. See also a discussion of the impact of the 2019 law <a href="https://www.jdsupra.com/legalnews/amendment-to-nys-tax-law-affects-36462/" rel="nofollow noreferrer">here</a>.</p>
<p>Incidentally, you do not need to file with the IRS Form 709, a gift tax form, because a transfer from the owners of real property to an LLC that they own is not a taxable gift. Instead it is considered to be a contribution to the capital of the LLC.</p>
<h3>Questions left unanswered</h3>
<p>I omit from this answer (for lack of time) the bottom line of all other forms, if any, must be completed and filed when a deed is recorded in New York City in a transfer of real estate for no consideration from its owners to an LLC owned by the owners. In particular, I leave unanswered the questions of whether you need to file the following forms:</p>
<ul>
<li><p>Affidavit of smoke detector</p>
</li>
<li><p>Tax form IT-2663 (for non-residents in our case)</p>
</li>
<li><p>Water utility form</p>
</li>
</ul>
<p>I suspect, but do not know that the smoke detector and water utility forms may be New York City specific.</p>
<p>I also do not analyze the filing fees due, but <em>see</em> <a href="https://www.tax.ny.gov/research/property/assess/sales/deedevents.htm" rel="nofollow noreferrer">this chart</a>. The basic fee for filing a quitclaim deed to residential real estate is $125.</p>
<p>(FWIW, for comparison's sake, <a href="https://www.arapahoegov.com/1423/Recording-Fees" rel="nofollow noreferrer">in Colorado</a>, the filing fee is $13 plus $5 per page, LLC ownership does not have to be disclosed, one information form similar to Form 584 in NY has to be filed, but doesn't prevent a deed from being recorded and isn't a matter of public record, affidavits related to smoke detectors don't have to be filed, and utility transfers are handled outside the real estate recording system. Prior to a transfer out of an LLC, in Colorado, one has to file a &quot;Statement of Authority&quot; which states under oath who is allowed to sign a deed from the LLC but not who owns the LLC.)</p>
