Councilmember Silverman Introduces Bill Requiring LLCs to Disclose Primary Ownership

Continuing her efforts to strengthen consumer protection and enhance building code enforcement within the Department of Consumer and Regulatory Affairs (DCRA), D.C. Councilmember Elissa Silverman (I-At Large) introduced legislation earlier this week enabling DCRA to clearly identify and hold responsible all partners in real estate limited liability companies, known as LLCs. Currently, financial partners in an LLC do not have to disclose their ownership stake, which has allowed slumlords and unscrupulous developers and contractors to hide behind the LLC corporate veil.

The Real Estate LLC Transparency Amendment Act of 2018 requires that any LLC involved in real estate development must disclose to DCRA every person with a financial interest in the organization. The legislation was co-introduced by Councilmembers Robert White (D-At Large), Brianne Nadeau (D-Ward 1), Mary Cheh (D-Ward 3), Charles Allen (D-Ward 6), and Trayon White (D-Ward 8). Councilmember Anita Bonds (D-At Large) was a co-sponsor.

"DCRA and the Office of the Attorney General need every possible tool we can provide for identifying negligent housing providers who profit by hiding behind an LLC structure,” said Silverman. “This bill will allow DCRA and the Attorney General to identify the people responsible for substandard and unsafe housing.”

Currently LLCs are only required to provide information about the Registered Agent, who does not necessarily have an ownership stake in the company and can be an employee or organizational representative. The primary financial beneficiaries of the company can remain anonymous, blocking enforcement agencies or damaged parties forced to endure substandard living conditions from identifying those responsible for the LLC’s activities.

The legislation does not change the process for organizing an LLC in the District, increase liability, or create new burdens for members of an LLC. It would instead apply only to companies applying for a Basic Business License that involves developing, owning, or operating a housing facility.

“DCRA Director Melinda Bolling asked for this legislation to help her agency crack down on slumlords and rogue contractors,” said Silverman. “I look forward to working with Chairman Mendelson and the Committee of the Whole to turn this bill into law so that we can help DCRA identify those who aren’t doing right by our residents.”