Landlords are frequent targets of lawsuits. Who wouldn’t want to own their investment properties and know how to buy a house anonymously? But governments don’t like anonymity, especially when it comes to large assets that are frequently at the center of legal actions. Most states’ laws are designed to prevent anonymous ownership of tangible assets.
So, is it ever possible to truly own real estate anonymously?
The short answer is (drum roll please) not perfect, but you can make it difficult for anyone to figure out who really owns your property.
How to buy a house anonymously
It’s pretty easy to buy real estate anonymously. Anyone can use an associate’s name (a “nominee” in legalese) on the contract of sale. The nominee can then assign you the contract of sale before settlement with just a signature, or if they buy it in a company name, they can simply assign ownership of the company to you after purchasing. Easy as pie. In the latter scenario, your name appears exactly nowhere on the settlement papers, sales contract, or articles of incorporation.
Ongoing ownership is harder to hide, however. To begin with, the IRS knows who owns what properties, assuming you declare income or losses from real estate. The IRS aside, every state requires a resident agent (who can be served with lawsuit paperwork) registered for non-owner-occupied properties. For many rental properties, this is the property manager, who receives official mail on your behalf. Here’s the rub: property managers and resident agents usually know who the owner of the property is. If a tenant sues your holding company (we’ll call it XYZ Inc.), their attorneys will haul your resident agent in for a deposition, shine bright lights in her eyes and demand everything she knows about you.
Unless you’re very rich and stealthy, that’s where the bubble bursts. If you are rich, well you can afford to create a wild goose chase if you want to give litigators a merry run for their money.
Celebrities buy real estate anonymously all the time. Some of them even manage to own them pretty anonymously; Jennifer Aniston famously bought a West Village apartment in her dog’s name. Her business manager signed the paperwork, and one of them clearly couldn’t keep a secret since the entire world knows the story. Still, with celebrity marriages dissolving faster than flies can drop, what celebrity worth their salt in sleaze wouldn’t want to hide assets from their spouse? Celebrities have all sorts of tricks up their sleeves, in buying properties anonymously and leaving no money trail.
Those tricks don’t come cheap though, in legal advice and accounting fees. For primary residences, owning in a company name also means forfeiting your exemption from capital gains taxes when you sell the property.
As an exercise in fun, let’s try to buy an imaginary property anonymously. Pierre is fabulously wealthy and enlists a nominee to make a cash offer on a property he wants in Maryland. The nominee buys the property under XYZ Inc. (a Nevada corporation), then assigns ownership to Pierre’s Delaware LLC. The companies have private mailboxes as the official addresses.
Pierre sets up an anonymous email account and hires a local property manager. The property management contract does not have Pierre’s real name anywhere on it, nor an address (a nominee or employee signs on his behalf). The property manager pays the taxes and completes rental registrations and any other local bureaucratic paperwork. Each month the property manager converts the rental income to a cryptocurrency (ideally something more stable than bitcoins), then sends it to Pierre’s account on a secure exchange.
It may be worth pausing here to note that when lawsuit paperwork is served on the resident agent, that’s generally considered adequate service for the lawsuit to proceed in court. Anonymity doesn’t mean that no one can sue you, just that they don’t know who they’re suing or what their assets are.
A determined plaintiff could find Pierre eventually. The nominees and resident agents are points of insecurity, albeit ones that Pierre may be able to hide his true identity from if he’s slippery. The property manager might glean some information from Pierre’s nominee when negotiating the property management contract. If Pierre wants to defend himself against a lawsuit, he’ll need to send an attorney to appear in court on his behalf, and that attorney will have some information about him. And of course, the IRS has records of these companies and their tax filings, but recovering tax records from the IRS is no trivial task for a civilian plaintiff.
Pierre is pretty insulated, but this is starting to seem less like fun and more like work. A lot of work, especially if he has to do this for each property. Either Pierre is a paranoid schizophrenic, a devout libertarian, a criminal mastermind or he just doesn’t think his marriage is going to last.
To conclude, yes you can buy real estate anonymously. Using an LLC and having a legal team can help make sure your personal info is hidden from curious renters or evil intentions.
Related Reading:
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Tools to Make Landlording EZ
After you’ve purchased your first rental property, the next steps are finding a qualified Tenant and creating a great Lease Agreement. Visit ezLandlordForms.com to learn everything you need to know about screening services and creating a perfect Lease to protect your investment.
Emily Koelsch, ezLandlordForms Contributing Writer
Emily Koelsch is a freelance writer and blogger, who primarily writes about business, real estate, and technology.
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