Washington to cut off Russian oligarchs from US property market
Russians may find themselves under new restrictions pertaining to the purchase of big-budget residential property in the US. American senators want to obligate companies insuring real estate deals to inform the Treasury about Russian natives purchasing expensive apartments in the country.
This possibility is discussed in a bill on new anti-Russian sanctions which was drafted by republicans Lindsey Graham, Robert Menendez, Cory Gardner and Ben Cardin. The document states that information on Russian beneficiaries will have to be disclosed for companies where Russians control more than 25% of the legal entity.
The bill’s authors do not clarify exactly what will be considered “elite” property. It is presumed that the Treasury will set the bar independently.
Insurance companies traditionally play a major role in deals with residential property in the US, explains Irina Mostovaya, a partner in the NAFKO Consultants legal firm. Title insurance is prevalent in the country: insurance against the loss of the acquired property as a result of third party actions or of previous deals which may lead to alienation of the property.
If the purchased property was acquired illegally by the previous owner, or if it could be subjected to enforced recovery, title insurance enables the new owner to compensate the losses. For this reason, insurers traditionally ask the client for a large amount of information.
Although according to the US National Association of Realtors, Russians are not the most active buyers of property in the country, the demand for high-end property in the US from wealthy Russians remains stable, says consultant Yekaterina Nikitina from the Knight Frank department of foreign property and private investments. Miami, New York and Los Angeles are among the most popular locations.
According to Knight Frank’s data, wealthy Russians buy apartments for $2-4 million in Manhattan, when the projects are complete, and from $1 million in the case of complexes under construction. In Los Angeles, among Russians there is a demand both for small apartments costing $2-3 million and for villas starting at $15 million.