A communication transmitted from Louis A. DePasquale, City Manager, relative to Awaiting Report Item Number 18-143, regarding requiring a Business Entity’s Beneficial Ownership and Residential Real Estate Beneficial Ownership Transactions be Disclosed in all Cambridge Real Estate Transactions

Assistant City Solicitors Nancy E. Glowa Paul S. Kawai City Solicitor TS ANTIOVIS Keplin K. U. Allwaters Sean M. McKendry Arthur J. Goldberg Deputy City Solicitor Megan B. Bayer Brian A. Schwartz CONDIS Samuel A. Aylesworth Katherine Sarmini Hoffman First Assistant City Solicitor CO RICIMINE Public Records Access Officer Seah Levy CITY OF CAMBRIDGE Office of the City Solicitor 795 Massachusetts Avenue Cambridge, Massachusetts 02139 May 6, 2019 Louis A. DePasquale City Manager City Hall Cambridge, MA 02139 Re: Awaiting Report No. 18-143, Policy Order No. O-4 of 12/17/18 Re: Report on Requiring a Business Entity's Beneficial Ownership and Residential Real Estate Beneficial Ownership Transactions be Disclosed in all Cambridge Real Estate Transactions Dear Mr. DePasquale: This response is provided relative to the above referenced Council Order, which asks the City Manager to "confer with the Assessors' Office on the topic of requiring that a business entity's beneficial ownership be disclosed in all Cambridge real estate transactions." The Order defines "beneficial owner" as "an individual or entity who ultimately owns or controls more than 25% of a company's shares or voting rights, or otherwise exercises control over the company or its management." We have conferred with the Assessors' Office in preparing this response. When the City of Cambridge ("City") is buying or selling property, all beneficial interests in the property must be disclosed to the City. G.L. c. 7C, §38. However, for non-City transactions, the City does not receive information on such real estate transactions until after they are completed and filed at the Middlesex South Registry of Deeds, after which the Registry of Deeds forwards such information to the Assessors' Office. In general, there is no requirement that the beneficial interests of a business entity acquiring property in its name that is within the City of Cambridge be disclosed to the City. While the City does issue municipal lien certificates pursuant to G.L. c. 60, §23, which would indicate usually that there is a parcel of property within the City that is about to be purchased and sold, the City must issue such certificates to "any person" who requests one. That statute does not explicitly authorize the City to require disclosure of beneficial interests of the applicant as a condition of issuance of the municipal lien certificate, and thus any requirement the City might impose upon a person who requests a municipal lien certificate to disclose such beneficial interests would likely be deemed to be inconsistent with the wording in that statute. Facsimile [phone removed] TTY/TTD [phone removed] Telephone [phone removed]

2 Because requests for municipal lien certificates are one of the few ways that the City has notice in advance of real estate transactions, and municipal lien certificates are something that buyers typically need from the City as part of their due diligence undertaken prior to a real estate transaction, making the issuance of municipal lien certificates conditioned on the disclosure to the City of all beneficial interests of both the potential buyer and the seller could be an effective way for the City to procure information about beneficial ownership. If the City Council wished to impose such a requirement, the City would need special legislation in order to do so. Therefore, if the City Council wished to file such special legislation and were to request that the Law Department submit such draft legislation to the Council for its review, it would be helptul for the Council to clarify how broadly the Council would intend for this disclosure requirement to apply: for example, would it apply to both for-profit and non-profit organizations; would it apply to trusts, or only to corporations; and if the corporation's beneficial owner is another corporation, would the disclosure of the name of that other corporation be sufficient? Very truly yours, Nancy E. Glowa City Solicitor