High-net-worth homebuyers struggle to protect their identities

Shortly after Russell Wilson closed the deal on his $6.7 million Bellevue home last August, TMZ had pictures and the location of the Seahawks quarterback’s posh lakeside mansion posted on its website. Details of the sale were not intentionally made public; Wilson masked his identity by forming a shell company, Duchess Investments LLC, to purchase the property. His name reportedly did not appear on company records. Nevertheless, TMZ was able to ferret out the information.

Wilson’s experience illustrates the perils facing high-profile homebuyers and sellers mindful of their privacy. Protecting identities in a real estate deal “is usually not 100 percent foolproof,” according to Lisa Whittaker, a broker at the Bellevue branch of Coldwell Banker Bain. But there are ways for sellers and buyers to minimize the chance of their names, and other sensitive information, being splayed all over the Internet.

Wilson’s strategy of forming a limited liability company is a popular one. Quick and easy to set up, an LLC can shield identities through legal obfuscation, burying the individual’s name deep in its records, or eliminating it entirely.

Sale of Mike Holmgren’s Mercer Island home is pending for $3.7 million, according to Zillow. Photos and prices courtesy Zillow

Sale of Mike Holmgren’s Mercer Island home is pending for $3.7 million, according to Zillow. Photos and prices courtesy Zillow

The use of LLCs to buy high-end property has grown substantially, says John Deely, principal managing broker of Coldwell Banker Bain’s South Lake Union office and a former manager of real estate branches in Kirkland and Bellevue.

“They’ve become the instrument of the day,” Deely said of LLCs. “There’s a lot of wealth in the area, and for a number of reasons, buyers and sellers don’t want people to know who they are.”

Another common tactic to skirt publicity is forming a trust in which an attorney acts as the buyer’s official representative. All legal records relating to the transaction are put in the attorney’s name, so the displayed address of the buyer or seller appears as a lawyer’s office.

“In my experience, ultimately a trust is the preferred means to maintain privacy,” Whittaker said. “At least with this large investment, they can filter out with their attorney as the trustee.”

Last year, 193 LLCs and two trusts purchased residential properties in King County priced at $1 million or higher, according to Deely’s records. There also were 25 corporate buyers, six limited partnerships, and 2,452 individual purchasers.

Yet for all the precaution, buyers’ and sellers’ names can — and do — become publicized. Sometimes a simple mistake is at fault; a friend of the buyer tells someone else about the deal, or a neighbor spots a celebrity checking out the home. Realtors can let the cat out of the bag, too, and are sometimes asked to sign nondisclosure agreements.

Nate Burleson’s Newcastle home sold for $3.1 million, according to Zillow. Photos and prices courtesy Zillow

Nate Burleson’s Newcastle home sold for $3.1 million, according to Zillow. Photos and prices courtesy Zillow

“It’s similar to a fiduciary responsibility,” said Whittaker, who has dealt with dozens of clients wishing to remain anonymous. “It’s as important to respect the privacy of a client as you would your own.”

Paperwork mistakes can reveal identities. In forming an LLC meant to shield identities, the principal might sign her own name, which is then easily accessed through King County records. Or a buyer might purchase using his name, then sign a quitclaim deed to move the purchase into a trust. Unfortunately, that step is too late; the quitclaim deed is a permanent public record.

“It is important to think about these things, and have these discussions before closing,” Whittaker said.

But even the most careful high-profile homebuyers face a relentless obstacle: circling, ravenous media sharks. “There are some people who really dedicate a lot of energy to this information,” Deely said.

The real-estate site Curbed, for example, tracks real estate deals involving celebrities in its network cities, including Seattle. Recent stories highlighted houses sold by ex-Seahawks receiver Nate Burleson and former head coach Mike Holmgren, and a home being sold by Microsoft CEO Satya Nadella.

Property sale records aren’t information seekers’ only wellspring. Sleuths can search public records for LLC companies, and vessel registration and license applications, among other things, to find a celebrity’s address. King County permit records can reveal a home’s floor plan and photos.

“In today’s world, if someone can identify a property, there are legitimate security concerns,” Deely said. He would like to see public agencies make it more difficult for searchers to find personal information about high-profile homeowners such as billionaires, sports stars, actors, musicians, and CEOs.

“They need to ask these people why they are getting this information, and what they plan to do with it,” Deely said. “People are using personal information in ways we never would have thought of.”

This article originally appeared in the May 2016 issue of “425 Business.”