Charney v. Herman

31 Misc. 2d 713, 222 N.Y.S.2d 14, 1961 N.Y. Misc. LEXIS 2936

• Court: New York Supreme Court
• Decided: May 9, 1961
• Status: Published

Opinion

Harold J. Crawford, J.

Application for an order reviewing determination of respondent as State Rent Administrator.

Petitioner is the tenant of an apartment in Kew Gardens. The present landlord acquired title on July 30,1959. In November of that year the landlord applied for an increase in rent because the property was not producing a 6% return on the purchase price. Said application was granted by the Local Rent Administrator and upon protest was upheld by the respondent. Petitioner claims that respondent’s determination is erroneous in several respects.

Petitioner contends that the sale price upon which respondent based the 6% return did not reflect the true value of the property because it resulted from abnormal financing in that all mortgages were placed on the property for a term of one year.

The landlord bought the premises in an all-cash transaction. The mortgage financing of which petitioner complains was arranged by the landlord with third parties and did not concern the seller. Presumably, therefore, it did not affect the price adversely since the seller was receiving all cash in any event.

Moreover, mortgage interest and amortization are not allowed as expense items in computing the net return and therefore did not affect the computations in fixing the increase necessary to afford a 6% return.

Petitioner further claims that essential services were not maintained. The Local Rent Administrator caused two inspections to be made. From the reports of the inspectors the Administrator determined that the landlord had remedied all outstanding service defects and was maintaining essential services on the date that the rents were increased.

Petitioner further contends that the allocation of increases was erroneously computed on rents previously increased for additional services. Respondent’s allocation formula uses the base rent plus financial increases but excluding increases for added services or equipment in order to calculate the percentage allocable to each apartment. Such procedure has been approved by the courts.

Respondent’s determination cannot be said to be arbitrary or capricious. Accordingly, the application is denied and the petition dismissed.