Real  Estate   Record





AND BUILDERS' GUIDE.





Vol. XXII.





NEW YOEK, SATÜEDAY, AUGUST 3, 1878.





No. 542.





Published Weekly by

TERMS.
OIVE YKAR, in advance.. ..SlO.OO.
Ooiiiiniinications should beaddre.ssed to

C.  \V.  .SIVKKT,

Nos. ."Wo ANO ''A7 KnOADW.W





lllSlsIS OF BUILDING LOANS.

Building loans m.ay bo framed .«;o .13 to bo free
from risk or relativoly so. No mercantile traus-
actiou.s uro entirely free from risk, but a well-cou-
sidered, judieionsly-planned and hone.stly-coii-
eeived scheine of building loan should involve as
little serious risk as is perniissible in business
all'aii'.s.

A\'iieii a discre(!t and fair-minded cajiitalist has
tlie good fortune to meet with an honest and coni-
petent builder, pos.sessod of a moderate sh.nre of
eaoital, tlic business rekitions of such partie-s are
likely tobe of the mo.st satisfactory kind. Whether
tlie emolument of the capitalist is great or small,
in such ciises he derives his share of the pccuniary
beneiit of the traiis.acfcion in such asiinple, natunvl
and e^Lsy w.aj', that he is inelined to felicitato him¬
self upon his happj' lot.

A business, however, in which there is but one
oa.se of ultimate success to ninety-nine of failure,
must contain bene.itb its surface elements of risk
which it were well if possible to explore and
deline.

The ri.sks of building lo.ins, as far as they relatc
to tlic capitalist, tuke root in the character or tbe
.solvency of the builder; ijersonal qnalities which
it behooves tho capitalist to examine and test.
Tho nlluriug feature of the transaction is that it
aiJpeiii's to guarantee to tbe capitalist a probt in
advance of the result of the venture. In other
words, the capitalist is allowed to realize his proßt
011 ptiper loug in advance of the possibüity of bis
realizing it in money, and the intermediatc steps
between tbe two stages are apt to be so masked
and concealed as to entirely escape the scrutiny
and consideration of the capitalist when he em-
bai'ks. The sale of lots nt a stipulated price, with
covenants as to the loaning of money, all properly
arranged and defmed in a written contract, seems
iis piain and clear as a bill of sale or articles of a
Charter party. In in'actical workiug these trans¬
actions M-e not nearly so simple or smooth as they
at first seem.

If the builder is an unscrupulous, cuniüng, low
fellow- he will probably try to lead on the capit¬
alist until the first payments on the contract are
secured. and until the capitalist has become so far
counnitted to the work that retreat or even hesi-
tatiou becomes impossible. "When this point has
been reached, the builder comraences a system-
atic coui-se of bulldozing and iutimidation, threat-
euing to stop the work or to delay it, or, perhaps,
pleading poverty and inability to proceed accord¬
ing to the conditions defined in the contract, and
begging for a new deal.   No description of the





ordcal through which the capitalist is compelied
to pass in the exigeucies of an insolvent or fraud-
• ulent building scheine would adequatoly repro-
duce the reality. Tho detnils of this experience
must be learnod from tiioso who havo already
gone through it.

Two risks or alternatives are here preseuted to
the capitalist. He maj-, in the lirst iilace, take
his stand firmlj' aud refuse to waive or exceed
the terms of the contract Thon, in caso of the
failure or refusal of the builder to proceed, be
may assort his reserved rights by foreclosing und
acquirhig the property. If the capitalist is un¬
willing to proceed to tho.'^e extreme measures, or
is di-ssuaded from it by counsel or friend.s, bis
purso-strings are apt to be unloosed or bis bank
account tlirown open to the free incursioiis of
the builder. The domands for money become
l>orsi.stent and importiimite, and the threats of
evil conseitueiicos more intiniiduling.

Tho ~".anting of lojins to the extent of fift3- per
cent. in exce.'s of the covenanted amount would
be a favor.able i.ssuo, bec.iuse in many c.asos the
excess reaches lO'i or l.öO per cent. If the builder
has originally ngreeil to take a loan equal to one-
half the co.st of building, he may manage to ex-
tract from the capitalist double that amount, or
tbe whole cost of the building, aud sometimes au
amount in excess of the cost.

If tho market is buoj-ant, and prices are ad¬
vancing, these liberal lo.ins may be reimburscd;
but, as too often happeiis, the capitalist finds him¬
self at the end of the job with 'premises pledged
as security for his advances, whose negotiable
market value represeuts only a fraction of the
sum lonned. Of these two methods of dealing
with tlefaulted building loan contracts, the fonner
is the safer and therefore preferable one.
However formidablo its consequences may
seem, a strict and severe interpretatiou of
tho ponalties of tho contract is the only
safe, regulär and practicable method for tho
capitalist to adopt. Leniency iu these cases
merely affords tho builder a license, wliich he is
j apt to abuso to the great loss and detriment of the
! capitalist. When tho latter linds he has made a bad
j bargain, he must reinstate himself without delay
in n Position of absolute control. There are cases
where the bargain has been made, contract cn-
} tered into, work begun, and, after the receipt of
one or more payments, the builder deliberatoly
I abandons tho job and perhaps absconds. This
presents a risk different from the other and equnl-
ly embarrasing. The capitalist, a" professional
man or merchant, perhaps, is totally unacquaiuted
with the details of building, and is forced to got
possessio!! of the property as promptly as possi¬
ble, and then set to work to complete the improve-
j ments already begun. To do this speedily nnd
I easily, he is apt to find himself at the niei'cy of
the original contractoi's, who are creditors of the
builder, and disposed to seek such liberal mai'gins
of profit frora the new owner as will cover the
losses which the3' have already sustained on the
Job. If the capitalist is obliged to seek new con¬
tractors, through whom he may effect the eom¬
pletion of tho work, he finds himself involved in
an annoying and hai'assing business, and one that
wiU make extraordinai-y demands upon his time,
patienceandpurse.   Inaword, however uncon-





genial or unexpected the employmcnt may bo,
he finds he must become, in spite|of bis prejutlice.s
a builder and owner of propcit}' rather than a
more capitalist and handler of money. Instead
of realizing bis cnpital by the prompt negotiabii-
ity of the pi-emises, the capitiUst is often obliged
to make a permanent investment of.tho i>roperty
with which he has thus become entangled.

The legal delaj's and expenses involved in re-
coveriug possessio!! of the title is a risk whieh
must also be allowed for in the outset of these
undei'takings.

Unsucros.sftil and disastrous building loans are
gcneruUj- founded in gross lictioiis. and represent
efforts to work palpable miracles, to perforiu im-
po.ssibilitics. The capitali.st is either deluded by
others or deludes himself into tbe belief that the
building business is capable of producing mar-
vellous and prodigous resuits, whereas under the
most Lavorable circumstances legitimate building
is productive of only modei'ate profit. Building
loan schemes ure outerod into recklesslj' and often
with a dishonest purpose. A fabulous and ex-
haustivo bonus is ostensibly guaranteed iu ad¬
vance to the capitalist, and the builder liopes
through monied assi.stance to twLst and wrigglo
his way through the job, intendhig in anj- ovent
to take good care of himself. The disaster wbich
overtakes the transaction earlier or later in its
progress may seem like a surprise to the bewil-
dered capitalist, w-hile in reality it may be a re¬
sult deliberately anticipated by the builder, and
certainly foreseen by auy intelligent pei-son con-
versiint with the details of the undertaking, the
critical and undetcrmiued point being merely as
to when the final catastrophe would happen.

It is the avowed experience of capitalists who
have exploited these schemes, that there is no
profit ordinarily attainable in them that will offset
tho i-isk, hardship and inconvenience that iusep-
arably attend defaulted building loan traiLsac-
tious. It is indispensable to commercial comfort
and success in these transactions that tho capi-
tjüist should bestride an easy-going hoi-se not
vicious or fi'actious or liable to break down.





MAE.KET REVIE-W.





REAL ESTATE MARKET.

During the month of July 481 deeds, excluding those
affecting property in the Twenty-third and Twenty-
fourth Wards, were flled for record in the oflice of the
Register of the City of New York, being ninety-nine
less than the number filed during the month of June.
The aggreirate consideration expressed in such deeds
amounts to §^1,890,9-12, against S5,äl4,769 the amount
expressed in the whole number of deeds filed during
the month of July, 1877. The number of mortgages
filed for record durina: last month is 477, representing
the sum of §^1.424,585, against §3.476,687 for the month
of Juue; '2'2U mortgages bear interest atGper cent.,
aggregating the sum of §1,685,070. The total number
made in favor of trust and Insurance companies is
fifty, representing §65:1,500.

At the Exchange Salesroom the entire interest was
again centered in foreclosure sales, füll details of
which are given below.

In the Building Department no plans worthy of
special notice have been flled since our last report.
The total number of plans filed is ten, embracing
twenty-two buildings, the estimated cost of which ia
§120,200.