AND







NEW YORK, AUGUST 1(),1913





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FOR  TRUE CONSIDERATION  IN TITLE   DEEDS





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The President of the Tax Board Says Concealment of Actual Prices Operates
to Detriment of the Business of Real Estate Brokerage—Tax Exemption Evils





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WHEN land is overvalued by the
Ta.x Department it is generally be¬
cause of a downward change of the con¬
ditions of the neighborhood, in the view
of President Lawson Purdy of the board
of commissioners. For example, he re¬
fers to a change which has come over
Broadway  north   of   Duane   street.

"Even in this section it is believed
by competent real estate men that the
depreciation of the section is largely
due to the failure of owners to replace
their obsolete buildings with modern
improvements," says Mr. Purdy. "Thc
tenants of this district were induced to
move by the better accommodations
offered them elsewhere. In such a case
any complaint is general notice to the
department that the whole section needs
careful scrutiny and that reduction in
the particular case will involve reduc¬
tion in many adjoining cases.

"Consideration of this subject would
not be complete without mentioning the
fact that when assessments are compared
with actual values, or with prices, the
assessments are, as a rule, fully a year
old and were based on the evidence of
the  preceding year."

True Consideration.

In the annual report of the Tax De¬
partment just issued, and to which some
reference was made last week in the
Record and Guide, the difficulty of set¬
ting a true value upon real estate is
used as an argument in favor of a law
that would require a statement of the
true consideration in deeds:

During the last twenty-five years the
practice of inserting a nominal consid¬
eration in deeds has become so universal
that only about one deed in twenty con¬
tains the actual consideration for trans¬
fer. This custom conceals ninety-five
per cent, of the best evidence of the
value of real property; it operates, as
is claimed, to hurt the business of real
estate brokerage, by causing a well-J
grounded fear on the part of investors
that they will be deceived as to the value
of real estate. Any practice which
checks the diffusion of real estate own¬
ership is a detriment to the community.

Concealment of Prices.

The concealment of the actual prices
paid for real estate forces the depart¬
ment to waste much valuable time in a
hunt for what ought to be a matter of
record. Sometimes deputies are de¬
ceived and suppose that the considera¬
tion was greater or less than it really
was. If they had all the considerations
for actual sales, those that were at pe¬
culiarly high or low prices would stand
out from the rest and would be discredi-
ited as evidence of value.

It is rather an extraordinary fact that
whereas the price of real estate is the
most important price to know from the
standpoint of taxation it is the most in-







HON. LAWSON PURDY.
President Board of Tax Commissioners.

accessible price to obtain. Stocks and
bonds are quoted daily on the Stock Ex¬
change. On the Produce Exchange we
have daily quotations of all kinds, of
produce; the IVIetal Exchanges give us
the prices of metals. Inquiry at any
retail store gives actual prices of every
conceivable kind of goods. Practically
the only price that is today concealed
is the price paid for real estate.

Real Estate Men Favor It.

In 1911 and 1912 the New York State
Conferences on Taxation recommended
a bill to require an affidavit setting forth
the true consideration for every trans¬
fer of real estate. In 1913 a bill having
the same object was introduced in the
Legislature, which attempted the same
result by penalizing the record of a
deed which does not contain a state¬
ment of the actual consideration. The
principle of these bills was endorsed
by Judges Giidersleeve, Brady and Ford.
Also by Mr. Seth Lov/ and Mr. James L.
Wells, a former president of the Tax
Department under Mayor Low; by Mr.
Feitner, another president of the Tax
Department, and by Mr. William R. Will¬
cox, recently president of the Public
Service Commission, and by the late
Mr. Edward M. Shepard. Men well
known for their knowledge of real es¬
tate have given their hearty approval
of the form and principle of tlie bill,
among tlicm being Charles S. Brown,
Robert E. Dowling, Francis E. Ward,
John L. Parish, Joseph P. Day and Seth
B.  Robinson.

City officials charged with the duty of
acquirinjr property for the city have ap¬
proved thc bill, namely, former Comp¬
troller Herman A. Metz and Mr. Coler.
former President of the Borough of
Brooklyn.





Bills have been introduced to carry
out the principle contained in this bill
in the states of Wisconsin, Illinois, Con¬
necticut, Colorado, Arizona, Pennsyl¬
vania and the District of Columbia. Ta.x
commissioners approve of the measure
on sight. The ta.x commission of Vir¬
ginia, including among its members the
Governor and the Lieutenant-Governor,
recommended the passage of a similar
bill to the one introduced into the New
York Legislature, as has the royal com¬
mission on ta.xation of British Columbia.
Exempt Real Estate.

A table is presented in the annual re¬
port analyzing the assessed value of all
exempt real estate into about fifty sep¬
arate classes, with a comparison of the
years 1910, 1911, 1912 and 1913. This
table shows the assessed value for 1913
in  the  aggregate  as  follows:

United   States   ............     $65,957,400

State of New York........         3,955,075

City of New York.........  1,355,164,450

Educational,   religious   and

other exempt institutions.     371,543,528
Total .................$1,796,620,453

Commenting on the foregoing. Com¬
missioner Purdy says:

"From time to time persons who
ought to know better get very much ex¬
cited over the fact that in the city of
New York there is exempt from taxation
eighteen hundred million dollars' worth
of real estate. The fact is that only
about one-fifth of this amount is prop¬
erty not belonging to the city, state or
nation. The total exemption for re¬
ligious, charitable and other like pur¬
poses is $371,543,528. There is room
for reform of the section of the law
which confers these exemptions, and we
would welcome thc day when intelligent
people will seriously undertake this re¬
form.

Full of Difficulties.

"Wlicn they do undertake it they will
find that the whole subject bristles with
difficulties. They will probably conclude
that thc repeal of all such exemptions
would be unwise and grossly unfair, be¬
cause for one reason religious, charitable
and educational institutions have been
built up with the confidence that their
real property would be exempt from
taxation. In some cases contributions
have been made to them upon condition
that the real property should be exempt
from taxation. To deprive all such in¬
stitutions at one sweep of the exemption
to which they have been accustomed
would produce wreck and ruin that very
few persons could contemplate with any
satisfaction. Practically every critic of
exemptions of this character makes ex¬
ceptions when he contemplates thc repeal
of exemptions.

"In the course of years abuses have
crept into the statute which do in fact
call  for amendment.    Let  no one,  how-