Opinion
December 21, 1959
In a proceeding to review a determination of the State Rent Administrator, the appeal is from an order denying the petition and dismissing the proceeding. Respondent, acting upon appellant's application under subdivision 5 of section 33 of the State Rent and Eviction Regulations, granted an increase in rents based on the equalized assessed valuation of the subject property, rather than on the price at which the property was sold to appellant. Order reversed, with costs, and matter remitted to respondent for reconsideration. It was erroneous to refuse to compute the net return on the sales price for the sole reason that the cash payment upon the purchase was only 5.33% of the purchase price. ( Matter of Bajart Management v. Weaver, 8 A.D.2d 56; Matter of Ackerman v. Weaver, 6 N.Y.2d 283.) It would be proper to consider that the property was mortgaged by prior owners merely for the purpose of giving an appearance of enhanced value, but such consideration, to result in decisive materiality, should be based on proof and not merely on an inspection of the official records showing the existence of the mortgages. In testing the bona fides of the sale, respondent might well have considered, as matters of discretion, (1) additional cash payments made by appellant since the purchase, and (2) an impartial appraisal of the market value of the property, as tendered by appellant. Nolan, P.J., Beldock, Ughetta, Hallinan and Kleinfeld, JJ., concur.