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Court rules co-ops equal rentals under ETPA.

For property tax valuation purposes cooperatives and condominium properties are required to be assessed as if they are rental properties using rent stabilized rents in such areas covered by the Emergency Tenant Protection Act, the New York State Court of Appeals has ruled.

Sec. 581 of the Real Property Tax Law as well as prior case law, states both condominiums and co-ops should be valued without regard to their ownership status.

Many assessors and hearing officers, including those in New York City, have insisted, however, on developing values for such buildings using market and not rent stabilized rents, even in places that fall under the rent stabilization laws. A market rent results in the property being assessed higher because more income is generated.

This decision in the Matter of Gree Board of Assessors came about because the Long Island town of Lynbrook falls under the Emergency Tenant Protection Act, which places multi-family residential property under the rent stabilization laws. This limits the potential income -- and therefore value of rental properties.

M. Alan Hyman, a certiorari and condemnation partner with Certilman Balin Adler & Hyman in East Meadow, said he thought the assessors would rely on a previous and similar decision that was made in an Appellate Division case he had tried some years ago called Matter of South Bay Condominiurn vs. Board of Assessors in Freeport, cited in the Greentree decision.

While both sides agreed the condo should be valued as a rental property, the Lynbrook appraiser prepared the Greentree case using market rents, which are much higher. The Greentree's lawyers took the position that since the town was subject to the ETPA, Greentree would be limited in its rental income to what it would receive based on regulated rents.

The village argued that although the earlier case provided that rent stabilized rentals be used, it disagreed with the holding since this property had never been a rental and started life as a condo.

"It said the owners who sought to rent them would not be subject to rent stabilization and so the assessor could Hyman added. "We argued that the condominium law provides that the assessment of condominiums has to be the same as rentals."

Attorney Dale Allinson, who is associated with the firm, said even though the condominium was built as a condo and was never a rental property, "The statute provides you must value as if it was operating as a rental property and disregard the ownership status." The decision resulted in a 50 percent cut on its Village tax, she noted, and will result in over a $400,000 refund plus 9 percent interest to the unit owners.

Allinson said the decision would apply to other jurisdictions, such as New York City, which come under the ETPA.

Nassau County assesses small condominiums the same way they assess small homes and those would not be affected.

Hyman said the ruling would affect cooperatives as well, if they are located in a rent stabilized area.

A New York City certiorari attorney, who asked not to be identified, said he had already pointed to this decision during conferences in New York City as the basis for using rent stabilized and not market rents when valuing a client co-op.
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Title Annotation:apartment cooperatives and condominiums assessed as rental properties using rent stabilized rents according to New York State Court of Appeals; Emergency Tenant Protection Act
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jun 30, 1993
Previous Article:Tenant takes two floors.
Next Article:Tax bills due, I&E's out.

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