New York Law Review

Tag: comparable sales

  • FMC Corp. v. Unmack, 92 N.Y.2d 176 (1998): Establishing “Substantial Evidence” to Challenge Property Tax Assessments

    Matter of FMC Corp. v. Unmack, 92 N.Y.2d 176 (1998)

    A property owner challenging a tax assessment needs only to present “substantial evidence” of overvaluation to overcome the presumption of validity; this requires credible and competent evidence of a valid dispute concerning the property’s valuation.

    Summary

    FMC Corp. and South Slope Holding Corp. separately challenged their property tax assessments. Both claimed overvaluation. FMC presented comparable sales data for its industrial complex, while South Slope argued that community opposition depressed its land value. The New York Court of Appeals held that both petitioners presented sufficient “substantial evidence” to overcome the initial presumption of valid tax assessments. The court clarified that “substantial evidence” in this context is a minimal standard, requiring only credible evidence of a genuine dispute regarding valuation, not proof of overvaluation by a preponderance of the evidence. The cases were remitted for further proceedings.

    Facts

    FMC Corp. challenged tax assessments on its chemical processing plant for 1992-1994, offering market sales data of seven comparable properties. South Slope Holding Corp. challenged assessments for 1989-1990 on properties bought for a subdivision, arguing that community opposition created a “value-depressing cloud” affecting marketability. South Slope presented an appraisal detailing the history of opposition and its impact.

    Procedural History

    In FMC Corp., the Supreme Court lowered the assessment but not to the level FMC requested. The Appellate Division reversed, finding FMC failed to overcome the presumption of validity. In South Slope, the Supreme Court sustained the petitions. The Appellate Division reversed, stating South Slope’s appraiser lacked objective data to support the “blight” claim. The New York Court of Appeals granted leave to appeal in South Slope and heard both cases together.

    Issue(s)

    1. Whether FMC Corp. presented “substantial evidence” to overcome the presumption of validity of the tax assessments on its industrial complex.

    2. Whether South Slope Holding Corp. presented “substantial evidence” to overcome the presumption of validity of the tax assessments on its land, based on the claim of a “value-depressing cloud”.

    Holding

    1. Yes, because FMC presented a formal appraisal report detailing comparable sales, which constituted credible evidence of a valuation dispute.

    2. Yes, because South Slope presented an appraisal report outlining the history of community opposition and its potential impact on the property’s market value, which constituted credible evidence of a valuation dispute.

    Court’s Reasoning

    The Court emphasized that a tax assessor’s valuation is presumptively valid. However, this presumption disappears when a petitioner presents “substantial evidence” to the contrary. The Court clarified that “substantial evidence” in this context is a minimal standard, requiring less than a preponderance of the evidence. It merely requires the petitioner to demonstrate a valid and credible dispute regarding valuation, based on “sound theory and objective data.” The court stated: “In the context of tax assessment cases, the ‘substantial evidence’ standard merely requires that petitioner demonstrate the existence of a valid and credible dispute regarding valuation.”

    In FMC Corp., the court found that the appraisal report, which used the comparable sales method and detailed attributes of comparable sites, met this threshold. “The appraisal report here was sufficient to meet petitioner’s initial burden to come forward with substantial evidence of a different yet credible valuation of its property and overcome the presumption of validity of respondent’s assessment.”

    In South Slope, the court acknowledged that some evidence was anecdotal. However, the appraisal report, which examined the history of community opposition and its impact, was deemed sufficient. The court noted, “Clearly, objective data exist indicating opposition to development of the land. Additionally, it is well within the realm of possibility that such organized resistance played some role in devaluing the land.”

    The Court reiterated that once the petitioner overcomes the presumption of validity, the court must weigh the entire record to determine if the petitioner proved overvaluation by a preponderance of the evidence. The cases were remitted to the Appellate Division for further consideration.

  • In re City of New York, 39 N.Y.2d 906 (1976): Admissibility of Comparable Sales in Condemnation Proceedings

    In re City of New York, 39 N.Y.2d 906 (1976)

    Evidence of comparable sales is inadmissible in condemnation proceedings if the properties are so dissimilar in size, adjacent development, and physical location that they offer no meaningful insight into the condemned property’s fair market value.

    Summary

    This case concerns the admissibility of evidence of comparable sales in determining the value of condemned property. The New York Court of Appeals affirmed the Appellate Division’s decision to reject the reconsideration of certain “comparable” sales. The court found that the properties offered as comparables were radically different from the condemned property in terms of size, adjacent development, and physical location, rendering them irrelevant for determining fair market value. The appellant’s attempt to relitigate previously decided issues was rejected, as there was no basis to overturn the prior determinations.

    Facts

    The City of New York condemned certain properties. The property owner sought to introduce evidence of comparable sales to establish the value of the condemned property. The alleged comparable properties differed significantly in size, adjacent development, and physical location from the condemned property.

    Procedural History

    The case was initially heard, and the appellant argued that the Constitution prohibits the exclusion of comparable sales evidence. The Appellate Division affirmed the lower court’s ruling. The New York Court of Appeals remitted the case to the Appellate Division for reappraisal after a prior appeal. The Appellate Division rejected the reconsideration of the “comparables.” The case then went back to the New York Court of Appeals.

    Issue(s)

    Whether the Appellate Division erred in rejecting the reconsideration of evidence related to comparable sales when such sales involved properties radically different from the condemned property.

    Holding

    No, because the properties offered as comparables were so radically different in size, adjacent development, and physical location from the condemned property that they provided no meaningful insight into the fair market value of the condemned land.

    Court’s Reasoning

    The Court of Appeals upheld its prior determinations, emphasizing that the proffered comparable sales were not truly comparable to the condemned property. The court reiterated its previous holding that the properties were so radically different “as to throw no helpful light on the fair market value of the land condemned.” The court refused to overturn its prior rulings based on the same evidence. The court emphasized the importance of genuine comparability when admitting evidence of comparable sales in condemnation proceedings. The court found no basis to reverse the Appellate Division’s decision, as it was in conformity with the Court of Appeals’ previous direction. The court essentially applied a relevance standard, finding the dissimilar properties lacked probative value. The court also reinforced the principle of stare decisis, declining to revisit issues already decided in prior appeals. The court’s decision underscores the trial court’s discretion in determining the admissibility of comparable sales evidence, provided that discretion is exercised within reasonable bounds of evidentiary principles.

  • Saratoga County Maple Corp. v. State, 26 A.D.2d 46 (1966): Inadmissibility of Averaging Front Foot Values in Eminent Domain

    Saratoga County Maple Corp. v. State, 26 A.D.2d 46 (1966)

    In eminent domain cases, an expert’s valuation of property based solely on averaging the per front foot sales prices of comparable properties without adjustments for differences is an improper method of valuation and inadmissible.

    Summary

    The State appropriated a portion of Saratoga County Maple Corp.’s property for highway purposes. The claimant’s expert valued the land by averaging front foot sales prices of neighboring properties without accounting for differences in location, size, or other characteristics. The Court of Claims awarded damages, which were later reduced by the Appellate Division. The Court of Appeals reversed, holding that the expert’s method of averaging front foot values was an improper valuation technique, rendering the expert’s testimony without probative force and necessitating a new trial.

    Facts

    The State appropriated part of Saratoga County Maple Corp.’s property for highway construction. The property was located on Route 7, also known as the Troy-Schenectady Road. Claimant’s expert, Babbitt, determined a value of $250 per front foot by averaging the front foot sales prices of several other parcels of land along Route 7. These parcels exhibited a wide range of front foot values (e.g., $400, $200, $95), reflecting differing characteristics and locations. The subject property had a shallow depth, especially at its eastern border, and was located half a mile from a shopping center, unlike some of the “comparable” properties.

    Procedural History

    The Court of Claims initially found the property’s value before the taking to be $22,500 and after the taking to be $500, awarding $22,000 in damages. The Appellate Division found the award excessive and reduced it to $17,000. The New York Court of Appeals reversed the Appellate Division’s order and remanded the case for a new trial.

    Issue(s)

    Whether an expert’s opinion on property valuation in an eminent domain case is admissible when it is based solely on averaging the front foot sales prices of neighboring properties without adjustments for differences in comparability.

    Holding

    No, because averaging the front foot sales prices of neighboring properties without adjustments for differences is a faulty and legally erroneous method of valuation.

    Court’s Reasoning

    The Court of Appeals found the expert’s valuation method flawed because it involved simply averaging the per front foot sales prices of purportedly comparable properties without accounting for significant differences in their characteristics and locations. The court noted that the wide range of front foot values among the supposedly comparable parcels ($95 to $400) indicated that they were not truly comparable without adjustments. The court emphasized that sales of other parcels used as criteria must be adjusted to reflect differences between them and the subject property. The expert failed to make such adjustments, instead relying on a purely mathematical averaging approach. The court also pointed out that the expert included sales that occurred *after* the appropriation, potentially reflecting the impact of the very project for which the land was being taken, which is impermissible under United States v. Miller, 317 U.S. 369. The court stated, “[A]n expert cannot reach his result mechanically by the mere mathematical process of averaging front footage sales prices, of parcels having obvious differences one from another as denoted by their locations and sales prices, without making adjustments for the prices of those that are more similar or dissimilar to the one in question.” The court concluded that this improper methodology rendered the expert’s testimony without probative force, requiring a new trial where a proper valuation method could be employed.

  • Matter of East 53rd Inc. v. Gabel, 16 N.Y.2d 521 (1965): Requirement to Consider Expert Testimony in Rent Control Determinations

    16 N.Y.2d 521 (1965)

    In rent control cases, administrators must consider expert testimony and evidence of comparable properties when determining fair market value.

    Summary

    East 53rd Inc. challenged the Rent Administrator’s denial of its request for a rent increase. The Court of Appeals held that the Administrator erred by not considering the testimony of the petitioner’s experts and evidence of comparable property sales and listings. The court emphasized the importance of a complete record for a fair determination under the state rent control statute and regulations. The case underscores the necessity for rent administrators to consider all relevant evidence, including expert opinions and comparable sales data, to ensure a just and informed decision.

    Facts

    East 53rd Inc., a landlord, sought a rent increase from the City Rent and Rehabilitation Administrator, Hortense W. Gabel. The Administrator denied the request. East 53rd Inc. presented expert testimony and evidence of comparable property sales to support their claim for a rent increase. The Rent Administrator did not consider this evidence.

    Procedural History

    East 53rd Inc. initially brought the case before the Special Term, which ruled in their favor. The Appellate Division reversed the Special Term’s decision. East 53rd Inc. appealed to the Court of Appeals.

    Issue(s)

    Whether the Rent Administrator erred by failing to consider expert testimony and evidence of comparable property in determining a fair rent increase.

    Holding

    Yes, because the Rent Administrator must consider all relevant evidence, including expert testimony and comparable sales data, to establish a complete record and ensure a fair determination under the state rent control statute and regulations.

    Court’s Reasoning

    The Court of Appeals reversed the Appellate Division’s order and reinstated the Special Term’s order, remanding the proceeding to the Administrator. The court held that the Administrator must hear the testimony of the petitioner’s experts and consider evidence of listings and sales of comparable property to complete the record. The court cited several prior cases, including Matter of Schreiber v. McGoldrick, Levy v. 1165 Park Ave. Corp., and Matter of Neulist v. Weaver, to support its decision. The court emphasized that failing to consider such evidence constitutes a failure to adhere to established principles of rent control administration. The dissent argued that the cited cases were not controlling and would have affirmed the Appellate Division’s order.