Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: [v. 100, no. 2593: Articles]: November 24, 1917

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REAL ESTATE AND (Copyright, 1917, by The Record and Guide Co.) NEW YORK, NOVEMBER 24, 1917 HOW REAL ESTATE IS DISCRIMINATED AGAINST The Game of '*Beat the Landlord" Is Played With Great Success—Still Operating Under the Laws of 1776 T^VVENTY-TWO years ago when I ^ embarked in the real estate and building business, I did so with full confidence that I had entered a busi¬ ness career. From that time up to the present day I have encountered an ever- increasing prejudice and hostility on the part of the public against the land owner which convinces me that the land owner, the builder and the land¬ lord are not considered business men. It is not to be wondered that the pub¬ lic mind assigns this low position to the real estate owner, because the pub¬ lic mind is directed in its attitude largely by the laws as they are upon our statute books. Oppression by Law. When we examine the law regarding the land owner, and the landlord, we find that the law does not consider them business men. This is what is the matter with real estate, and it is the duty of all engaged in the real estate business to see that the laws are changed placing the landlord upon the same footing as other business men. It is the boast of our nation that we do not tolerate special privilege and in¬ versely then we should not oppress any particular class, but unfortunately we dOj for the landlord and real estate owners are oppressed by law more than any other class. They are the step¬ children of the law. The ordinary pro¬ cess of law, the common rules of busi¬ ness and the customary considerations shown to business men are not applied to the landlord. Since the law discrim¬ inates against him it is no wonder that the popular idea is that the landlord is not a business man, but one who makes his money without work or ef¬ fort. This thought on the part of the pub¬ lic is behind the hostility shown to the real estate business. That these and similar agitations have gained pub¬ lic favor is not to be wondered at, because any doctrine that promises to give something for nothing is bound to attract a large following. Relation of Law to Landlord. The first point that I wish to take up is the relation of the law to the landlord. The cry of "land and lib¬ erty" is an ancient one, and while "land" and "liberty" had an inter-re¬ lation in times when nearly all the real estate consisted of homesteads during the agricultural era, it has no relation whatever in our large indus¬ trial centers (which includes nearly one- half of our population) where most of the population are rent payers. From the beginning of the nineteenth century our country changed from an agricultural to an industrial nation, and the rural homesteaders became city rent payers. The cities grew rapidly. Tenements, flats, and apartments sprang up everywhere in ever increasing num¬ ber and size. The constructing, leasing, operating and selling of buildings now became an established industry not on¬ ly in dwellings, but also in business houses for merchants and manufactur¬ ers who previously took pride in hav¬ ing a building exclusively for them¬ selves soon saw the advantage and By FREDERICK C. ZOBEL economy of paying rent for one ^ or more floors in a well-equipped building. The whole real estate business now be¬ came "commercialized." Its motto was "built by the block and sold by the lot." Land and houses were sold like so many loaves of bread. The builder became a manufacturer of houses and the landlord a merchant who sold space plus service. This industry now extends over the greater part of all our large and grow¬ ing cities, and this huge industry is struggling on through a maze of ar¬ chaic laws which impede its proper de¬ velopment at every step. Every line of trade has had legislations changed to aid its development, but real es¬ tate is still trying to do business under the laws of 1776. The tremendous changes in the real estate business have passed unnoticed because these changes have been so gradual that even the property own¬ ers themselves have hardly become aware of them. The law of landlord and tenant is still the same as in the days when the only improvements con¬ tained in houses were a pump in the back yard and a hole in the wall where a tenant could put a stove if he chose. Compare with these, the modern apartment house furnishing all the comforts and conveniences of a hotel! It is on the relation of the law to the landlord that I wish to comment first. Motive for Taxing Real Estate. It is beyond dispute that the under¬ lying motive for taxing real estate_ is economy to the State in the collection of taxes. All other forms of property may be hidden, removed or denied and therefore the collection of taxes would be difficult and the State put to large .expense. Real estate is the only prop¬ erty that cannot be so secreted, and it was therefore found expedient to place the greater part of taxation upon real estate. In this way, the landlord or property owner becomes a tax col¬ lector for the State without receiving any remuneration. It was always con¬ tended that since people had to live in houses the landlord could collect the tax by charging it on the rent. Whether this is so or not, I will not now dis¬ cuss, but this was the habit from the earliest times. Now, if there ever was a class of people since the beginning of time that was hated and ostracized by their fel¬ lows, it was the tax collectors, the tithe gatherers, the publicans.^ In the Scriptures we read of "publicans and sinners." These tax gatherers were so loathed by the common people that "sinners" were considered their only fit associates. This peculiar attitude of mind has endured to the present day and it accounts for the lack of justice done to the landlord, both by the law as it is upon our statute books, and by the public in general. There is. in the minds of all rent payers, and their name is legion, a sub-conscious feeling that the landlord is a flint-hearted, grasping rascal, a grafter and a para¬ site on the body politic, and this sub¬ conscious feeling finds expression only too frequently. When I say that the law does not do justice to the landlord, but treats him with the same scorn and contempt as many individuals do, I realize that I am impeaching the fairness of some of our most cherished traditions. Never¬ theless, comparing the attitude of the law to the landlord and the attitude of the law toward the ordinary busi¬ ness man, I repeat that the conduct of the State towards the landlord can¬ not be too severely criticised. Entitled to Prior Claim. The State having appointed the land¬ lord (quite against his desire) as tax collector, practically says to him: "The taxes must be paid, I don't care whether your building is vacant nor brings an income, the taxes must be paid. I don't care to whom you owe money, who has a mortgage on your property, the taxes are the first lien against the prop¬ erty." Now, the landlord would be perfectly willing to act as tax-collector for the State if the State would give him the same right and power that it reserves for itself in the collection of taxes. In other words, the landlord should be entitled to a prior claim for rent due to him in preference to all other creditors. However, the State does not give him that right. In fact, it treats him worse than the ordinary creditor, as I will show later, and I contend that it is unmoral on the part of the State to impose obligations upon the landlord without placing at his dis¬ posal means to meet these obligations. For the State to say to the landlord, "If the taxes are not paid your prop¬ erty will be confiscated. I don't care how you collect your rent." is so mani¬ festly unfair that it is surprising that this fact has not sunk into the con¬ sciousness of the public long before this. The only explanation is, as I said before, that the popular mind pic¬ tures the landlord as a grafter, and anything that deprives him of his due "just serves him right." Comparison of Cases. Let us draw a comparison between a coal merchant suing on a contract for coal delivered, and a landlord suing on a contract for rent due. The coal merchant A has a contract with B by which A is to deliver to B one ton of coal each day, the coal for the current month to be paid for in ad¬ vance. A starts to deliver coal, but about the tenth day, the coal merchant not having received the money in ad¬ vance, as stipulated in the contract, re¬ fuses to deliver any further coal to B and sues to compel B to pay the money agreed in the contract. B makes no defence except to say that he has no money and therefore is unable to pay. The court, recognizing the destitute condition of B, promptly renders a judgment that A need not carry out the contract, instructing him, however, to deliver coal to B for three or four days longer and that thereafter A may seek redress in any way that he may see fit. Can we imagine such a legal decision? Vet this is precisely what the court does in the average landlord and ten¬ ant case. A tenant may be behind two weeks or a month or two months and when the landlord finally sues to re-- llflCORp AND GUIDB IS IX JTS FIFTIETH YEAR OF CONTINUOUS PUBIilCATION,