The Real Deal New York

This month in real estate history

The Real Deal looks back at some of New York's biggest real estate stories

May 31, 2011
By The Real Deal

1973: REBNY accused of co-op commission price fixing

Edmund Hume
Edmund Hume, president of REBNY in the 1970s.
The federal government charged both the Real Estate Board of New York and an apartment building owner and management group of illegally setting commission rates and other fees in the sale of co-op units, 38 years ago this month.

The U.S. Justice Department’s antitrust division claimed in a civil complaint filed in Manhattan that for two decades, REBNY and a group called the Apartment Association conspired “to raise, fix and maintain the commissions and fees” for brokers. Such collusion violated the Sherman Antitrust Act, the agency said.

While the government claimed that the practice would prompt residential brokerages throughout the industry to adopt the same rates as these two industry leaders and create an unlevel playing field for consumers, REBNY defended its policy of publicly stating the percentages agents should be paid. At the time it was 5 percent for sales under $100,000 and a lower rate for more expensive apartments.

“The establishment of commission rates provides protection to the public and offers sensible guidelines to the real estate broker,” Edmund Hume, president of REBNY, was quoted as saying in the New York Times.

In November 1974, the two firms, without admitting guilt, signed an agreement with the government pledging to refrain from dictating commission rates or other fees. Today, REBNY says it does not establish commission rates, although it is generally 6 percent for residential apartment sales.

1950: Queens grows past Bronx to become third-largest borough

After trailing far behind Manhattan, Brooklyn and the Bronx in housing development in the early decades of the 20th century, development in Queens exploded in a post-World War II boom. While the other boroughs barely grew, Queens become the third-largest borough in the city, a U.S. Census report released 61 years ago this month showed.

The 1950 Census count reported that the population in Queens jumped about 19 percent, or by 250,000 residents, in the preceding decade, while the Bronx added just 6,000 residents. One of the largest new projects was Parkway Village, which opened in 1947 with 685 apartments in Kew Gardens Hills.

In the decennial count, Brooklyn had 2.74 million residents, Manhattan had 1.96 million and Queens had 1.55 million. There were 1.45 million residents in the Bronx and roughly 190,000 in Staten Island. By comparison, three decades earlier, in 1920, Queens had just 470,000 residents while the Bronx had 730,000.

Queens continued to grow rapidly, and in the next Census in 1960, the borough overtook Manhattan to claim the second-most populous position. Today the most populous boroughs, in order, are: Brooklyn, Queens, Manhattan, the Bronx and Staten Island.

1921: State committee unearths NYC commercial mortgage abuse

A State Senate committee investigating the root causes of the housing crisis in New York City caused by the post-World War I population surge uncovered a widespread pattern of mortgage lenders overcharging owners of office and rental apartment buildings, 90 years ago this month.

The Lockwood Committee, chaired by Republican Brooklyn State Senator Charles Lockwood, and led by renowned consumer rights attorney Samuel Untermyer, discovered that commercial mortgage lenders tacked on fees and expenses worth between 20 percent and 50 percent of the entire loan.

In some cases, borrowers were forced to buy undesirable property from lenders in order to make the deal. In one case, an owner of an unidentified office building on Seventh Avenue borrowed $1.45 million from Mutual Life Insurance. But a condition of receiving the loan was to buy scattered properties from the insurance company for $650,000.

The committee also helped put the brakes on steep rental increases, and halted 40,000 proceedings to evict tenants that were underway at the time.

Compiled by Adam Pincus

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