Stark & Stark Associate in Bankruptcy and Creditor's Rights Group Published in US1

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Marshall T. Kizner from Stark & Stark’s Bankruptcy and Creditor’s Rights Group authored the article,Commercial Property Taxes: Is Your Business Paying More Than Its Fair Share?, published on March 20, 2013 in US1 Newspaper.

The article discusses the factors and considerations that go into investigating, and filing, tax appeals for commercial properties in New Jersey.  Mr. Kizner explains the steps business owners should take to investigate the tax assessment and file and litigate the appeal.
 
Mr. Kizner explains, “While there is nothing that a tax payer can do about the local tax rate, a tax payer can seek relief by filing a tax appeal to challenge the assessed value of the property.  Now is the time to investigate whether your business is paying more than it should.”
 
To read the full article, click here

 

Tax Appeal Update: 2013

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Like most areas of the law, court decisions and new legislation impact the rights of property owners as they navigate the tax appeal system.  Among the more notable changes that occurred in the later part of 2012 which will have an impact on tax appeals filed for 2013 are the following:

  • On January 17, 2013, the New Jersey Supreme Court ruled that naming the wrong plaintiff in a tax appeal complaint is not always a fatal flaw requiring the case to be dismissed.  In Prime Accounting the property owner filed an appeal and attached the tax assessment card to the complaint (as required by the court rules). However, the tax assessment card had the wrong company listed as the property owner and when the tax complaint was filed, the name from the tax assessment card, not the current owner of the property, was identified as the plaintiff in the case. The tax court dismissed the complaint, and the Appellate Division affirmed the dismissal. When the case reached the New Jersey Supreme Court, the lower court decisions were reversed and the tax appeal was reinstated. In reviewing the facts, the New Jersey Supreme Court noted that the municipality was aware which property was under appeal since the tax card was attached to the complaint, and more important, the new owner asked to tax office to change the name of the owner on the tax records.  As a result, the New Jersey Supreme Court held that the mistake did not deprive the Tax Court of subject-matter jurisdiction and the complaint could be amended to correct the mistake. In addition, the amendment would relate back to the original filing date.  It is important to note that this case did not expand the definition of an "aggrieved taxpayer" or who has standing to appeal.  Rather, the case makes it clear that certain types of errors can be corrected with relation back to the original filing date. To read the case, Click Here.
  •  On December 7, 2012, the Tax Court found that the dismissal of a tax appeal by the Morris County Tax Board fell short of providing the taxpayer with the “square deal” that the New Jersey legislature had hoped for.  At the tax board hearing, the property owner’s appraiser testified based upon an appraisal that contained some boiler-plate language indicating that the report’s “intended use was for the lender/client to evaluate the property.”  Despite the appearance by their appraiser and attorney, the Tax Board dismissed the appeal for lack of prosecution which, under New Jersey law, is a dismissal with prejudice.  The Tax Court reversed the Tax Board noting that tax appeals are being dismissed for lack of prosecution far too often by local tax boards and the remedy should only be granted in the “most egregious circumstances”.  It is important to note that this decision does not change the burden of proof in a tax appeal case, or change the requirement that a property produce some evidence at the tax board hearing.  To view the case, Click Here.
  • On November 15, 2012, the Tax Court once again held that a contract purchaser does not have standing to file a tax appeal. Prior to the April 1 tax appeal deadline, a contract purchaser filed a complaint to appeal the tax assessment of the property it was acquiring. The sale closed on May 30, 2012. The municipality filed a motion to dismiss the complaint since at the time of the appeal, the contract purchaser was not an “aggrieved taxpayer” since it had not paid any taxes on the property.  The Tax Court agreed with the municipality and dismissed the appeal. Although this case did not change the law, it drives home the lesson that appealing parties must meet the definition of an aggrieved taxpayer to have standing to appeal.  If a contract purchaser wants to have the tax assessment appealed, he or she must make certain the contract requires the seller to file an appeal and, once filed, expressly set forth each party’s rights and obligations (ie. who can settle the case). To view the case, Click Here.
  • Hurricane Sandy visited New Jersey after the applicable valuation date of October 1, 2012.  As a result, Hurricane Sandy will not be relevant in most tax appeals.  However, if an owner complied with the requirements of N.J.S.A. 54:4-35.1 and sent a written notice to his or her tax assessor before January 10, 2013, he or she will be able to take advantage of a little know law which will make Sandy's damage relevant to the 2013 tax appeal.  Click here for more details on this statute.  By moving the valuation date from October 1, 2012 to January 1, 2013, the damage from Sandy can be taken into account when valuing your property.  The Tax Court has not issued many decisions interpreting this law, but Hurricane Sandy is likely to change that as cases progress through the court.

Tim Duggan and Marshall Kizner are members of Stark & Stark's Eminent Domain and Real Estate Tax Group in our Lawrenceville, New Jersey office.  For questions or additional information, please contact Mr. Duggan or Mr. Kizner.

Court Holds That Strict Compliance with Income and Expense Request (Chapter 91) Required to Avoid Dismissal of Property Tax Appeal

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In a recent case, the Tax Court of New Jersey dismissed a property owners’ tax appeal for providing a false response to the Assessor’s request for income and expenses under N.J.S.A. 54:4-34 (Chapter 91 Request).  In this case, the tax payer owned income producing property.  The Assessor timely and properly mailed the Chapter 91 Request to the Tax Payer.  The Tax Payer responded by claiming that the subject property was not income producing.  Shortly thereafter, the Plaintiff, who was prosecuting an appeal for the prior tax year, served discovery responses on the Municipality’s lawyer and the Assessor, which showed that the property was in fact generating rental income.

The tax payer filed an appeal for the subsequent tax year and the Municipality moved to dismiss the appeal on the grounds that the Assessor rendered a false Chapter 91 Request, which is an express ground for dismissal under the controlling statute.  The tax payer did not deny that it violated the statute, however, it argued that its false representation should be excused since the Assessor knew that the property was income producing, and had detailed information about the income generated by the property prior to the date the Assessor was required to fix its assessment for that upcoming tax year.

The Court rejected this argument and dismissed the appeal.  Reasoning that the statute is plain and unambiguous and bars an appeal when an owner provides false accounting in its response to a Chapter 91 Request.

This case stresses the importance of accurately completing a Chapter 91 Request, even when the Assessor is in possession of income and expense information concerning the subject property from an ongoing tax appeal. In accordance with prior decisions, the Chapter 91 Request statute is generally inflexible.  Tax payers should be aware of the importance of timely and accurately completing a Chapter 91 Request to avoid the harsh dismissal remedy that often results from non-compliance with the statute.

Marshall Kizner is an Associate in Stark & Stark's Lawrenceville, New Jersey office concentrating in Bankruptcy & Creditors Rights. For questions, or additional information, please contact Mr. Kizner.

Tax Appeal Deadline Approaching: Now is the Time to Act

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To appeal a property tax assessment in New Jersey, a property owner must file a written appeal no later than April 1, 2103, or May 1, 2103 if the town completed a reevaluation or reassessment.  When landlords who lease on a triple-net basis receive their 2013 tax assessment card, do they need to worry about the tax assessment since their tenants are paying the taxes?  The answer is yes, for several reasons.

If a tenant vacates, the landlord must make certain the resulting empty space is offered to prospective tenants at a competitive rate.  If the taxes that are being passed through are higher than competing properties, the landlord may be at a competitive disadvantage.

The same holds true for lease extensions and renewals. Tenants often hire consultants who can compare the cost of comparable space, and landlords do not want to lose tenants because the taxes are too high.

Finally, if a tenant is provided with some cash flow relief by way of lower property taxes, the tenant may survive this economic downturn.  Sometimes even a minimal savings goes a long way.

These are just some of the reasons why landlords with triple net leases should consider filing tax appeals now.

Stark & Stark represents owners of shopping centers, office complexes and all types of commercial and industrial properties.  If you would like assistance in evaluating the merits of a tax appeal, please contact Timothy P. Duggan, Esquire at 609.895.7353 or Jerry Nelson, Esquire at 609.945.7635.
 

Tim Duggan is a Shareholder in Stark & Stark's Eminent Domain and Real Estate Tax Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Duggan.

 

Hurricane Sandy and the Tax Assessor

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New Jersey adopted a law that may help property owners whose property was damaged by Hurricane Sandy.  However, you need to act quickly to take advantage of the law.
 
New Jersey assesses real property on an annual basis using October 1 of each year as the date of valuation.  For example, 2013 tax assessments are based upon the condition and value of property as of October 1, 2012.  Since Hurricane Sandy arrived after the valuation date, any decrease in value caused by Hurricane Sandy may not be relevant in a 2013 tax appeal.
 
However, there is an exception to the rule.  If your property sustained significant damage that caused a “material depreciation” in the value  between October 1, 2012 and January 1, 2013, you may be entitled to a reduction in your tax assessment.
 
The law in question  (N.J.S.A. 54:4-35.1) provides:
When any parcel of real property contains any building or other structure which has been destroyed, consumed by fire, demolished, or altered in such a way that its value has materially depreciated, either intentionally or by the action of storm, fire, cyclone, tornado, or earthquake, or other casualty, which depreciation of value occurred after October first in any year and before January first of the following year, the assessor shall, upon notice thereof being given to him by the property owner prior to January tenth of said year, and after examination and inquiry, determine the value of such parcel of real property as of said January first, and assess the same according to such value.
 
To take advantage of this law, you need (1) a building or structure that was damaged, (2) the damage must cause the value to be materially depreciated, and (3) you must notify the tax assessor of the damage before January 10, 2013.  It is advisable to send a written notice to the tax assessor, via certified mail, immediately and follow up with a call.  You may access the statewide directory of tax assessors here.
 
If you have any questions or need assistance in sending a notice to your local assessor, please contact Timothy P. Duggan, Esquire, at 609-895-7353 or tduggan@stark-stark.com.
 
Tim Duggan is a Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Duggan.

 

Failure to File a Timely New Jersey Property Tax Appeal Will Result in Dismissal

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Compliance with New Jersey’s procedural law for the filing of a property tax appeal is critical. In fact, filing an untimely appeal (even if only a few days late) will lead to dismissal. The Tax Court recently affirmed this well-settled principle and reiterated that a tax appeal for the current year must be filed on or before April 1st, or 45 days from the date the bulk mailing of the notices of assessment are completed, whichever is later. See Romero v. North Plainfield Borough, Docket No. 012383-2011, New Jersey Tax Court, January 20, 2012. The only exception to this is where a municipal-wide revaluation or municipal-wide reassessment has been implemented. In those instances, the appeal deadline is May 1st.
 

In Romero, the property owner merely filed his property tax appeal three days after the April 1st deadline. The property owner filed a motion with the Board of Taxation to allow the late filing of the appeal. The Board granted the motion over the opposition of the municipality. Subsequently, the Board entered a judgment affirming the property tax assessment, without prejudice, and the property owner appealed to the Tax Court.
 

The court ruled that because the property tax appeal was not filed by the April 1st deadline, neither the Tax Board nor the Tax Court had jurisdiction to hear the matter. The court stated that “it is well-settled law of this state that taxpayers must strictly comply with the statutory time limitations for filing an appeal, and that failure to do so is a fatal jurisdictional defect.”
 

The case demonstrates the importance of complying with filing deadlines and shows how strictly the courts follow New Jersey’s statutory framework in the context of tax appeals.

 

Marshall Kizner is an Associate in Stark & Stark's Lawrenceville, New Jersey office concentrating in Property Tax Appeals. For questions, or additional information, please contact Mr. Kizner.

Chapter 91 Update: "The check is in the mail"

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In previous blogs, I discussed the scope of Chapter 91, whether an owner-occupied property is subject to a Chapter 91 request, and the problems associated with requesting a reasonableness hearing when a Chapter 91 motion is granted. Now we move to what happens when the property owner mails its response to the Chapter 91 request, but the municipality denies receipt of the response?
 

The New Jersey Tax Court recently answered this question in a case where the court sided with the property owner and denied the municipality’s motion to dismiss a tax appeal.  See Cam Gar v. Verona Township, Docket No. 004838-2011, NJ Tax Court, Nov. 9, 2011 [link]. 
 

Verona Township sought to dismiss a tax appeal alleging the property owner failed to respond to a Chapter 91 request.  The property owner admitted it received the request, but argued it responded to the request in a timely manner by mailing the completed response to the assessor.  To support its position, the property owner offered the testimony of its bookkeeper, a 16-year employee whose job responsibilities include responding to Chapter 91 requests sent for the numerous properties managed by her employer. The bookkeeper went through in detail the procedures she implemented to handle Chapter 91 requests and produced a copy of the Chapter 91 response which had her hand written note “mailed w/rent roll 9/24/10.”  Although she admitted that she did not have a specific recollection of completing or mailing the form, “she testified that she would have followed all of the above procedures as to the handling of the Chapter 91 request.”
 

The municipality argued that without a specific recollection of completing and mailing the Chapter 91 response, the property owner cannot take advantage of the “presumption of receipt” arising under New Jersey case law. In addition, the municipality argued that vague testimony would lower the standard for other property owners who could merely argue “the check is in the mail” and avoid having its complaint dismissed. The court disagreed with the municipality and denied the motion.
 

It is important to note that the court’s decision turned on the credibility of the witness and the corroborating evidence produced at the hearing. It is not enough for a property owner to allege “I believed I mailed it”, or “since I responded every  year, I believe I responded this year”, without providing a thorough description of the procedures implemented to handle Chapter 91 requests and producing documentation that supports the testimony. Prudent property owners should adopt specific procedures for responding to Chapter 91 requests, including:

  1. stamping the request with the date it is received;
  2. having the information assembled immediately for a timely response;
  3. mailing the response by certified mail; and
  4. keeping a copy of the response with some record of when it was mailed

Failure to Pay Taxes Can Lead to the Dismissal of Your Property Tax Appeal

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As a general rule, a property owner must be current with its property taxes when it files a complaint with the New Jersey Tax Court to appeal a property tax assessment. If the taxes are not current, the municipality can move to dismiss the complaint.

 

Is there an exception to this rule? Yes, but it is very limited.

 

The New Jersey Tax Court can “relax the tax payment requirement and fix such terms of payments as the interests of justice may require.”  N.J.S.A. 54:51A-1(b).  Recently, the New Jersey Tax Court reviewed a case where a property owner asked the court to relax the payment requirement because the municipality was partially to blame for the financial problems arising from the development of the property being appealed.  Evans-Francis Estates Associates, LP v. Township of Cherry Hill, Docket No. 012386-2011, New Jersey Tax Court, Nov. 9, 2011.   The owner alleged the municipality’s reluctance to allow affordable housing units to be constructed on the property contributed to the financing obstacles.  However, the owner conceded that the collapse in the tax credit equity market contributed to delays in starting construction.

 

The Court applied the following three part test when reviewing the request to relax the tax payment requirement:

At a minimum, it would seem that such circumstances must be (1) beyond the control of the property owner, not self-imposed, (2) unatributted to poor judgment, a bad investment or a failed business venture, and (3) reasonably unforseable.
 

The Court found the property owner failed to meet any part of the test because the “obstacles encountered by the plaintiff in securing the approvals and financing necessary to construct its project are commonplace and reasonably foreseeable.”   The Court was not persuaded that the municipality’s conduct was a mitigating factor or that the severe economic times excuse the obligation to pay property taxes.
 

The case demonstrates the challenges facing property owners in these tough economic times when it comes to appealing a distressed property. To appeal, a property owner must find a way to be current through the first quarter of the year or risk having its appeal dismissed, good times or bad. 

Stark & Stark Shareholder Comments on Importance of Timing in Real Estate Revaluations

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Timothy P. Duggan, Chair of Stark & Stark’s Real Estate Tax Appeals Group, was quoted in the April 24, 2011 Hudson Reporter article, Time will tell: Is now the best – or worst – time for a reval? The article discusses whether now is the best, or the worst, time for the city to conduct property revaluations.
 

Mr. Duggan states, “In reality, a reval can be done at any time, although the best time is when the [property] market is as stable as possible. You actually have the same problems in a rising market that you have in a falling market. That problem being that the comparable sales that you use [to determine the fair market value of each property] fluctuate quite a lot, and fluctuate quite a lot within a short period of time.”
 

You can read the full article online here.

Stark & Stark Shareholder Featured in NJ Biz Tax Appeals Article

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Timothy P. Duggan, Chair of Stark & Stark’s Real Estate Tax Appeals Group, was featured in the February 21, 2011 NJ Biz article, A taxing affair for towns as appeals mount.

The article discusses the recent rise of property tax appeals taking place in New Jersey as the steep drop in property values continues after the market crashed. Mr. Duggan states, “property owners should analyze their property to determine whether an appeal is appropriate. You can be properly assessed, and your neighbor under or over. The question is whether your property is properly assessed irrespective of what is going on in the market.”

You can read the full article online here.