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.