I previously wrote a blog discussing a case where the New Jersey Tax Court found that a contract purchaser who did not own the property on date the tax appeal was filed (March 29, 2012) did not have standing to file a tax appeal. As a result, the Tax Court dismissed the appeal. On July 3, 2013, the Appellate Division of the Superior Court of New Jersey reversed the Tax Court and held that the contract purchaser had standing to file the appeal and is entitled to proceed towards trial.
The case must be read carefully so the holding is not misconstrued. For example, the case does not stand for the proposition that all contract purchasers have standing to file a tax appeal. Specifically, the Appellate Court stated “we do not mean to suggest that every contract purchaser qualifies as an aggrieved taxpayer for purposes of standing under N.J.S.A. 54:3-21.” The issue of whether a contract purchaser can appeal is a “mixed question of law and fact.” The Appellate Division noted that the analysis will include “among other things the provisions of the contract itself, the timing of title acquisition in relation to the filing date, and the proportionality of the tax burden.”
In the case at bar, the original closing date under the contract was February 2012, well before the April 1, 2012 appeal deadline. Also, the buyer was going to bear the lion’s share of the tax burden (7 of the 12 months) and, if the tax appeal was successful, would have avoided being unfairly assessed. Finally, the closing was only two month after the April 1, 2012 appeal deadline. These factors all weighed in favor of allowing the contract purchaser top appeal.
When the purchase price of real property is significantly below the tax assessment, the parties to the contract should discuss who will file and prosecute the appeal. When doing so, the issue of standing (ie., who can appeal) must be addressed. However, if the issue gets overlooked and the seller refuses to file an appeal, the buyer can look to this decision when deciding whether to file an appeal.