New Jersey Real Estate Attorney Blog

On October 29, 2012, Hurricane Sandy brought storm surges in excess of 9 feet. This was bad news for Ocean County, in which 29 of 33 municipalities border the ocean. Our office previously reported on statutory relief available to owners of properties that sustained damage during the hurricane. While the 2013 relief will be limited to loss of value to structures and not loss of value to land, we are surprised by the number of taxpayers in Ocean County whose assessments still do not accurately reflect the diminution of value sustained by the properties.

Some of the more severely affected towns in Ocean County have conducted revaluations or re-assessments this year in order to re-examine the properties and fairly determine their new true values. The towns of Plumsted, Stafford, Manchester, Seaside Heights, Pine Beach, Point Pleasant Beach and Toms River have all been designated for re-assessments this year. While the filing deadline for New Jersey tax appeals is generally April 1, towns in which a revaluation or re-assessment has taken place are usually assigned a tax appeal filing deadline of May 1. All of the aforementioned towns will observe a May 1 filing deadline, except for Point Pleasant Beach and Toms River, in which the deadline has been extended to June 1.

The municipal-wide revaluations of storm affected towns presents two major logistical problems. First, for towns in which all or most properties (line items) have been substantially affected, the lowering of all assessments will provide little relief to taxpayers, who will most likely be forced to begin paying a higher tax rate in order to ensure that the municipal budgets are maintained, without the need for bonding. Second, for towns in which only a few line items were affected, the lowering of assessments of the coastal properties will result in a higher tax rate for all residents, especially the residents of the lower priced inland properties. Very often, these are the residents who can least afford to pay a higher tax rate.

Throughout the year, this office has published a series of articles about real estate tax assessments. We have discussed how assessments are calculated, and how assessments can be appealed when they are too high. We have also discussed the fact that most real estate assessments in New Jersey do not exceed the actual value of the properties, and for many taxpayers, the high taxes they are paying is simply a function of a high real estate tax rate, which cannot be appealed. For our final article of this year, we will discuss some reasons why your tax rate may be as large as it is, and some ways that the local governments can (but probably will not) lower them.

The free market system, driven by the traditional principle of supply and demand, not only controls the prices of the products we buy, but also dictates the price that we pay for labor. We certainly would not continue to give raises, for example, to an undeserving employee, especially when many qualified applicants were waiting to take that person’s job. Recently, much attention has been brought to the paradigm, which awards teachers for seniority, rather than academic achievement. Perhaps one of the greatest casualties of the expensive union contracts for public school teachers is that it comes at the expense of the school system’s ability to hire additional necessary teachers, in the absence of substantial increases to the municipal budget.

According to recent data, the average cost to the taxpayers was $17,469 per child for the 2010-2011 school year. In Asbury Park, the cost per student for that same time frame was $29,819! We compared that figure to the prices for the 50 most expensive private schools in the nation. There was not much difference in the prices. In Newark, where the annual cost to the taxpayers for each school child now exceeds $25,000, hard working parents are forced to pay exorbitant taxes, as their children continue to receive subpar educations. Governor Christy has agonized over the inequality of treatment between children, based solely upon where they live. While private schools continue to be far less expensive, and in many cases, have higher academic standards than their public counterparts, there is still no tax credit for New Jersey parents that wish to send their send their children to private schools.

Nearly every resident in the State of New Jersey has been affected by Hurricane Sandy. In little more than 24 hours between the dates of October 29 and October 30, New Jersey residents experienced massive flooding and storm related damage from the hurricane. In the aftermath of Sandy and the considerable destruction it caused, many affected property owners have been left wondering if there will be any property tax relief available.

Historically, N.J.S.A. 54:4-35 has established that the assessed value of all New Jersey real estate must be determined as of October 1 of the pre-tax year. For example, the assessed value of a person’s property in 2013 must be based upon what the property was worth as of October 1, 2012. For this reason, a taxpayer who files an appeal should present evidence of sales of comparable properties that sold on or before October 1. However, for practical reasons, County Tax Board commissioners and Tax Court Judges will routinely allow evidence of sales that may have closed a month or two after the October 1 assessing date.

The question then becomes whether there is any legal basis for reducing assessments for damage from a storm that occurred 4 weeks after the assessing date. A similar situation had occurred in March of 1962 when many homes were severely damaged as a result of a coastal storm. At that time, there was no law reducing taxes for those damaged properties.

We are frequently asked questions regarding the necessity of the appraiser at the tax appeal hearing. For owners of more moderately priced properties, the decision is not an easy one to make. Very often, taxpayers conclude that the cost of an appraisal may exceed the savings that will be derived from the tax appeal. For the first time, this year, several dozen taxpayers asked us to file their appeals without appraisals.

The disadvantages of failing to obtain an appraisal are twofold. Primarily, we will focus on the role of the appraisal during the tax appeal hearing. At the hearing, the taxpayer has the burden of proving that the assessment is too high, while the municipality, on the other hand, is afforded the presumption of correctness. Put simply, the municipality does not need to prove anything. Consequently, for hearings at the county level, the municipality generally does not produce a full appraisal, but rather a list of comparable sales that will be relied upon. In some cases, the municipality will not produce any proof at all in support of its assessment and simply argue that the taxpayer has not satisfied his burden to prove that assessment wrong. Absent a well-prepared appraisal and expert testimony, it is nearly impossible for the taxpayer to satisfy his or her burden of proof.

To illustrate how this works, we will look at the matter of Greenblatt v. Englewood City. We previously reported on the case with regard to the use of “unusable sales.” In Greenblatt, the Court also visited the issue of whose duty it was to put forth credible evidence. The Court, in that matter, remarked that neither the taxpayer, nor the municipality had put forth any good evidence. However, since the taxpayer was the party bearing the burden of proof and the municipality was the party that was afforded the presumption of correctness, the Court ultimately ruled that, in a matter where neither side had put forward a good case, the Court must rule in favor of the municipality.

We are frequently asked questions from clients regarding the Tax Appeal filing deadline. Generally, the filing deadline for all real estate tax appeals is April 1, although the deadline is routinely extended by a month in during revaluation years. In one such matter, our firm successfully argued to the Tax Court that while the taxpayer missed the filing deadline, the delay in filing was excusable due to the fact that the taxpayer was not afforded proper notice of the change in his assessment. However, cases in which the filing deadline is waived are extremely rare and taxpayers must take special care to ensure that the April 1 filing deadline is not missed.

In the matter of Shin v. Borough of Norwood (App. Div. 2012), the appellants were property owners who had attempted to file their 2010 tax appeals with the Bergen County Board of Taxation on the April 1, 2010 filing deadline. The problem was that the attorney for the taxpayers had retained the services of a courier service, who apparently did not understand the urgency of the filing deadline. The courier showed up to the Bergen County Board of Taxation on April 1, but after the Board’s 4:30 closing time. The courier then re-attempted service on April 2. The filing was rejected as a “late filing.”

The Taxpayer then appealed to Tax Court, claiming that the filings should have been accepted. The municipality filed, and was granted a Motion to Dismiss, based upon the relevant law that states that all filings must be received by April 1. The taxpayer subsequently appealed the Tax Court’s decision. In affirming the Tax Court’s decision to dismiss the Taxpayer’s appeal, the Appellate Division remarked that the County Boards of Taxation have authority to set their own hours and that they were simply following their usual procedure and closing at 4:30 P.M. There was no bad faith or malfeasance on the part of the County Tax Board and it was the Taxpayer’s obligation to ensure that the application was filed by April 1, prior to the Board’s closing time.