Newark Church Denied Property Tax Exemption

Church Not Exempt and Subject to Foreclosure for Failure to Pay Taxes

A New Jersey appellate court has affirmed a trial court’s ruling that will allow the City of Newark  to foreclose on a warehouse property owned by Yes Lord Ministries, Inc.  Yes Lord, a religious organization qualified for exemption from the payment of taxes under federal law , has been unable to use the office space in the warehouse since it purchased the property in 2004 because of roof leakage and dangerous wiring.  Newark filed its foreclosure complaint with the Superior Court Chancery Division in 2007 after Yes Lord had failed to pay property taxes to the City.  Yes Lord objected to the foreclosure, and in response, filed an application for tax exemption.  Yes Lord appealed the City’s denial of its exemption claim to the Essex County Board of Taxation.  The Board affirmed the City’s decision, and instead reduced the property’s assessment by thirty percent.

The matter then proceeded to Superior Court where Yes Lord — although previously claiming that the building was not being used — argued that the building was now being used for meetings by the church’s auxiliary groups.  The trial court concluded that the property was not exempt because no certificate of occupancy had been issued authorizing the building’s use.  The Appellate Division agreed with the Chancery judge because N.J.S.A. 54:4-3.6 and New Jersey case law require that a property actually be used for the tax exempt purpose.  Additionally, the Appellate Division cited Grace & Peace Fellowship Church, Inc. v. Cranford Twp., 4 N.J. Tax 391 (Tax 1982), which held that property should not be exempted until a certificate of occupancy has been granted and the public benefit underlying the tax exemption has begun.

The Appellate Division’s opinion in City of Newark v. (148) BLOCK 1861, LOT 24,  605-611 Central Avenue, former Assessed Owner(s) Yes Lord Ministries, Inc., may be found here.

The author wishes to acknowledge the assistance of Cory K. Kestner, Esq., of McKirdy & Riskin, PA, in the preparation of this article.