Paramus Appeal Dismissed: Obligation to Submit Income and Expense Info Runs with the Land
Another New Jersey property owner had its real estate tax appeal dismissed this week for failure to respond to a municipal tax assessor’s request for income and expense information. That’s not surprising, given the volume of appeals facing New Jersey’s municipalities and now pending in the New Jersey Tax Court and the County Boards of Taxation. What makes this recent case particularly intriguing, however, is the fact that the appeal was dismissed not because of any failure on the part of the owner who filed the appeal, but instead due to a failure to respond by the prior owner.
In Yeshivat v. Borough of Paramus, the defendant Paramus moved pursuant to “Chapter 91”, N.J.S.A. 54:4-34, to dismiss Yeshivat’s 2011 tax appeal for failure to respond to the tax assessor’s request for income and expense information that covered the period Oct. 1, 2009, through Sept. 30, 2010. The property was listed in the assessor’s records as income-producing during that time. The new owner acquired title to the property on October 7, 2010. No response to the request was provided, and the record revealed that the tax assessor’s request was sent to the prior owner, not the new owner. Yeshivat argued that after acquiring the property, it ceased to be income-producing and therefore there was no obligation to submit the income and expense information from the prior owner’s use. The Tax Court, however, concluded that the failure of the prior owner to respond to a valid Chapter 91 request for property that produced income during the requested reporting period is a defect that “runs with the land”, and therefore acts to bar to the new owner’s 2011 tax appeal. In addition, Yeshivat suggested that it never received the tax assessor’s request, and argued that the court should impose on the assessor the additional duty to track property transfers and resend the Chapter 91 request to each new owner. This argument was also rejected by the court.
A copy of the Tax Court’s opinion is available here.
This case is a reminder that any party buying commercial real estate should request – prior to closing – copies of ALL notices to the seller from municipal officials. In this matter, had the new owner received the notice and timely responded to the assessor’s request, it could have notified the assessor that the property was no longer an income-producing property and preserved its right to appeal the assessment in 2011.
