You are here: / Real Property Tax Law

THE FAILURE TO TIMELY SERVE THE COUNTY TREASURER WITH THE PETITION SEEKING JUDICIAL REVIEW OF A PROPERTY TAX ASSESSMENT, A VIOLATION OF RPTL 708 (3), REQUIRED DISMISSAL OF THE PETITION (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the petitioners in this action seeking judicial review of a property tax assessment did not demonstrate good cause for failing to timely serve the county treasurer. The petition should have been dismissed:

RPTL 708 (3) requires that “one copy of the petition and notice shall be mailed within [10] days from the date of service thereof . . . to the superintendent of schools of any school district within which any part of the real property on which the assessment to be reviewed is located and, in all instances, to the treasurer of any county in which any part of the real property is located” … . “Failure to strictly comply with the statute’s notice requirements ‘shall result in the dismissal of the petition, unless excused for good cause shown’ ” … .

The inquiry before us … distills to whether petitioners have demonstrated sufficient good cause to avoid mandatory dismissal. Petitioners rely on the affidavit of their counsel’s employee, who avers that she was unable to find the treasurer’s address on Sullivan County’s website and, consequently, she determined that she could send the petition and notice to the local school district’s superintendent and two unrelated county agencies based upon her evaluation of the responsibilities of those agencies pertaining to the assessment of properties in Sullivan County. … [T]he failure to locate the treasurer’s contact information on the County website neither provides justification for the conclusion that service on a different County office could be made in lieu of the treasurer, nor does it establish that respondents made some affirmative misrepresentation as to the proper location to serve the treasurer … . … [T]here is no indication that petitioners undertook any additional action to ascertain the appropriate contact information for the County treasurer before resorting to service on other government officials, thus negating petitioners’ contention that they engaged in diligent efforts … . Matter of Tribeca Estates LLC v Town of Fallsburg, 2024 NY Slip Op 03214, Third Dept 6-13-24

Practice Point: RPTL 708(3) is strictly construed. Here petitioner could not demonstrate good cause for failing to timely serve the county treasurer with the petition seeking judicial review of a tax assessment and the petition was dismissed.

 

ALTHOUGH THE BUILDING IS OWNED BY A NOT-FOR-PROFIT CORPORATION WHICH RAISES FUNDS FOR HEALTHCARE SERVICES, THE BUILDING IS LEASED TO A FOR-PROFIT CORPORATION WHICH PROVIDES DIALYSIS; THE LEASED BUILDING, THEREFORE IS NOT EXEMPT FROM PROPERTY TAX PURSUANT TO RPTL 420-A (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Rivera, over a three-judge dissenting opinion, determined the property at issue, which is leased by a for-profit corporation, is not entitled to exemption from property taxes pursuant to Real Property Tax Law (RPTL) 420-a:

Petitioner Samuel and Bertha Schulman Institute for Nursing and Rehabilitation Fund, Inc. (Schulman), is a federally tax-exempt, New York not-for-profit corporation, which fundraises and manages assets in support of the healthcare purpose of non-parties Schulman and Schachne Institute for Nursing and Rehabilitation, Inc., and Brookdale Hospital Medical Center. Starting in 1995, Schulman leased to petitioner Brookdale Physicians’ Dialysis Associates, Inc. (Brookdale Dialysis) portions of a building Schulman owns in New York City. Brookdale Dialysis is a for-profit New York corporation that used the building to provide dialysis services for a fee. Under the lease Brookdale Dialysis paid $24,217.08 per month in rent to Schulman and was responsible for any property taxes that might become due during the tenancy. * * *

Petitioners argue that the property is exempt under RPTL 420-a (1) (a) because the building is used exclusively for its intended charitable purposes in that its dialysis services are vital and necessary to the charitable missions of Schulman and non-parties Brookdale Hospital and the Nursing Institute. However, the exempt purpose at issue here is that of the property owner—Schulman—and its purpose is to raise funds, not to provide dialysis services, or even medical services more generally. It is true that Brookdale Hospital and the Nursing Institute provide health care services, but still, the exemption is for Schulman’s property. And to the extent Schulman supports the health care efforts of these two entities it does so by fundraising, not by providing direct health care services. If Schulman engaged in its fundraising efforts in the building, then the exemption would apply to any portion so used, but Schulman vacated the premises during Brookdale Dialysis’ tenancy. Matter of Brookdale Physicians’ Dialysis Assoc., Inc. v Department of Fin. of the City of N.Y., 2024 NY Slip Op 01583, CtApp 3-21-24

Practice Point: A building owned by a not-for-profit corporation but leased to a for-profit corporation is not exempt from property tax pursuant to RPLT 420-a.

 

, ,

THE COMPLAINT STATED CAUSES OF ACTION AGAINST NYC ALLEGING CONSTITUTIONAL AND STATUTORY VIOLATIONS STEMMING FROM AN UNEQUAL AND DISCRIMINATORY PROPERTY TAX SCHEME (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Rivera, over a two-judge partial dissent and a one-judge partial dissent, reversing (modifying) the appellate division, determined the complaint stated causes action for constitutional and statutory violations of the Real Property Tax Law (RPTL) and the federal Fair Housing Act (FHA) relating to an unequal property-tax scheme:

Plaintiff Tax Equity Now NY, LLC (TENNY) challenges New York City’s property-tax system, alleging that the system imposes substantially unequal tax bills on similarly-valued properties that bear little relationship to the properties’ fair market value. According to the complaint, the result is staggering inequities and a regressive tax system that hurts those who can least afford to pay heavy taxes. The complaint further alleges that multi-million-dollar properties are taxed at similar or lower rates than less valuable properties and that real property in majority-people-of-color districts are overassessed and subjected to higher taxes compared to properties in majority-white districts. TENNY seeks declaratory and injunctive relief against City and State defendants for alleged constitutional and statutory violations caused by the City’s tax scheme. Despite the comprehensive, detailed allegations and legal precedent supporting the causes of action, the Appellate Division dismissed the complaint in its entirety at the pleading stage for failure to state any claim. That was error. * * *

… [T]he complaint’s allegations, supported with independent studies and the City’s own data of widening disparities resulting from its annually-repeated assessment methodology to Class One and Two properties, sufficiently plead violations of RPTL 305 (2) against the City. * * *

The FHA’s legislative goals are twofold: elimination of discrimination in housing and the promotion of residential integration  * * *

… [U]nder our State’s liberal pleading standards, TENNY’s allegation that the City’s tax system perpetuates segregation suffices … . Tax Equity Now NY LLC v City of New York, 2024 NY Slip Op 01498, CtApp 3-19-24

Practice Point: Under New York’s liberal pleading standards, the complaint stated causes of action against NYC for violations of the Real Property Tax Law and the federal Fair Housing Act stemming from an unequal and discriminatory property tax scheme.

 

A CHALLENGE TO THE FINAL TAX ASSESSMENT OF REAL PROPERTY BROUGHT BEFORE THE COMPLETION AND FILING OF THE ASSESSMENT MUST BE DISMIISSED AS UNTIMELY (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Duffy, disagreeing with the Third Department, determined that an action challenging a real property tax assessment cannot be brought before the completion and filing of the assessment. Here the action was brought before the filing of the assessment and was therefore properly dismissed as untimely:

The time period within which a proceeding challenging a final assessment of real property may be commenced is set forth in section 702(2) of the Real Property Tax Law. Section 702(2) provides, in relevant part, that a proceeding to review the assessment of real property:

“shall be commenced within thirty days after the final completion and filing of the assessment roll containing such assessment. For the purposes of this section[,] an assessment roll shall not be considered finally completed and filed until the last day set by law for the filing of such assessment roll or until notice thereof has been given as required by law, whichever is later” … . * * *

The provision requires a petitioner to commence a proceeding within the 30-day period between the finalization of the tax assessment roll and the expiration of that statute of limitation or face dismissal. * * *

Thus, the failure to timely commence a Real Property Tax Law article 7 proceeding is “a complete defense to the petition” which “must be dismissed” … . Matter of Coscia v Town of Greenburgh, 2023 NY Slip Op 05729, Second Dept 11-15-23

Practice Point: Here the challenge to the real property tax assessment was brought in September 2016 but the completion and filing of the assessment was not until November 2016. The challenge was properly dismissed as untimely.

 

, , , ,

THE DECLARATORY JUDGMENT ACTION ALLEGING THE COUNTY TAX MAP VERIFICATION FEES CONSTITUTED UNAUTHORIZED TAXES SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the plaintiffs’ declaratory judgment action should not have been dismissed. Plaintiffs alleged that certain fees (tax map verification fees) charged by the county’s Real Property Tax Service Agency constituted taxes which were not legislatively authorized:

… [T]he tax map verification fees were not expressly authorized by the State Legislature through the 2019 revisions to CPLR 8019 and 8021. A tax is exacted from a citizen to “defray the general costs of government unrelated to any particular benefit received by that citizen” … . “The State Constitution vests the taxing power in the state legislature and authorizes the legislature to delegate that power to local governments” ( … see NY Const, art XVI, § 1). “‘[T]he delegation of any part of [the] power [of taxation] to a subdivision of the State must be made in express terms,’ and the delegation of any form of taxation authority ‘cannot be inferred'” … .. “The legislature must describe with specificity the taxes authorized by any enabling statute. In turn, local governments can only levy and collect taxes within the expressed limitations of specific enabling legislation” … .

Here, while the revisions to CPLR 8019 and 8021 reference the County’s authority to collect tax map verification fees … , the revisions do not provide an express delegation of taxing authority, nor do they provide for a review mechanism, as is constitutionally required … . Cella v Suffolk County, 2023 NY Slip Op 05387, Second Dept 10-25-23

Practice Point: Fees imposed by a county which are not justified by the related expenses may constitute unauthorized taxes.

 

, , ,

THE REAL PROPERTY TAX LAW (RPTL), NOT THE CPLR, CONTROLS THE COMMENCEMENT OF A REAL PROPERTY TAX FORECLOSURE PROCEEDING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the city in this property tax foreclosure proceeding properly followed the procedure for commencing the action prescribed in the Real Property Tax Law (RPTL) (as opposed to the CPLR procedure):

Real Property Tax Law provides that a proceeding for the foreclosure of tax liens in rem shall be commenced in the manner provided in Real Property Tax Law article 11, title 3 (see id. § 1120). Title 3 sets forth specific requirements for public notice by publication and personal notice to owners and other persons with a right, title, or interest in affected properties (see id. §§ 1124, 1125). RPTL 1125(3)(c) provides that the service required by that section “shall be deemed to be equivalent to the service of a notice of petition pursuant to [CPLR 403]” … . Thus, the City was required to comply with the service requirements set forth in the Real Property Tax Law, rather than those set forth in the CPLR … . The City established that it satisfied the notice and service requirements set forth in the Real Property Tax Law and that it is entitled to a default judgment with respect to the parcels of real property identified in the City’s motion (see RPTL 1131, 1136[3]). Matter of Foreclosure of Tax Liens (City of Newburgh), 2023 NY Slip Op 04381, Second Dept 8-23-23

Practice Point: The procedure for commencing a real property tax foreclosure action is prescribed by the Real Property Tax Law (RPTL), not the CPLR.

 

,

​ALTHOUGH A PURPOSE OF THE WATERSHED CORPORATION WAS TO ENSURE CLEAN DRINKING WATER FOR NEW YORK CITY; OTHER PURPOSES INCLUDED FOSTERING DEVELOPMENT; THEREFORE THE UPSTATE PROPERTY OWNED BY THE CORPORATION WAS NOT ENTITLED TO A CHARITABLE OR PUBLIC USE TAX EXEMPTION PURSUANT TO REAL PROPERTY TAX LAW 420-A (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the upstate property owned by the Catskill Watershed Corporation (petitioner) was not entitled to a charitable or public purpose exemption from the town’s property tax. Although a purpose of the corporation was to ensure clean drinking water for New York City, the fact that the purposes included economic development precluded the charitable or public purpose tax exemption pursuant to Real Property Tax Law (RPTL) 420-a:

… [P]etitioner’s certificate of incorporation expressly provides that it is formed for, among other things, “the exclusively charitable or public purposes of . . . aiding that part of the . . . [community in the Watershed] by attracting new commerce and industry to such area and by encouraging the development of, or retention of, commerce and industry in such area, and lessening the burdens of government and acting in the public interest.” These near-identical reasons were rejected by the Court of Appeals, which acknowledged that, even though a property may very well provide a laudable “public benefit,” where the overall use is “to further economic development and lessen the burdens of government, [such use] cannot be deemed ‘charitable’ within the meaning of section 420-a (1) (a)” … . Nor do we find convincing petitioner’s federal tax-exempt status, as “evidence of an organization’s section 501 (c) (3) status, by itself, does not create a presumption that the entity is entitled to a tax exemption under [RPTL 420-a]” — particularly given that the “IRS’s definition of what constitutes an exempt ‘charitable purpose’ is exceedingly broad” … . Matter of Catskill Watershed Corp. v Assessor of the Town of Middletown, 2023 NY Slip Op 03055, Third Dept 6-8-23

Practice Point: Even if a purpose of a corporation is to benefit the public (here the protection of drinking water), where other purposes are designed to foster development, the property owned by the corporation is not entitled to a charitable or public purpose exemption from property tax pursuant to RPTL 420-a.

 

, ,

THE CITY OF OGDENSBURG PROPERLY PASSED A LOCAL LAW REPEALING A PRIOR LOCAL LAW WHICH OPTED OUT OF THE RPTL ARTICLE 11 PROVISIONS FOR DELINQUENT REAL ESTATE TAX COLLECTION; THE COUNTY’S ARGUMENT THAT THE LOCAL LAW UNLAWFULLY SHIFTED THE BURDEN OF TAX COLLECTION TO THE COUNTY AND SCHOOL DISTRICT WAS REJECTED (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Cannataro, determined the Local Law which repealed a prior Local Law in which the City of Ogdensburg opted out of the application of RPTL Article 11 (regarding the collection of delinquent real estate taxes) was not unconstitutional. The county argued repeal of the local law unlawfully shifted the burden of delinquent tax collection to the county and the school district. That argument was rejected:

Inasmuch as the County has no powers with respect to taxation that are not “unambiguously delegated” to it by the legislature or the Constitution … and the legislature has chosen to limit a county’s ability to enter into RPTL 1150 (1) agreements by making such agreement permissive rather than mandatory, it cannot be said that the City impaired the County’s power by doing as the legislature permits it to do under RPTL article 11. Therefore, we conclude that Local Law No. 2 does not violate the statutory and constitutional protections at issue, but effectuates a power the legislature granted to cities wishing to revoke their initial opt-out from article 11. Matter of St. Lawrence County v City of Ogdensburg, 2023 NY Slip Op 02757, CtApp 5-23-23

Practice Point: A city can opt out of the RPTL Article 11 provisions re: delinquent real estate tax collection, and it can later opt back in. Here the county’s argument that the city’s opting back in unlawfully shifted the tax collection burden to the county and school district was rejected.

 

, , ,

ALTHOUGH THERE IS MERIT TO THE DEFENDANTS’ ARGUMENT THEY WERE DEPRIVED OF THEIR PROPERTY WITHOUT JUST COMPENSATION IN THESE TAX FORECLOSURE PROCEEDINGS WHERE THEIR PROPERTIES WERE TRANSFERRED TO NEIGHBORHOOD RESTORE UNDER NYC’S THIRD PARTY TRANSFER PROGRAM, THE DEFENDANTS’ FAILURE TO ANSWER IN THE TAX FORECLOSURE ACTIONS AND THEIR FAILURE TO REDEEM WITHIN FOUR MONTHS PRECLUDED ANY RECOVERY (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Wooten, determined the tax foreclosures on defendants’ properties were valid and the transfer of the properties under New York City’s Third Party Transfer Program (TPT program) was proper. The court noted that, under the current procedure, property worth $2 million could be lost for nonpayment of a small water bill and the owner would receive no compensation. Here the city demonstrated it fulfilled the tax-foreclosure notification requirements and defendants did not answer and did not attempt to redeem the property within the four-month redemption period:

… [T]he defendants’ motions were time-barred due to their failure to move to vacate the judgment of foreclosure or to take any action to redeem the subject properties within the four-month redemption period … . In light of the presumption of regularity created by the entry of the judgment of foreclosure against the subject properties (see Administrative Code § 11-411), which became conclusive four months after the entry of the judgment …, there is no basis to consider the defendants’ contentions that the subject properties were not distressed … . Further, this Court has held that where, as here, the defendant property owners failed to interpose a timely answer or to redeem the property during the four-month period following the entry of the judgment of foreclosure, they are not entitled to “compensation” for any “surplus money as a result of the foreclosure and transfer of the property” under the TPT program … . Thus, while we emphasize that there is potential merit to the defendants’ contentions that they were deprived of their properties without just compensation, and that the transfer of a property which was not distressed under the TPT program was improper, we are constrained to conclude that those issues are not reviewable by this Court under the circumstances presented. Matter of Tax Foreclosure Action No. 53, 2023 NY Slip Op 02711, Second Dept 5-17-23

Practice Point: The court acknowledged that the city’s transfer of defendants’ properties to Neighborhood Restore under NYC’s Third Party Transfer program may have deprived defendants of just compensation for the taking of their properties, the fact that defendants did not answer in the tax foreclosure proceedings and did not attempt to redeem the properties within the four-month redemption period precluded any recovery.

 

THE COUNTY DID NOT SUBMIT SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPTL 1125 IN THIS PROPERTY TAX FORECLOSURE CASE (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the county (petitioner) in this real property tax foreclosure case did not demonstrate the respondent received notice of the foreclosure as required by RPTL 1125 and a recent Court of Appeals ruling:

In James B. Nutter & Co. v County of Saratoga (__ NY3d ___, 2023 NY Slip Op 01469 [2023], revg 195 AD3d 1359 [3d Dept 2021]), the Court ruled that RPTL 1125 (1) (b) (i) contains no presumption of service and that “an interested party may create a factual issue as to whether the taxing authority has complied with the requirements of RPTL 1125 (1) (b) . . . despite the taxing authority’s submission of the ‘affidavit[s] of mailing’ mandated by [RPTL] 1125 (3) (a) and evidence that no mailings were returned” (id. at *3). Here, petitioner’s attorney avers in support of its motion for summary judgment that “affidavits documenting compliance with all RPTL requirements for this proceeding have been publicly filed with the [c]ounty [c]lerk as a part of the judgment roll therein; and, assuming without conceding, that any noticing defects as to [a]nswerants occurred, by service of an [a]nswer therein [a]nswerants concedes actual notice of the pendency of this proceeding and its applicability to the above said parcel, thereby as a matter of law obviating any such defects.” Although RPTL 1125 (1) (b) “contains no requirement of actual notice and evidence of the failure to receive notice is, by itself, insufficient to demonstrate noncompliance” (id.), this generic language failed to affirmatively establish compliance with the statutory mailing requirements as it failed to establish that the notice of foreclosure was mailed to respondent’s actual mailing address or the last address listed in petitioner’s records and that the records had been searched to verify that the mailings to respondent were not returned … . Matter of County of Albany (Johnson), 2023 NY Slip Op 02564, Third Dept 5-11-23

Practice Point: Here the county failed to prove strict compliance with the notice requirements of RPTL 1125 precluding summary judgment in this real property tax foreclosure case.

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2024 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy