Real Property Tax Law Archives - New York Appellate Digest

MAINTENANCE FEES IMPOSED BY THE TOWN FOR TRIMMING AND REMOVING BRUSH ON PRIVATE PROPERTY ARE NOT TAXES, THEREFORE THE TOWN IS NOT ENTITLED TO CREDIT FROM THE COUNTY FOR UNPAID MAINTENANCE FEES, TWO JUSTICE DISSENT (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, over a two justice dissent, determined that maintenance fees imposed by the town for trimming and removing brush from private property are not taxes. Therefore the town cannot seek credit from the county for unpaid maintenance fees:

Section 936 (1) of the RPTL [Real Property Tax Law] provides that the county guarantees the town’s “taxes” by crediting the town “with the amount of . . . unpaid delinquent taxes.” The question raised on this appeal is whether the maintenance charges are “taxes” for the purposes of RPTL 936 and thus whether the County respondents must credit the Town petitioners for the amount of any such charge that goes unpaid or is delinquent.

The maintenance charges are assessed against individual properties for their benefit and thus do not fall within the general definition of “tax,” which instead contemplates ” public burdens imposed generally for governmental purposes benefitting the entire community’ ” … . Nor do those charges constitute “special ad valorem levies” as defined by RPTL 102 (14). A ” [s]pecial ad valorem levy’ ” is “a charge imposed upon benefitted real property in the same manner and at the same time as taxes for municipal purposes to defray the cost, including operation and maintenance, of a special district improvement or service” (id.). Although the definition of “tax” does, in certain enumerated circumstances, include “special ad valorem levies” (RPTL 102 [20]), the maintenance charges are not special ad valorem levies because they are not used to defray the cost of a “special district improvement or service” (RPTL 102 [14]). Maintenance charges also are not assessed “ad valorem” because the amount of the charge is not based on property value but is instead based on the actual expense to the town. Moreover, assuming, arguendo, that the charges are “special assessments” as defined by RPTL 102 (15), we note that the definition of “tax” specifically excludes “special assessments” (RPTL 102 [20]). Matter of Town of Irondequoit v County of Monroe, 2019 NY Slip Op 06235, Fourth Dept 8-22-19

August 22, 2019/by Bruce Freeman

Education-School Law, Municipal Law, Real Property Tax Law, Utilities

FIBER OPTIC CABLES AND ENCLOSURES ARE TAXABLE UNDER REAL PROPERTY TAX LAW (RPTL) 102 (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that the fiber optic cables and equipment at issue constitute taxable property under RPTL 102, in that the statutory exception for radio and television signals was not demonstrated to be applicable:

… [T]ax exclusions are never presumed or preferred and before [a] petitioner may have the benefit of them, the burden rests on it to establish that the item comes within the language of the exclusion.’ Moreover, a statute authorizing a tax exemption will be construed against the taxpayer unless the taxpayer identifies a provision of law plainly creating the exemption . . . Thus, the taxpayer’s interpretation of the statute must not simply be plausible, it must be the only reasonable construction’ ” … . …

… [P]etitioners contend that their fiber optic installations are not taxable property pursuant to RPTL 102 (12) (i) (D) because, inter alia, petitioners use those properties to some unspecified extent to transmit “news or entertainment radio, television or cable television signals for immediate, delayed or ultimate exhibition to the public” … . We reject that contention. In light of petitioners’ failure to establish the percentage of their fiber optic installations that are used for those purposes, we may accept their contention only if we conclude that any such usage of fiber optic installations, no matter how slight, is sufficient to exclude the properties from the tax. That is not ” the only reasonable construction’ ” of the statute … , indeed, it is “simply [not plausible” … . If we accept that interpretation, based on the proliferation of uses of cell phones to stream video, television, and other programming, all fiber optic cables will be excluded from taxation. That, however, conflicts with the Court of Appeals’ determination in T-Mobile Northeast, LLC that such property is taxable (32 NY3d at 608). Moreover, RPTL 102 (12) (i) provides that taxable property includes all “wires, poles, supports and inclosures for electrical conductors upon, above and underground used in connection with the transmission or switching of electromagnetic voice, video and data signals between different entities.” Matter of Level 3 Communications, LLC v Erie County, 2019 NY Slip Op 05913, Fourth Dept 7-31-19

July 31, 2019/by Bruce Freeman

Associations, Real Property Tax Law

SUPREME COURT SHOULD NOT HAVE GRANTED SUMMARY JUDGMENT FINDING THAT THE VALUE OF COMMON AREAS OF A DEVELOPMENT OWNED AND MAINTAINED BY PETITIONER HOMEOWNERS’ ASSOCIATION WAS ZERO FOR PROPERTY TAX PURPOSES BECAUSE OF ENCUMBRANCES AND RESTRICTIONS, QUESTIONS OF FACT ABOUT THE VALUE OF THE COMMON AREAS HAD BEEN RAISED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined questions of fact precluded summary judgment finding that the value of the common areas of a development owned and maintained by petitioner homeowners’ association was zero because of encumbrances and restrictions on the property. Petitioner sought a reduction of the tax assessments pursuant to Real Property Tax Law (RPTL) article 7. The town and the village had assessed the value of the common areas in the millions of dollars:

… [T]he declaration of protective covenants purports to impose a servitude upon the common area parcels in the nature of an easement or covenant that runs with the land; however, petitioner’s bylaws specifically state that individual lot owners “shall have a license to use the [c]ommon [a]reas.” To the extent that the corresponding deeds to the individual lot owners recite that each conveyance was made subject to both the declaration of protective covenants and petitioner’s bylaws, we now reiterate that “[s]uch a conflict in terminology does not lend itself to summary relief” … . …

… [P]etitioner failed to demonstrate, as a matter of law, that the assessed property values of the individual lot owners within the development already include an enhanced value or premium sufficient to cover or offset the value of petitioner’s common area parcels. …

Nor did petitioner sufficiently establish that the subject common area parcels have zero or only nominal value. Indeed, “[i]t is possible that a parcel is so interwoven with a dominant estate that it has no extrinsic value that is available for tax purposes. If, however, it is shown that a servient parcel[, i.e., the common area parcels,] has substantial value, the land can be taxed despite its relationship to a dominant estate owned by a member of a community development” … . Matter of The Assn. of Prop. Owners of Sleepy Hollow Lake, Inc. v McBride, 2019 NY Slip Op 05371, Third Dept 7-3-19

July 3, 2019/by Bruce Freeman

Landlord-Tenant, Municipal Law, Real Property Tax Law

BUILDINGS RECEIVING REAL PROPERTY TAX LAW 421-g BENEFITS ARE NOT SUBJECT TO THE LUXURY DEREGULATION PROVISIONS OF THE RENT STABILIZATION LAW (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over an extensive dissent, reversing the Appellate Division, determined that “plaintiffs’ apartments, which are located in buildings receiving tax benefits pursuant to Real Property Tax Law (RPTL) § 421-g, are [not] subject to the luxury deregulation provisions of the Rent Stabilization Law (RSL … .”:

The legislature’s intention, as reflected in the language of the statute at issue here, is clear and inescapable. During “the entire period for which the eligible multiple dwelling is receiving” RPTL 421-g benefits, it “shall be fully subject to control” under the RSL, “notwithstanding the provisions of” that regime or any other “local law” that would remove those dwelling units from such control, “unless exempt under such local law from control by reason of the cooperative or condominium status of the dwelling unit” (RPTL 421-g [6] …) … . The statute does not say that eligible units shall be fully subject to “the provisions of” any local law for the stabilization of rents. Put differently, the notwithstanding clause of the statute evinces the legislature’s intent that any “local law for the stabilization of rents” that would exempt the unit from “control under such local law” does not apply to buildings receiving RPTL 421-g benefits, with the sole exception being for cooperatives and condominiums … . Kuzmich v 50 Murray St. Acquisition LLC, 2019 NY Slip Op 05057, CtApp 6-25-19

June 25, 2019/by Bruce Freeman

Foreclosure, Real Property Actions and Proceedings Law (RPAPL), Real Property Tax Law

PETITIONER IS NOT ENTITLED TO SURPLUS PROCEEDS AFTER A TAX FORECLOSURE SALE (FOURTH DEPT).

The Fourth Department determined petitioner was not entitled to the surplus proceeds after a tax foreclosure sale:

We reject petitioners’ contention that they have a right to the surplus proceeds of the foreclosure sale. As respondent correctly contends, petitioners’ application for surplus proceeds was improperly predicated upon provisions of RPAPL article 13 that apply to surplus monies arising from the sale of property in mortgage foreclosure proceedings (see e.g.RPAPL 1361 [1]). RPAPL article 13, entitled “Action to Foreclose a Mortgage,” does not apply to properties acquired by a tax district pursuant to an in rem foreclosure proceeding under RPTL article 11. Thus, petitioners’ reliance on RPAPL article 13 and cases involving mortgage foreclosures is misplaced … . …

Moreover, petitioners are not entitled to surplus proceeds under RPTL article 11. Contrary to petitioners’ assertion that RPTL article 11 is “silent” regarding any remaining interest that former property owners may have, such as entitlement to surplus proceeds upon the sale of the property following a default judgment of foreclosure, the statute provides that, when property owners neither redeem the property nor interpose an answer, the tax district is entitled to a deed conveying an estate in fee simple absolute and the property owners are “barred and forever foreclosed of all . . . right, title, interest, claim, lien or equity of redemption” that they may have had in the property (RPTL 1136 [3] …). Where the tax district obtains a valid default judgment of foreclosure, which is presumed here given that the default judgment is not subject to challenge on this appeal, the formr property owners are not “entitled to any compensation upon the resale of the property” … , and the tax district may “retain . . . the entire proceeds from [the re]sale” … . Matter of Hoge v Chautauqua County, 2019 NY Slip Op 04821, Fourth Dept 6-14-19

June 14, 2019/by Bruce Freeman

Real Property Tax Law

PETITIONER, A CORPORATION OPERATING A BUSINESS ON THE PROPERTY, WAS NOT THE OWNER OF THE REAL PROPERTY AND WAS NOT OBLIGATED TO PAY PROPERTY TAXES, THEREFORE PETITIONER DID NOT HAVE STANDING TO CHALLENGE THE PROPERTY TAX ASSESSMENT PURSUANT TO RPTL 704 (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Garcia, over an extensive two-judge dissent, determined that the petitioner, which did not own the property during the years the property tax assessments were challenged, lacked standing pursuant to RPTL 704. The property was owned by a trust during the relevant years, and petitioner is a family corporation which operates a House of Pancakes franchise on the property. The property held by the trust was transferred to Portia DeGast in 2013. She is the president of petitioner corporation, which had paid all the property. The tax years in issue were 2010 – 2013:

… [T]he parties agree that, during the relevant years, petitioner was not the owner of the subject property, nor was petitioner legally bound to pay the real property taxes. * * * … [P]etitioner here was not “legally responsible” for paying the undivided tax liability … . * * *

… Portia DeGast [is not] an aggrieved party based on her status as a beneficiary of the … Trust. The parties agree that, during the relevant years, the trust itself — not Ms. DeGast — owned the subject property. Like petitioner, Ms. DeGast was not authorized to pursue an article 7 proceeding on the property owner’s behalf. And, like petitioner, Ms. DeGast lacked any legal obligation to pay the real property taxes; to the contrary, the terms of the … Trust explicitly authorized beneficiaries to “enjoy the assets held by the trust without rent or other compensation to the trust, such as by occupying the trust’s real property” … . In any event, the petitioner in this matter is the …Pancake House — not Ms. DeGast. Matter of Larchmont Pancake House v Board of Assessors, 2019 NY Slip Op 02441, CtApp 4-2-19

April 2, 2019/by Bruce Freeman

Agency, Real Property Law, Real Property Tax Law

CONDOMINIUM UNIT OWNERS’ AUTHORIZATION OF THE CONDOMINIUM BOARD TO CHALLENGE THE CONDOMINIUM’S REAL PROPERTY TAX ASSESSMENT REMAINS VALID FOR SUBSEQUENT TAX YEARS UNLESS CANCELED OR RETRACTED, THERE IS NO NEED FOR YEARLY AUTHORIZATIONS (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a two judge dissent, reversing the Appellate Division, determined that a condominium board of managers need only seek one authorization from condominium unit owners to challenge the condominium’s real property tax assessment The authorization is deemed to remain in effect in subsequent tax years unless canceled or retracted:

This appeal presents the question whether Real Property Law § 339-y (4) requires a condominium board of managers to obtain a separate authorization from each condominium unit owner granting the board authority to proceed on behalf of that owner for each tax year in which the board challenges the condominium’s real property tax assessment. We conclude that section 339-y (4) allows a standing authorization issued by an owner to confer authority upon a board to act on behalf of that owner for the tax year in which that authorization was issued and in all subsequent tax years, unless such authorization is canceled or retracted. Matter of Eastbrooke Condominium v Ainsworth, 2019 NY Slip Op 02384, CtApp 3-28-19

March 28, 2019/by Bruce Freeman

Civil Procedure, Real Property Tax Law

EXTENSION OF TIME TO FILE A MOTION TO VACATE A TAX FORECLOSURE JUDGMENT SHOULD NOT HAVE BEEN GRANTED, CPLR 2004 DOES NOT APPLY TO TIME LIMITS SPECIFICALLY CALLED FOR IN THE REAL PROPERTY TAX LAW (RPTL) (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined respondents’ motion to vacate a tax foreclosure judgment should not have been granted. The court noted that an extension of time pursuant to CPLR 2004 should not be granted where the Real Property Tax Law addresses the issue:

We further … with petitioner that the court erred in granting respondents’ implicit request for an extension of time to bring the motion (see CPLR 2004). The Court of Appeals has emphasized that, ” [a]s a general rule, there should be no resort to the provisions of the CPLR in instances where the [RPTL] expressly covers the point in issue’ “… . We conclude that RPTL article 11 comprehensively addresses the situation where a default judgment of foreclosure is properly obtained and the defaulting property owner seeks to reopen the default and, therefore, such property owner “may not reach outside of the RPTL to [reopen] such a proceeding”… . More particularly, RPTL 1131 expressly covers the point in issue here inasmuch as it provides, in unambiguous and prohibitory language, that “[a] motion to reopen any such default may not be brought later than one month after entry of the judgment” … . To countenance resort to CPLR 2004 under these circumstances would undermine the statutory scheme established by the legislature and erode the finality of foreclosure proceedings even after a defaulting property owner has been afforded due process … . Matter of Foreclosure of Tax Liens By Proceeding In Rem Pursuant To Art. 11 of The Real Prop. Tax Law By The County of Wayne Relating To The 2015 Town & County Tax (Schenk), 2019 NY Slip Op 01029, Fourth Dept 2-8-19

February 8, 2019/by Bruce Freeman

Municipal Law, Real Property Tax Law

PERSONAL PROPERTY LOCATED ON REAL PROPERTY SUBJECT TO A TAX FORECLOSURE WAS NOT ABANDONED BY THE OWNER OF THE PERSONAL PROPERTY (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice Troutman, reversing Supreme Court, determined respondent’s application to vacate “that portion of a judgment of [tax} foreclosure that deemed respondent’s personal property located at a foreclosed property to be abandoned to petitioner” should have been vacated. The petitioner-city foreclosed on real property which was not owned by the respondent. The respondent owned hundreds of auto parts which were on the foreclosed property:

… [W]e agree with respondent that the court lacked jurisdiction to dispose of personal property. Supreme Court may exercise in rem jurisdiction over real property in a proceeding to foreclose a tax lien (see RPTL 1120 et seq.). A proceeding of that kind “produces a judgment binding only on those who have been named as parties and duly notified—the usual understanding of what due process requires”… . ” [T]he failure to substantially comply with the requirement of providing the taxpayer with proper notice constitutes a jurisdictional defect which operates to invalidate the sale or prevent the passage of title’ “… . Here, petitioner did not provide notice to respondent with respect to respondent’s personal property and could not have done so. The notice procedures in the statute relate to real property only, not personal property (see RPTL 1122-1125). Moreover, RPTL article 11 does not contain a mechanism by which the tax district may obtain a party’s personal property upon that party’s default. In the event of a default, the tax district is awarded “possession of any parcel of real property described in the petition of foreclosure” and is entitled to a deed conveying to the tax district full and complete title to the parcel (RPTL 1136 [3] [emphasis added]). Upon the execution of the deed, any person with a right or interest “in or upon such parcel shall be barred and forever foreclosed” of that right or interest (id. [emphasis added]).

Nothing in RPTL article 11 confers upon Supreme Court in rem jurisdiction over personal property. Matter of The Foreclosure of Tax Liens By Proceeding In Rem Pursuant To Art. 11 of The Real Prop. Tax Law By The City of Utica (Suprunchik), 2019 NY Slip Op 01020, Fourth Dept 2-8-19

February 8, 2019/by Bruce Freeman

Real Property Tax Law

LARGE CELLULAR DATA TRANSMISSION EQUIPMENT OWNED BY T-MOBILE IS TAXABLE REAL PROPERTY SUBJECT TO REAL PROPERTY TAX LAW 102 (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge DiFiore, determined that certain large cellular data transmission equipment owned by T-Moblle is taxable real property subject to Real Property Tax Law (RPTL) 102 (12) (i):

T-Mobile owns large cellular data transmission equipment that it has installed on the exterior of buildings in Mount Vernon. The installations — which are large enough to require the use of “stealth walls” that shield them from view — consist of multiple pieces of interconnected equipment, including base transceiver stations (essentially cabinets housing wiring and providing battery power); antennas that transmit and receive the signals; and coaxial, T-1, and fiber optic cables running amongst the other components. T-Mobile enters multi-year leases with the owners of the buildings to enable it to occupy the exterior space on the buildings for installation of the equipment. * * *

Under the RPTL, all “real property within the state” is subject to real property taxation unless otherwise exempt by law (see RPTL 300). “Real property” is defined under subdivision (12) of RPTL 102. Under RPTL 102(12)(i), that term includes: “When owned by other than a telephone company as such term is defined in paragraph (d) hereof, all lines, wires, poles, supports and inclosures for electrical conductors upon, above and underground used in connection with the transmission or switching of electromagnetic voice, video and data signals between different entities separated by air, street or other public domain . . . .” … . …

The plain language of paragraph i encompasses each component of T-Mobile’s data transmission equipment, which consists of base transceiver stations; antennas; and coaxial, T-1, and fiber optic cables. The base transceiver stations are essentially cabinets that house cables and other electrical components and provide battery power, so they qualify as “inclosures for electrical conductors.” The large rectangular antennas are part of the base transceiver stations and, thus, also “inclosures for electrical conductors.” The various cables in the installations are “lines” and/or “wires” under the plain text of the statute. Because the primary function of the equipment installations is to transmit cellular data, the components are “used in connection with the transmission or switching of electromagnetic voice, video and data signals between different entities separated by air, street or other public domain,” as required by the statute. Thus, although ambiguities in tax statutes are generally resolved in favor of the taxpayer (… , that doctrine is not implicated here because the plain text of RPTL 102(12)(i) unambiguously indicates that T-Mobile’s equipment installations are taxable real property. Matter of T-Mobile Northeast, LLC v DeBellis, 2018 NY Slip Op 08539, CtApp 12-13-18

CELL PHONE COMPANIES, CELL TOWERS

December 13, 2018/by Bruce Freeman