You are here: / Real Property Tax Law

Action Based Upon Misclassification of Property Must Be Brought Under Article 7 of the Real Property Tax Law

In determining that an action based on the allegation property had been misclassified must be brought under article 7 of the Real Property Tax Law (RPTL), the Second Department explained when a plenary action challenging property tax can and cannot be maintained:

In general, the proper method for challenging excessive or unlawful real property tax assessments is by the commencement of a tax certiorari proceeding pursuant to RPTL article 7 … . Such a proceeding, which must be commenced within 30 days after the filing of the final assessment roll, can challenge an assessment as being excessive, unequal, or unlawful, or as resulting from the property being misclassified (see RPTL 702[2]; 706[1]).

The procedures of RPTL article 7 need not be followed, and a plenary action may be commenced collaterally attacking the assessment where the challenge is that the taxing authority has exceeded its power, such as by effectively withdrawing a previously recognized exemption … . A collateral attack may also be mounted where the challenge is based upon “the method employed in the assessment involving several properties rather than the overvaluation or undervaluation of specific properties” … .

Here, all of the allegations regarding the assessment stem from the Board’s determination that the subject property should be classified as “Class two” property on the 2007/2008 tax roll … . As the Supreme Court properly pointed out, a challenge to this alleged misclassification had to be asserted in a proceeding pursuant to RPTL article 7 … . Tricarico v County of Nassau, 2014 NY Slip Op 05857, 2nd Dept 8-20-14

 

Mistaken Classification of Property Resulting In a Much Too Large Tax Bill Was a “Clerical Error” Which Could Be Corrected by the City Department of Finance—No Need for Property Owner to Commence a Tax Certiorari Proceeding

The Second Department, in a full-fledged opinion by Justice Leventhal, over a dissent, determined that the petitioner could challenge a mistaken classification of his property (which resulted in a property tax more than $40,000 too high) through an Article 78 proceeding finding that a tax certiorari proceeding under the Real Property Tax Law (RPTL) was not the exclusive vehicle for the challenge.  The Article 78 proceeding was timely, a tax certiorari proceeding would not have been timely.  The mistake was deemed a “clerical error” which could have been corrected by the NYC Department of Finance (DOF) pursuant to City Administrative Code sectionn 11-206:

We agree with the petitioner that the DOF’s determination, at the very least, suggests that it misapprehended both the relief sought by the petitioner as well as its authority to grant the relief actually requested. Administrative Code § 11-206 vests the DOF with the discretion to correct tax assessments that are erroneous due to a clerical error or to an error of description; the DOF’s authority is not limited to transcription errors or arithmetical errors. Moreover, contrary to the DOF’s representation in the letter dated March 24, 2011, the authority to correct such an error pursuant to Administrative Code § 11-206 does not lie with the Tax Commissioner or the judiciary. Therefore, the Supreme Court erred in granting the respondents’ motion pursuant to CPLR 3211(a)(5) and (7) to dismiss the petition on the grounds that it fails to state a cause of action and that the proceeding was time-barred. Matter of Better World Real Estate Group v New York City Dept of Fin, 2014 NY Slip Op 05786, 2nd Dept 8-13-14

 

, , ,

In the Context of a Challenge to the Tax Assessment of a Home, the Town Must Obtain a Warrant Based Upon Probable Cause Before It Can Enter the Home (Over the Homeowner’s Objection) to Inspect it

The Second Department, in a full-fledged opinion by Justice Dickerson, determined that the Town did not make the requisite showing to justify an inspection of the interior of petitioner’s home.  Petitioner had challenged the tax assessment of her property.  Supreme Court had ruled the Town could enter petitioner’s home to inspect it.  The Second Department reversed, finding that Supreme Court improperly placed the burden on the petitioner to demonstrate why inspection should not be allowed.  The burden should have been placed on the Town to make a showing that a warrant allowing entry of the home was supported by probable cause:

We hold that the Town respondents bore the burden of demonstrating their entitlement to enter the petitioner’s home over her objections. The petitioner bore no burden, in the first instance, to demonstrate her right to preclude the Town respondents from entering into her home against her will. The right to be free from unreasonable searches is granted by the Fourth Amendment, and made applicable to the States and their subdivisions by virtue of the Fourteenth Amendment (see Mapp v Ohio, 367 US 643), though this right is by no means absolute. By directing the petitioner to move to preclude the Town’s appraiser from conducting an interior appraisal inspection of her home, the Supreme Court improperly shifted, from the Town respondents, the burden of demonstrating their entitlement to enter into the petitioner’s home, to the petitioner to demonstrate her right to preclude the Town respondents from sending an agent into her home. We further hold that, based on a proper balancing of the Town respondents’ interest in conducting the inspection against the petitioner’s Fourth Amendment rights, and the privacy invasion that such a “search” would entail, the Town respondents failed to satisfy their burden. * * *

Since the Town respondents sought entry into the petitioner’s home to have the Town’s appraiser conduct an inspection of the premises, the Town respondents were required to obtain a warrant upon a showing of probable cause. By directing the petitioner to move to preclude the Town respondents from conducting an interior inspection of her home, the Supreme Court improperly shifted the burden from the Town respondents to demonstrate their entitlement to entry into the petitioner’s home upon a showing of probable cause, to the petitioner to demonstrate her right to deny entry to the Town respondents … . “[B]y erroneously requiring [the] petitioner[ ] to move to preclude, the court did not properly evaluate the reasonableness of the inspections sought by respondents, i.e., the court did not conduct the necessary Fourth Amendment analysis balancing respondents’ need for interior inspections against the invasion of petitioner[‘s] privacy interests that such inspections would entail” … . Matter of Jacobowitz v Board of Assessors for the Town of Cornwall, 2014 NY Slip Op 05544, 2nd Dept 7-30-14

 

,

Property Should Not Have Been Restored to Petitioner—Time for Redemption Had Passed—Default Judgment in Tax Foreclosure Action Extinguished Petitioner’s Rights in the Property

The Fourth Department determined Supreme Court should not have restored title to property to the petitioner after the a default judgment had been entered in a tax foreclosure action.  The time for redemption had passed and had not been extended:

The Treasurer’s posting of the tax enforcement notification at petitioner’s residence on April 25, 2012 extended the right of redemption until May 25, 2012 (see RPTL 1125 [1] [b] [iii]). Only a local law could extend the cut-off date for redemption (see RPTL 1111 [2]) and, thus, contrary to petitioner’s contention, the published notice of the tax auction could not extend that date of redemption. Where a valid tax lien exists, and the taxing authority followed all proper procedures in foreclosing the lien, the taxpayer’s property interests are “lawfully extinguished as of the expiration of the[ ] right to redemption and the entry of the judgment of foreclosure” … . Thus, all of petitioner’s right, title and interest in the parcels, in her individual and representative capacities, was extinguished when the default judgment was entered in the tax foreclosure action on June 18, 2012 (see RPTL 1123 [8]).  Matter of Johnstone v Treasurer of Wayne County, 2014 NY Slip Op 04590, 4th Dept 6-20-14

 

First Appellate Decision Addressing the Computation After Default of a Delinquent Tax Installment Agreement

In a tax foreclosure proceeding based upon the alleged default of the respondent in making installment payments on the taxes owed, the Third Department, in finding County Court had not correctly determined the redemption amount correctly, explained, in a full-fledged opinion by Justice McCarthy,  how the calculation should be made:

We begin with the statutory requirements for installment agreements, as relevant to a default. RPTL 1184 (6) calls for amortization of interest over the period of the agreement and says that each installment payment is due on the last day of the month. RPTL 1184 (7) refers to RPTL 924-a for the applicable interest rate, which here is 12% per annum or 1% per month (see RPTL 924-a [1], [2]). Pursuant to RPTL 1184 (7), “[i]f an installment is not paid” by its due date, “interest shall be added at the applicable rate for each month or portion thereof until paid. In addition, if an installment is not paid by the end of the fifteenth calendar day after the payment due date, a late charge of [5%] of the overdue payment shall be added.” In the event of a default, the taxing authority has “the right to require the entire unpaid balance, with interest and late charges, to be paid in full” (RPTL 1184 [8] [b]), and can also go forward with foreclosure or enforce the collection of the delinquent tax lien pursuant to any other applicable law (see RPTL 1184 [8] [b]). * * *

We start by explaining how to calculate “the entire unpaid balance.” Although the statute may be complex, we find that its language is unambiguous and, therefore, we must give effect to its plain meaning … . Respondent acknowledges that it failed to pay the September, October and November 2011 installment payments. The “entire unpaid balance” must be figured as of the date that petitioner demanded that the balance be paid in full (or accelerated it), which occurred here after the September installment payment was overdue. When that payment was not paid by its due date, 1% interest should have begun to accrue (see RPTL 1184 [7])[FN3]. The statute calls for interest to be added if “an installment” is not paid, so this interest should be calculated on the overdue September installment payment. In addition, a 5% late charge should have been added for the September installment payment because that payment was overdue by more than 15 days (see RPTL 1184 [7] [imposing late charge of 5% “of the overdue payment”]). So the amount owed as of the date of acceleration, but before acceleration occurred, included the amount of the September installment payment, plus 1% interest on that installment payment amount from the day after the September payment was due until the date of acceleration, plus 5% of the September installment payment amount as a late charge. Adding that sum of September’s payment, interest and late charge to the remaining unpaid principal as of the date of acceleration (covering what would have been the October and November installment payments, but not including the amortized interest for those months as those payments were not yet due under the agreement) will produce “the entire unpaid balance.”

From the time that the balance was demanded (or accelerated), 1% interest per month is due on that amount until the property was redeemed. Although interest is still calculated at 1%, this interest rate is not determined under the statutory provisions dealing with interest on installment agreement payments (see RPTL 1184 [6], [7]), but is determined under the default provision of RPTL 1184 (8) (b) that allows petitioner to enforce the collection of the delinquent tax lien pursuant to any other applicable law (i.e., RPTL 924-a, which addresses interest on tax delinquencies).  Matter of County of Ulster…, 2014 NY Slip Op 05398, 3rd Dept 7-17-14

 

,

Parcels of Land Entitled to Tax Exempt Status Despite Alleged Violations of Building and Fire Code

The Third Department determined three parcels of land were entitled to tax exempt status, based upon the use of the land for religious and charitable purposes, despite alleged building and fire code violations:

RPTL 420-a (1) (a) provides, in relevant part, that “[r]eal property owned by a corporation or association organized or conducted exclusively for religious [or] charitable . . . purposes . . . and used exclusively for carrying out thereupon\. . . such purposes . . . shall be exempt from taxation as [therein] provided.” To demonstrate entitlement to this exemption, “(1) the [petitioning] entity must be organized exclusively for purposes enumerated in the statute, (2) the property in question must be used primarily for the furtherance of such purposes, . . . (3) no pecuniary profit, apart from reasonable compensation, may inure to the benefit of any officers, members, or employees, and (4) the [petitioning] entity may not be simply used as a guise for profit-making” … . Notably, “a property owner seeking a real property tax exemption which demonstrates that it is a not-for-profit entity whose tax-exempt status has been recognized by the Internal Revenue Service and whose property is used solely for [charitable] purposes has made a presumptive showing of entitlement to [the] exemption” … . * * *

…[B]ecause the alleged violations do not divest petitioner of its ability to use the affected parcels for religious or charitable purposes, such violations cannot operate to deprive petitioner of a tax exemption to which it otherwise has demonstrated entitlement. To the extent that respondents believe that petitioner is not in compliance with all relevant provisions of the Town’s building and fire code, their remedy is to issue a stop work order or pursue whatever enforcement proceedings may be available. Oorah Inc v Town of Jefferson, 2014 NY Slip Op 05387, 3rd Dept 7-17-14

 

,

Tax Assessment Reductions Can Be Sought Solely through a Tax Certiorari Proceeding Under the Real Property Tax Law, Not Through an Article 78 Proceeding

The Second Department determined the procedure under the Real Property Tax Law (RPTL) was the only avenue available to petitioner to seek a reduction of tax assessments.  Petitioner had successfully challenged the tax assessments for the 2006/2007 tax year and then sought a reduction for the following year in an Article 78 proceeding.  The Second Department determined petitioner should have sought reductions for all the relevant tax years within the time limits of RPTL 702(2) and could not use an Article 78 proceeding to collaterally attack the assessment:

“Ordinarily, the proper method for challenging excessive or unlawful real property tax assessments is by the commencement of a tax certiorari proceeding pursuant to article 7 of the Real Property Tax Law” … . Such a proceeding is properly commenced after exhaustion of the administrative grievance remedies, and within 30 days after the filing of the final assessment roll (see RPTL 702[2]…). An “excessive assessment” subject to review pursuant to RPTL article 7 includes an assessment of a special assessing unit that fails to comply with the limitations on increases in assessed value set forth in RPTL 1805 (see RPTL 701[4][d]; 706[1]…).

Collateral attacks on assessments are proper where the jurisdiction of the taxing authority is challenged, the tax itself is claimed to be unconstitutional …, or the challenge is to “the method employed in the assessment of several properties rather than the overvaluation or undervaluation of specific properties” … . None of these exceptions to the exclusive applicability of RPTL article 7 are present here, since the petitioner challenged, as excessive, the assessments of specific parcels of property by virtue of the appellants’ failure to comply with RPTL 1805 (see RPTL 701[4][d]).

The petitioner contends that, nonetheless, the commencement of a CPLR article 78 proceeding within the time provided for by CPLR 217 is the proper vehicle by which to compel the requested transition assessments because recalculation of the 2007/2008 assessments only became necessary after the assessments for the previous tax year were reduced by the Supreme Court and that reduction was affirmed pursuant to our decision and order in Matter of Rainbow Diner v Board of Assessors (71 AD3d 901). We reject this contention, since the petitioner was required to timely exhaust administrative remedies applicable to tax certiorari proceedings, and its challenge was subject to the limitations period of RPTL 702(2). Matter of Jonsher Realty Corp/Melba Inc v Board of Assessors, 2014 NY Slip Op 04195, 2nd Dept 6-11-14

 

, , ,

County Could Not Avoid or Delay Payment of Property Tax Refund on Financial Hardship Grounds

The Second Department determined the county did not make a sufficient showing of “fiscal chaos” to allow it to avoid immediate payment of a refund the  overpayment of property taxes:

Contrary to the appellants’ contention, the decisions of the Court of Appeals … do not stand for the proposition that a court may decline to issue an award of damages or refunds against a municipality whenever such award will result in financial hardship … . “Instead, these cases stand for the more limited proposition that, where a municipality has reasonably relied upon a widespread and longstanding practice (as in Matter of Hellerstein) or a statute is later invalidated (as in Foss), and where applying the invalidation retroactively would call into question a settled assessment roll or property rights based thereon,’ a court may exercise its discretion by giving its holding only prospective application” … . No such situation is present in the instant case. Accordingly, under the circumstances presented here, the Supreme Court properly rejected the appellants’ “fiscal chaos” defense, and granted the petitioner’s motion to compel the appellants to satisfy obligations that they incurred in connection with the stipulation of settlement and, thus, to calculate and pay the refund owed to it. Matter of Long Is Automotive Group Inc v Board of Assessors of Nassau County, 2014 Slip Op 02586, 2nd Dept 4-16-14

 

,

Statutory Notice Requirements for Tax Foreclosure Me

The Third Department determined the tax foreclosure proceedings were valid.  The motion to reopen the default judgment was untimely and the statutory notice requirements were met:

A motion to reopen a default judgment of tax foreclosure ‘may not be brought later than one month after entry of the judgment'” … . Significantly, “‘the statute of limitations set forth in RPTL 1131 applies even where, as here, the property owner asserts that he or she was not notified of the foreclosure proceeding'”… .

…[W]e reject respondent’s contention that the statute of limitations period for its motion to vacate never commenced running because petitioner failed to comply with the notice requirements of RPTL 1125. Pursuant to RPTL 1125 (1) (b) (i), notice of a foreclosure proceeding shall be sent to a party entitled to notice by certified mail and first class mail and “notice shall be deemed received unless both the certified mailing and the ordinary first class mailing are returned by the United States postal service within [45] days after being mailed” … . Further, where one of the notices is not returned within the requisite period, a petitioner is “‘not obligated to take additional steps to notify [the] respondent of the foreclosure proceeding'” … . Here, the first class mailing sent to respondent in October 2011 was never returned to petitioner. Additionally, although the November 2011 first class and certified mailings were both returned, that did not occur within 45 days; they were returned more than 100 days after being mailed. As a result, the mailings were deemed received and petitioner’s obligation to provide notice under the statute was satisfied … . Matter of County of Clinton, 2014 NY Slip Op 02486, 3rd Dept 4-10-14

 

,

Appraisal Report Lacking Required Supporting Data Properly Struck

The Third Department determined Supreme Court properly struck the appraisal report offered by the petitioner in an effort to reduce the assessed value of petitioner’s golf courses.  The report was struck for failure to include supporting data (required by 22 NYSRR 202.59 [g][2]):

Petitioner’s appraisal report employed the income capitalization approach …, which purported to establish value by capitalizing the anticipated net operating income from a single year by a market oriented capitalization rate. The appraisal report used as a key component income and expenses from two other golf courses, and this information formed the basis for the operating expense ratio. However, the identity of the other two courses used in compiling this information was not provided, but was listed as “confidential” since petitioner’s appraiser had ostensibly obtained the information when working for such courses. We agree with Supreme Court that this information was critical and, since undisclosed, ran afoul of 22 NYCRR 202.59 (g) (2) … . *  *  *

We further note that, even if the presumption regarding the assessor’s value is rebutted, petitioner still had the burden of establishing overvaluation by a preponderance of the evidence …, and we generally accord deference to Supreme Court’s credibility determinations in analyzing the appraisal reports, as well as its decision, so long as they are “not based upon an error of law or against the weight of the evidence” … . Here, Supreme Court set forth several deficiencies in the appraiser’s report and the appraiser’s testimony that caused it to reject petitioner’s contention regarding value. Matter of Bove v Town of Schodack, 516416, 3rd Dept 4-3-14

 

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 © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy