Fox Rothschild LLP

Superstorm Sandy and Your Tax Assessments

Real Estate Tax Appeals

November 2012

In March of 1962, a vicious coastal storm devastated the New Jersey coast and destroyed much of the coastline and homes, businesses and other structures. At the time, the New Jersey tax assessment system had no answer for the tax inequities created by this storm. Thus, owners of ravaged property had no way to obtain the relief from paying full taxes on property that had been substantially altered or destroyed by the Nor’easter.

Because of the pervasive effects of that storm, the New Jersey Legislature responded and amended N.J.S.A. 54:4-35.1 to permit claims for assessment relief for destruction to property occurring before April 1, 1962. That statute provides in pertinent part;

“…When any building or other structure which has been destroyed, consumed by fire, demolished or altered in such a way that its value has materially depreciated, either intentionally or by the action of storm, fire, cyclone, tornado, or earthquake, or other casualty, …the assessor shall…after examination and inquiry, determine the value of such parcel real property as of…January 1, and assess the same according to such value.”

Today, the special relief afforded by this statute applies only to events occurring between October 1st of the pre-tax year and January 1st of the tax year provided the property owner notifies the assessor of the loss by January 9th of the tax year. N.J.S.A. 54:4-35.1. Given the pervasiveness of property damage caused by Superstorm Sandy, the logical question is: “Can the procedure outlined by this statute work?” In other words, is this law, which never contemplated a natural disaster the magnitude of Superstorm Sandy, function to provide relief to those most in need?

Before delving into the statutory framework, this author stresses that an affected property should send a letter, e-mail or fax to the assessor prior to January 10, 2013. That notice should (1) identify the property by street address and tax block and lot (which is on the tax bill), (2) give a brief description of the damage, and (3) specify it was caused by Superstorm Sandy. Fox Rothschild’s website has a resource, the “Fox Rothschild Disaster Recovery Consultation Unit.” Click here to access a form letter.

Generally, statutes dealing with property taxes are interpreted narrowly against the property owner. Thus, statutes granting exceptions from New Jersey’s assessment framework will be construed in favor of the taxing district. In New Jersey, a municipal assessor is required to value property as of October 1st each year and certify a list of assessed values by January 10th of the year of assessment. In the intervening period, the assessor will make adjustments, if warranted and time willing, by the January 10th deadline. N.J.S.A 54:4-35. In a typical year, this can be a daunting task as most municipalities have thousands of assessments which strain an assessor’s abilities to view each property and make adjustments while also attending to his or her other duties that the law requires.

N.J.S.A. 54:4-35.1 has been construed narrowly since its adoption. In one case, a fire started on December 31st and the taxpayer claimed that the building was substantially destroyed before midnight. However, the proofs were not conclusive on that point and the Court ruled that the taxpayer failed to prove that the destruction took place before January 1st ruling against the taxpayer. Rutherford Construction Co. v. Borough of Rutherford,6 N.J. Tax 605 (1984). In another case, a taxpayer’s property was totally destroyed but the taxpayer had not notified the assessor and had not filed assessment appeals. Instead, the taxpayer relied on the so-called Correction of Errors statute, N.J.S.A. 54:51A-7, arguing that the listing of the building’s assessed value was a clerical error. The Court ruled otherwise noting the narrow scope of that statute. East Washington Realty v. Washington Borough, 14 N.J. Tax 560 (1995). In Galloway Township v. Dorflinger, 2 N.J. Tax 358 (1981), the property was totally consumed by fire in early July. At that time, appeals could be filed by August 1st (now April 1st) so the taxpayer appealed. The County Board of Taxation ruled in the taxpayer’s favor and adjusted the value for half of the year but the Tax Court reversed and ruled that N.J.S.A. 54:4-35.1 did not apply as the loss did not occur after October 1st.

In New Jersey, the county boards of taxation are an important cog in the administration of tax assessments. By statute, a board is required to review the assessor’s certified list submitted shortly after January 10th. See N.J.S.A 54:4-46. During that review, the Board may “increase or decrease the assessed value of any property not valued at its taxable value….” N.J.S.A. 54:4-47. While the authority of the Board to adjust assessments has been upheld by the courts, the short period of time for the Board to investigate, revise and correct assessments does not effectively allow for widespread application of this mechanism. Further, it is not clear if such review would be viewed as an end around of N.J.S.A. 54:4-35.1. Thus, this author does not see this as a realistic opportunity to correct assessments where the taxpayer has not given notice of a loss to the assessor.

It is clear from the action taken in 1962, that the Legislature can respond to the occasion. In amending N.J.S.A. 54:4-35.1, the New Jersey Legislature clearly strove for an equitable result in extending the notification deadline as an effort to ameliorate the devastating effects of that Nor’easter. While lawmakers may step to the plate again, no legislation has been introduced as of the writing of this article. Potential solutions include an extension of the notification date under the current law coupled with an extension of the April 1st appeal date (The appeal deadline had once been August 1st.). Further, the Correction of Error statute could be amended to include a provision designed to deal with the widespread devastation caused by Superstorm Sandy.

Superstorm Sandy was never anticipated by New Jerseyans, including our governmental officials and we all earnestly hope that this is a one-time event. However, given its massive effects, legislative relief should be designed to assist those who have lost much and in some cases, everything. In the meantime, the property owner must remain vigilant and seek relief under the current statute by giving notice of property damage to the assessor before January 10, 2013.

If you have questions regarding this Alert, please contact Jeffrey M. Hall, Co-chair of Fox Rothschild's Real Estate Tax Appeals practice. 

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Attorney(s)

Hall, Jeffrey M.

Practice Area(s)

Real Estate Tax Appeals

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