New Jersey State Real Estate Laws & Regulations

New Jersey Legislature Increases Minimum Threshold for Filing a Property Tax Appeal Directly With the New Jersey Tax Court

Alexander Wixted — Thu, 28 Jan 2010 09:17:37 -0500

As noted on the official website for the New Jersey Tax Court, due to recently enacted legislation, any local property tax appeals that are not added or omitted assessments may be filed directly with the Tax Court only if the original assessment exceeds $1,000,000.

The Assembly Committee that reviewed the legislation and recommended its adoption noted that "[i]ncreasing the assessed value requirement will decrease the overburdened Tax Court's caseload and allow these cases to be heard by county boards of taxation, which are better equipped to handle a large volume of tax appeals." For what it is worth, the prior $750,000 threshold had not been increased since it was first established in 1979.

The legislation increases the threshold for making a direct filing from $750,000 to $1,000,000. Therefore, any taxpayer whose assessment is below the minimum threshold may still challenge its tax assessment by filing a Petition of Appeal with the County Board of Taxation in the county where the property is located. However, those taxpayers whose assessments exceed $1,000,000 may either file a Petition at the County Board level or file a direct appeal with the Tax Court. There are advantages and disadvantages with both approaches.

Notices of the tax assessments are typically mailed on or around February 1st.

Tax Appeals Filed in 2009 Nearing the All-Time High

Alexander Wixted — Fri, 20 Nov 2009 15:58:10 -0500

A recent article published in the Newark Star Ledger noted that the number of property tax appeals filed in New Jersey for the 2009 tax year is considerable. The author notes that nearly 16,000 tax appeals were filed in the State of New Jersey in 2009 which is nearing the record of 16,300 set in 1992. In Ocean County, appeals have tripled to more than 14,000 from the levels filed in 2008. In Essex County, the number of appeals is nearly twice the amount filed in 2008.

Interestingly, the article highlighted several arguments that taxpayers often make in seeking a reduction in their property tax assessment. These often range from “I overpaid for my property” and “I bought at the peak of the market” to “my home is outdated and needs to be modernized”. For those property owners who did not file a tax appeal in 2009, they will have to wait until the 2010 tax year to challenge their assessment as the deadline to file for 2009 was April 1^st.

Nonetheless, it is not too early for a property owner to start preparing for the inevitable tax appeal next year. Below are a few tips that will aid all classes of taxpayers from the residential homeowner to the commercial developer.

DO YOUR HOMEWORK – At times, a taxpayer will focus on the attributes of their own home and disregard how their property sits in the general scheme of the surrounding neighborhood. An Internet search or your local real estate broker may be willing to assist you in locating comparable sales (known as “comps”) that can be used to justify a reduction in your assessment if a home similar enough to yours has sold for a value less than what your equalized assessment is. However, as any taxpayer will quickly find, no two properties are exactly alike. Therefore, it is important to conduct thorough research to make sure you have the best and most comparable information available. Ideally, a licensed appraiser should be consulted for a professional opinion.
VERIFY YOUR INFORMATION – The tax assessor in each municipality maintains a property record card for every property within its taxing district. The property record card identifies the particular attributes of each property and provides an excellent starting point for anyone looking to lower their taxes. Sometimes, the property record card contains an innocent error or miscalculation that the tax assessor may relied upon for determining a property’s assessment. Accordingly, sometimes a property owner can justify a reduction in its assessment based upon a correction of an error in the property record card. A property record card which is a public record can usually be obtained by contacting the tax assessor’s office – however, every assessor’s office has their own procedures for obtaining a copy of the card which should be strictly followed as a matter of courtesy and procedure
KNOW AND MEET THE DEADLINE – The deadline to file a tax appeal for the 2010 tax year in most municipalities will be Thursday, April 1, 2010. In those municipalities undergoing a revaluation and reassessment which may not be concluded by the statutory deadline, the April 1^st filing deadline might be extended (but not automatically). If the filing deadline is extended, the taxpayer will receive a written notice from its tax assessor listing the revised filing date. By rule and procedure, tax appeals must be RECEIVED by the filing deadline.

One of the easiest ways for a taxpayer to lose their right to appeal is to simply mail in their application by the filing date. Most people will simply drop their federal and state tax returns in the mail at the same time they file their tax appeals. This may past muster with Uncle Sam but it will not under New Jersey tax appeal laws. To be safe, a taxpayer can hand deliver the appeal to the local County Board of Taxation or the Tax Court on the deadline date, but it must remember to hand deliver or mail copies to the appropriate recipients noted in the appeal form.

Case Development - Realty Transfer Fees

Alexander Wixted — Tue, 17 Nov 2009 10:18:14 -0500

On October 30, 2009, the Tax Court of New Jersey decided Mack-Cali Realty, LP, et al. v. Clerk of Bergen County, et al. which presented the question of whether the exemption from the realty transfer fee allowed by N.J.S.A. 46:15-10(a) where consideration is less than $100.00 is applicable from two conveyances from Mack-Cali to other limited liability companies which it was the sole member. While the decision will likely be appealed to the Appellate Division, the decision currently stands for the proposition that a deed between commonly-owned entities that transfers unencumbered real estate and for which no other consideration passed from grantee other than the amount set forth in the deed, then that transfer is likely exempt from the realty transfer fee requirements.

The Tax Court construed the definition of "consideration" is stated in terms of “the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, …” (emphasis added). As such, while the definition includes the amount of any mortgage to which the transferred property is subject, it does not otherwise include any element not paid by the grantee to the grantor. Therefore, it does not include an indirect benefit of the kind imputed by the New Jersey Division of Taxation in affirming the County Clerk's determination that a realty transfer fee be imposed. Accordingly, the Tax Court held that the consideration for each transfer was $10.00 as stated in the deed and the transactions are exempt from the realty transfer fee.

My tenant moved out and left its junk behind. Now what?

Alexander Wixted — Thu, 05 Nov 2009 20:00:20 -0500

Imagine a situation where a burglar breaks into your home and “borrows” some of your possessions without paying for them. On the way out, the burglar drops its wallet on your kitchen floor. Instead of returning the wallet to the burglar, you immediately throw it in the trash. Do you think that you should have to compensate the burglar for failing to notify before throwing the wallet away?

Of course you shouldn’t. But, if you were a landlord and the burglar was your tenant, and you had a lease to allow the tenant to “borrow” your space in exchange for paying rent, the analogy might have a different conclusion. That’s because New Jersey has a Tenant Abandoned Property Act (N.J.S.A 2A:18-72 et al.) (the “Act”), which permits a landlord of commercial or residential property to dispose of any tangible goods, chattels or other personal property left upon a premises by a tenant, but the landlord must reasonably believe under the circumstances that the tenant has left the property upon the premises with no intention of asserting any further claim to the premises or the property and the landlord must put the tenant on notice that the property will be disposed if not timely claimed. An exception is made for perishable items, which the landlord may freely dispose in order to maintain the premises in a sanitary condition.

In this tough economic climate, landlords are facing an increasing number of defaults both from residential and commercial tenants alike. While the causes of default can range from the non-payment of rent to the breach of a covenant of the lease, the ultimate goal of the landlord is usually to recoup most (if not all) of the back rent due and fees accrued, recapture the premises from the tenant, and (hopefully) relet the space to a new tenant. Problems arise when a tenant abandons the premises surreptitiously and without providing a forwarding address. Aside from the monetary implications, the landlord is saddled with the responsibility of disposing of the tenant’s property.

Understandably, the primary concern of any landlord is getting paid. But the handling, care, and disposal of a tenant’s possessions is governed by statute and a landlord faces consequences if it does not follow the procedures prescribed by the Act. In this situation, a landlord is entitled to enter the premises and collect the property and possessions and left behind by the tenant. However, before the landlord can sell them or otherwise dispose, the landlord must provide written notice to the tenant as required by the Act. The Act has very stringent notice requirements which can subject the landlord to monetary liability if not followed. Under the Act, a landlord is also required to store the possessions for a period of time at the tenant’s expense. The landlord must exercise reasonable care for the property and depending upon the circumstances may be best served by procuring a commercial storage unit to store the possessions. As you can imagine, this is a source of added aggravation for the landlord especially if it is required to front the costs of the storage in hope of recouping it from the tenant.

Under the Act, before a landlord of a residential or commercial property can consider disposing of property abandoned by the tenant, the Act requires that one of the following has occurred: (1) a warrant for removal has been executed and possession of the premises has been restored to the landlord or (2) the tenant has given written notice that he or she is voluntarily relinquishing possession of the premises. Either option poses difficulties for the landlord. In most instances, a tenant abandons a property and thus does not provide the written notice contemplated by the Act; therefore, a landlord is required to file an action in court to recapture the premises and will undoubtedly incur additional expenses that may or may not ultimately be recovered from the defaulting tenant.

Commercial landlords, however, have a silver lining. The provisions of the Act will not apply to the disposal of tenant property left on non-residential rental property if there is a lease in effect which has been duly executed by all parties and said lease contains specific terms and conditions for the disposal of tenant property. In other words, a landlord of non-residential property can essentially bypass the grasp of the Act by tackling the disposal of tenant property in an abandonment head-on in the underlying lease agreement.

Landlords of all non-residential property should re-visit their lease agreements to insure that not only do they provide for the landlord’s ability to reclaim the premises in the event of an abandonment, but also contain detailed provisions specifying how the tenant’s property will be disposed if the premises are abandoned.

New Jersey's Site Remediation Reform Act

Alexander Wixted — Thu, 08 Oct 2009 14:08:41 -0500

The following entry was written by Burton J. Jaffe, Esq., a real estate attorney resident in Fox Rothschild's Princeton office. Burt can be contacted at (609) 895-6630 or at bjaffe@foxrothschild.com

On November 3, 2009 the Site Remediation Reform Act, NJSA 58:10C-1 et seq. (the “Act”) becomes effective. The Act materially changes the role of the New Jersey Department of Environmental Protection (“NJDEP”) with respect to the remediation of contaminated property in New Jersey.

The Act changes the role of NJDEP from direct supervision of the remediation of contaminated sites to a compliance, enforcement and monitoring role of independent professionals conducting such work. The professionals must be licensed by the Site Remediation Professional Licensing Board which is established in NJDEP. The Board’s mandate is to establish licensing requirements for site remediation professionals and to oversee the licensing and performance of site remediation professionals.

Additionally, the Act requires the NJDEP to inspect all documents and information submitted by a licensed site remediation professional, authorizes NJDEP to review the performance of a clean up under a broad range of circumstances (NJDEP can audit a clean up for up to three years after its conclusion) and mandates that NJDEP undertake direct oversight of contaminated sites under certain conditions and authorizes, but does not require, NJDEP to undertake direct oversight under certain other conditions.

The purpose of the Act is to improve the speed of site clean-ups and the Act is carefully designed to accomplish this purpose without lessening the stringent remediation requirements already in place in New Jersey.

Complying With COAH Does Not Immunize Municipalities from Suit Over Affordable Housing

Andrea Tompkins Wright — Tue, 29 Sep 2009 13:38:18 -0500

Following the Fair Housing Act (FHA) and the regulations enacted by COAH under the Act, many municipalities believed that they could prevent developers from locating affordable housing in areas not specifically zoned for affordable housing by complying with the FHA and COAH regulations. And that may be true, in part. Municipalities that meet their fair share obligation under the FHA and COAH regulations are immune from builder’s remedy suits. But what about good old fashioned prerogative writ claims? Apparently not.

In the recent decision of Homes of Hope, Inc. v. Eastampton Township Land Use Planning Board, the appellate court held that affordable housing constitutes an “inherently beneficial use” for the purposes of obtaining a use variance. This is true whether or not the municipality has met its fair share obligation under the FHA and COAH regulations, or not.

For practical purposes, if your affordable housing development requires a use variance, you must show that the proposed development satisfies both negative and positive criteria. The decision in Homes of Hope means that the “positive criteria" requirement for granting a use variance is automatically satisfied, by the very fact that the proposed development is affordable housing. Developers will, of course, still need to satisfy the "negative criteria" requirement, or show that the proposed development would not be detrimental to the municipality in general or to the future residents of the development.

Camden County Property Taxes Highest in the State, 11th in the Nation

Alexander Wixted — Thu, 24 Sep 2009 15:49:23 -0500

One New Jersey county is on the cusp of cracking a Top 10 List that probably leaves little to be desired.

As reported in an article by Jim Walsh published in today's edition of the Courier-Post, (follow link here for online article) a new study published by the Washington D.C. based Tax Foundation has concluded that property taxes in Camden County are the highest in New Jersey and 11th highest in the nation (out of 790 "high population" counties) when measured as a percentage of a home's value. The national median is nearly 1 percent (0.96%) - Camden County's was estimated at 2.33%. Following close behind were Gloucester County (31st), Salem County (32nd) and Burlington County (46th).

Not to be outdone, the North Jersey counties fared even better (or worse...) according to the Foundation's ranking of median property tax paid per owner-occupied home in 2008. New Jersey had six of the top 10 counties (from 1 to 10, Westchester County, NY ($8,890); Nassau County, NY ($8,628); Hunterdon County, NJ ($8,492); Bergen County, NJ ($8,446); Rockland County, NY ($8,430); Essex County, NJ ($7,924); Somerset County, NJ ($7,743); Morris County, NJ ($7,557); Passaic County, NJ ($7,370); and Putnam County, NY ($7,324). The national median is $1,897.

According to its website, Tax Foundation "is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937." Click here to review a copy of the Foundation's press release on the property tax census survey.

The question remains - what can be done to fix the problem? That remains to be seen, but suffice it to say that property taxes are sure to be a hot button issue in the upcoming Gubernatorial elections in New Jersey. From a practical perspective, the deadline to file an appeal challenging a property's assessment for tax purposes is April 1st annually (unless extended in which case the taxpayer would receive written notice). It is important to note, however, that pursuant to state statute the property taxes for the 2010 tax year are determined, in part, based upon the fair market value of your property as of October 1, 2009.

October 1, 2009 is a week away. One can only hope that next week will not mark the start of a top 10 ranking for Camden County, or a blue ribbon for the six North Jersey contenders.

Constructing Solar Panels On Capped Landfills - Can You Turn a Negative into a Positive?

Alexander Wixted — Tue, 15 Sep 2009 13:52:14 -0500

Several South Jersey communities are exploring the feasibility of solar panel projects on land formerly used as landfills. In a time of economic downturn, the notion of “turning lemons into lemonade” can take on many faces. Although the headlines have been dominated recently with health care related issues, energy issues and the “Green” movement appear to have some staying power. While constructing solar panels is believed to be a viable source of alternative energy, obtaining an approval from the state and local governments for such facilities is not without its challenges. Navigating the extensive regulatory landscape governing solar energy is a delicate balance of public and private concerns. The tightening of the credit markets over the past year has diminished the available capital for such projects; however with care and consideration a project may qualify for grants and incentives from state and federal agencies.

The Borough Council of the Borough of National Park (Gloucester County) recently passed a resolution designating a prospective redeveloper of a closed landfill on property formerly utilized for the disposal of demolition material and local household waste. The parcel is the only undeveloped tract of land in National Park Borough. As noted by the article published in the August 23, 2009 edition of The Gloucester County Times, although the project is in its infancy stages it appears to have the support of the local community. According to the proposal submitted by Westfield Energy, the prospective redeveloper, the former landfill could eventually house a 30-acre field of solar panels as well as over 130,000 square feet of office and retail space with an increasing focus on environmentally sustainable buildings.

It is noteworthy that last fall, Governor Corzine unveiled New Jersey’s latest Energy Master Plan which would provide the blueprint for the state’s energy policies for the next decade. If you need a crash course or even a refresher, follow this link and continue to the bottom of the page for an article by Steven Goldenberg, Esq. of Fox Rothschild LLP which was published in the June 2009 edition of the Mercer Business Journal.

Solar panels present an additional method of reducing a building’s carbon footprint and possibly even generating some much-needed revenue for the property owner or the local government. A similar proposal is in its informal stages in Mullica Township which is also in Gloucester County. There, township officials are pursuing a plan to lease a portion of a former garbage dump so that it can be used for a solar farm. The proposed site is located at the highest point in the township which makes it an attractive location for a solar park due to the significant amount of unimpeded access to the sun.

Among the many considerations that must be given to the proposed development of a solar farm, the interplay between public and private parties and agencies is very important. Whether the developer is a private property owner versus a designated redeveloper or a redeveloper designated by a municipality to redevelop land in a blighted condition is an important factor. Another factor is the extent to which the subject property is environmentally contaminated. The New Jersey Department of Environmental Protection has varying standards for the amount of environmental contaminants permitted to remain in the soil depending upon the type of development taking place above ground. For example, the soil quality for a residential subdivision would be more stringent than the required soil quality for a solar park. Furthermore, the cost of construction is always a consideration, and who bears the cost depends the public versus private nature of the developer. Public/private partnerships have been successful.

There are a whole host of considerations that must be given, but the fact that these projects are even being considered is a plus. Whether these solar projects ever reach construction and completion remains to be seen. Nonetheless, it presents an opportunity to make some lemonade which hopefully will be tasty, healthy, and maybe even profitable enough for all to benefit.

New Law Authorizes "Green" Building Code

Andrea Tompkins Wright — Mon, 14 Sep 2009 13:52:19 -0500

On August 6, 2009, Governor Jon Corzine signed into law legislation that authorizes the incorporation of “green building” requirements into New Jersey’s Uniform Construction Code

P.L. 2009, Ch. 106 (the “Act”) authorizes the Commissioner of Community Affairs to amend the Uniform Construction Code’s energy subcode to establish enhanced energy-saving construction requirements, which requirements “may exceed the requirements of national model codes.”

While the Act specifically adds the International Energy Conservation Code as one of the model code alternatives to be used as a basis of the energy subcode (thus ensuring that the State’s code will be based on national standards), it also provides that the Commissioner may amend or supplement this energy subcode at any time, although only once, prior to 2012.

In amending the subcode, the commissioner must rely upon 10-year energy price projections provided by an institution of higher education, and the added costs of such construction requirements must be “reasonably recoverable” through energy conservation over a period of not more than seven (7) years.

Municipalities May Still Be Charging COAH Fees: Do You Have To Pay?

Andrea Tompkins Wright — Mon, 14 Sep 2009 10:50:11 -0500

The New Jersey Council on Affordable Housing recently published a “NRDF Moratorium FAQ” sheet (available here), advising municipalities that “if a preliminary or final site plan approval was granted prior to July 17, 2008, and said approval includes a requirement for a non-residential development fee under a COAH or Court approved development fee ordinance, that fee can still be collected (i.e. 1% or 2%), provided building permits are issued for the development prior to January 1, 2013.”

At least one municipality is acting on such advice, and refusing to release building permits and/or certificates of occupancy until the previously required ordinance fee is paid.

But is COAH’s advice consistent with the Stimulus Act? Probably not.

While the statute has yet to be interpreted by the courts, Section 36 (e) of the Stimulus Act states as follows: “The [NRDF Act] prohibits municipalities from imposing their own fees to fund affordable housing on non-residential development, and [the Stimulus Act] is not intended to alter this underlying policy.” (emphasis added).

Thus, the plain language of the Stimulus Act prohibits municipalities from imposing their own affordable housing fee. Refusing to release permits or certificates of occupancy prior to the payment of a previously required fee certainly seems to this author as “imposing” a fee, in violation of the Act.

Further, nothing in the Act reinstates a municipality’s ability to collect the former fee. The only exception to this prohibition is related to those fees which are contractually obligated through a developer’s agreements, a redeveloper’s agreement, or a general development plan, as specifically provided for in N.J.S.A. 40:55D-8.6.

It would appear then that COAH’s advice is clearly inconsistent with the Stimulus Act, which only authorizes municipalities to continue to collect COAH fees where such fee is based on the exceptions listed above.

If your development was approved prior to July 17, 2008, and a municipality seeks to impose upon you a previously required COAH fee, Fox Rothschild advises that you review your options with a New Jersey licensed attorney, or contact this office for additional information.

The Statewide Non-residential Development Fee Suspension and Refund

Andrea Tompkins Wright — Tue, 11 Aug 2009 09:44:00 -0500

On July 27, 2009 Governor Jon S.Corzine signed into law the New Jersey Economic Stimulus Act of 2009. Sections 37 through 39 of the New Jersey Economic Stimulus Act of 2009 suspend the Non-Residential Development Fee Act which was signed into law on July 17, 2008. As a result, developer’s will no longer be required to pay the 2.5 % development fee.

In addition, developers that have paid a non-residential development fee since July 17, 2008, may claim a refund of “the difference between the moneys committed prior to July 17, 2008 and the monies paid.” The Act provides that a developer can submit a claim for reimbursement of non-residential development if:

the developer paid a fee and the development received preliminary or final site plan approval prior to July 17, 2008; or
the developer paid a fee and the project was referred to a planning board by the state, a governing body, or other public agency for review prior to July 17, 2008; or
the developer paid a fee and the non-residential development is not subject to a fee pursuant to N.J.S.A. 40:55D-8.6 (which provides for contractual agreements to pay non-residential development fees)

A developer seeking a refund must submit the claim in writing, and a copy of the proof of payment, to the same entity to which the fee was paid on or before November 24, 2009.

Economic Stimulus Act of 2009

Jack Plackter — Tue, 28 Jul 2009 16:10:56 -0500

The Legislature and the Governor recently enacted a number of laws designed to minimize the impact of current conditions on New Jersey businesses and residents, including legislation providing incentives to create jobs and make business investments in this State.

The Economic Stimulus Act of 2009 authorizes developers to enter into agreements in qualifying economic redevelopment and growth grant incentive areas which means Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a center as designated by the State Planning Commission; a transit village, as determined by the Commissioner of Transportation; and federally owned land approved for closure under a federal Base Realignment Closing Commission action. The redevelopment incentive grant agreement specifies the amount of the incentive grant to be awarded the developer, the frequency of payments, and the length of time, which shall not exceed 20 years, during which that reimbursement shall be granted. In no event shall the combined amount of the reimbursements under redevelopment incentive grant agreements with the State or municipality exceed 20 percent of the total cost of the project, exclusive of publicly-owned infrastructure. Up to 75 percent of the incremental local and state revenues generated and collected from the project may be pledged towards the incentive grant.

The Act is intended to finance the project financing gap which means the part of the total redevelopment project cost, including return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to, developer contributed capital, which shall not be less than 20 percent of the total project cost, and investor or financial entity capital or loans for which the developer, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources. This Act is a tremendous incentive to developers in the targeted areas and is similar to laws we have used to help finance major casino expansions in New Jersey.

Free Rent Provision May Extend Term of Lease

Andrea Tompkins Wright — Mon, 27 Jul 2009 09:36:34 -0500

Free rent is customarily given by a Landlord to a Tenant as an incentive to lease a particular space. Besides the obvious benefit to Tenant, Landlord also benefits by being able to list the lease on the rent roll starting on the day the lease begins, even if no rent is being collected. But does free rent extend the term of a lease? According to a recent New Jersey Appellate decision, it does.

In R.A.M. Holding Corp. v. Hoboken No. 1 Blimpie, Inc., No. L-1267-08 (N.J. Super. Ct. App. Div. July 24, 2009 ), Landlord and Tenant negotiated a 10 year lease commencing on September 1, 1997 and terminating on August 31, 2007. Because of necessary renovations, Landlord offered to abate rent for the first two months and the parties executed a rider to that effect. The rider also provided for an option to extend the term for an additional five years provided notice was given within 60 days of the date of termination. Tenant gave notice to Landlord that it intended to extend the lease on October 2, 2007, after the original lease term would have terminated. Landlord commenced dispossess proceedings, claiming that the lease had already terminated on August 31, prior to the notice of extension.

The court found in favor of Tenant, and held that the rider provision giving Tenant two months of free rent actually amended the term of the lease and extended the date of termination to November 31, 2007, which in turn granted Tenant an additional 60 days to give notice of Tenant’s decision to extend the lease.

While not all free rent provisions will extend the term of a lease, Landlords should ensure that the language of any lease or rider specifically states that any free rent incentive given is to be taken during the lease term and state the particular date on which the lease is to terminate.

Applications for Farmland Assessment DUE AUGUST 1st

Alexander Wixted — Thu, 23 Jul 2009 10:00:29 -0500

The New Jersey Farmland Assessment Act of 1964 (N.J.S.A. 54:4-23.2) (“Farmland Assessment Act”) permits farmland and woodland of not less than five acres in area that is actively devoted to agricultural or horticultural use to be assessed at its productivity value, rather than the fair market value.

The practical effect of a farmland assessment is that qualifying property owners will pay significantly less in property taxes versus the property taxes that would be levied based on the fair market value of the property. Far too often a seemingly compliant farmland property does not qualify for a Farmland Assessment because the owner did not adhere to the stringent filing and qualification criteria necessary to qualify. Among the many criteria is a requirement that the land must be actively devoted to agricultural or horticultural uses for at least two years prior to the tax year in which the assessment is sought. Also, property owners must file annually for Farmland Assessment by completing a Form FA-1 with the municipal tax assessor prior to the August 1^st deadline. Note that an approved Farmland Assessment does not automatically renew from year to year but requires the property owner to file every year for the Assessment.

Interestingly, the property owner seeking the assessment need not be the actual farmer or cultivator of the land. The Farmland Assessment Act permits an owner to rent the qualifying farmland to a farmer to cultivate agriculture and horticulture consistent with the Farmland Assessment Act. However, the use of the land for agriculture or horticultural purposes must not be haphazard even if it produces enough income to satisfy the gross sales requirement of the Farmland Assessment Act.

The New Jersey Department of Agriculture publishes an informational guide to Farmland Assessments. See http://www.state.nj.us/agriculture/
FarmlandAssessmentGuide.pdf or call the Department of Agriculture at (609) 984-2503.

Tax Appeals - Score Another Victory for the Municipality in a Chapter 91 dismissal

Alexander Wixted — Fri, 19 Jun 2009 09:12:15 -0500

Further to my May 12, 2009 blog posting whereby the Appellate Division affirmed the dismissal of a taxpayer's tax assessment appeal on Chapter 91 grounds, the Appellate Division reinforced its interpretation that the Chapter 91 dismissal sanction does not violate the Excessive Fines Clause of the United States and New Jersey Constitutions.

In Davanne Realty v. Edison Township (decided June 15, 2009), the Appellate Division concluded that "[t]he appeal-dismissal sanction imposed by N.J.S.A. 54:4-34 is not punishment because it is rationally and reasonably related to and fully justified by the need to efficiently assess and collect property taxes based on property value. The Legislature's denial of an opportunity to present relevant information beyond the statutory deadline may further the government's interest in timely receipt of data by "creat[ing] a reasonable incentive" for meeting the deadline for response.""

It is important to note that the taxpayer here did not avail itself of the right to challenge the tax assessor's methodology at a "reasonableness hearing". In short, inquiry focuses on the reasonableness of the data used by the assessor and its methodology used to determine the assessment. Unless the tax assessor’s assessment is completely unfounded, the assessment will likely be upheld.

However, because a reasonableness hearing is a consequence of the taxpayer’s failure to respond to a Chapter 91 request, the taxpayer is prohibited from introducing any affirmative evidence to refute the data used by and the conclusion reached by the assessor. Nevertheless, it is an opportunity for the taxpayer to obtain some clarity as to how its income-producing property is being valued.

Not to sound like ~~a broken record~~ (does today's youth even know what a 45 is?) a corrupted .mp3 file, but if you are served with a Chapter 91 income and expense request, and you are desirous of reducing your taxes by filing a tax appeal the following year, you must file a Chapter 91 response within the required time period. It is ever clear with each passing decision that the failure to comply with Chapter 91 will almost certainly result in the dismissal of your tax appeal.

Yale Enterprises, L.L.C. v Euksuzian

Melvyn J. Tarnopol — Tue, 19 May 2009 13:56:13 -0500

In an unpublished opinion from the Appellate Division, Yale Enterprises, L.L.C. v. Franck and Sarkis Euksuzian, Docket No. A-1224-07T1, the Court dealt with some interesting issues between a landlord and a tenant.

The landlord and tenant entered into a commercial lease in Medford, New Jersey, to commence on October 1, 2002. The landlord was to perform certain interior renovations prior to occupancy. However, the landlord failed to deliver the space and a series of amendments were entered into, each extending the time by which the landlord was required to deliver the space and requiring the landlord to obtain a certificate of occupancy before the tenant was required to take possession of the space. The final amendment required delivery of the space by the landlord by March 1, 2005. However, although the tenant took possession of the space on March 1, 2005, the landlord had still not acquired a certificate of occupancy for the space. Thus, the tenant’s occupancy was illegal. At the time that the tenant occupied the space, it had been evicted from its former space (after having obtained a series of extensions), which explains why the tenant moved into the new space without the certificate of occupancy having been obtained by the landlord.

Promptly following the tenant’s occupancy, Medford Township issued various citations and levied fines because of the tenant’s occupancy without a certificate of occupancy having been obtained. The tenant expended monies to complete the improvements that should have been performed by the landlord, eventually obtaining a certificate of occupancy. Thereafter, the landlord commenced an eviction action for the failure of the tenant to pay rent. The tenant admitted that it had not paid rent, but brought a counterclaim for the fines and penalties it paid to Medford Township, for unreimbursed costs expended by the tenant for improvements to the space that it made, and for rent paid by the plaintiff to its former landlord as holdover rent that the tenant was forced to pay because of the landlord’s failure to timely deliver the space. The tenant also claimed lost profits.

However, as to the lost profits, the tenant’s failure to deliver to the landlord, during discovery, of economic information relating to the tenant’s business, resulted in the Court excluding any evidence that would have proved lost profits. (It should be noted that, often, lost profits are difficult to prove, particularly in a situation where there is not a history of the company to show prior years’ profits since, without such a history, lost profits are too speculative to prove.)

The landlord argued that the tenant had waived its right to damages signing a series of amendments, each of which provided for the occupancy date of the space to be pushed back. Presumably, none of these amendments, copies of which are not included in the opinion, made any reference to the tenant’s holdover situation or to any damages incurred by the tenant because of the delay in delivery.

The jury found in favor of the tenant, requiring reimbursement from the landlord, as to the fines and penalties paid to Medford Township, for the unreimbursed costs expended by the tenant for the improvements to leased premises, and for the excess rent paid by the tenant to its former landlord. The jury also found that the space was uninhabitable for the first five months of the lease, and decided that the rent should be reduced by fifty percent for that five-month period. In addition, the jury found that the tenant should not be required to pay any late charges otherwise required by the terms of the lease. The Court upheld all the jury awards.

Finally, the Court enforced the provision of the lease that provided for the “successful party” to be paid its legal fees, and awarded a portion of the tenant’s legal fees to the tenant, based on the fact that the tenant was only partially successful in its claims.

The landlord made two arguments that the Court did not accept.

First, the landlord argued that since the multiple amendments entered into between the landlord and the tenant did not reserve the tenant’s rights to damages because of the late delivery of the space by the landlord, the tenant waived its right to claim such damages. The Court found that silence as to damages did not constitute a waiver. Second, the landlord argued that the tenant should not have been permitted to argue “economic duress,” in that the tenant argued that the landlord knew that timely occupancy was essential to complete the transaction, and that the tenant was left with no alterative other than to act as it did, signing the series of extensions and then occupying the space without a certificate of occupancy having been issued. The Court rejected this argument of the landlord, finding that it was reasonable that the jury should determine that the landlord was aware of the economic pressures that the tenant was being put under by the landlord’s failure to timely deliver the space.

The opinion provides no evidence as to the background in connection with the negotiation of the amendments. We do not know whether the landlord raised the issue of the tenant waiving its rights to damages and we do not know whether the tenant raised the issue of preserving its rights to damages. Since the amendments, presumably, were silent as to this issue, it was left to the Court and the jury to determine the intent of the parties when the various amendments were executed.

From a landlord’s perspective, if a landlord is going to sign an addendum to a lease providing for an extension of a delivery date, the landlord should at that time try to specify that the tenant has suffered no damages up to that date. If the tenant is unwilling to agree to such a provision, the landlord should at least attempt to get the tenant to specify what its losses, such as holdover rent from the other location, might be.

From a tenant’s perspective, the tenant should resist any attempt to limit its damages. However, the lesson from this case is that if the parties remain silent as to damages incurred through the date of execution of an amendment, a court will likely determine that there has been no waiver of a claim to those damages.

Corzine Conditionally Vetoes Senate Bill No. 2577

Andrea Tompkins Wright — Mon, 18 May 2009 08:40:36 -0500

On Monday, May 4, 2009, Governor Corzine placed a conditional veto on Senate Bill No. 2577, which permits the conversion of age-restricted developments to non-age-restricted developments.

Under the original bill as approved by both houses of the Legislature, developers would be entitled to convert any age-restricted housing development that has received preliminary and final land use approval to a non-age-restricted development provided that the developer (1) has not accepted any deposits or conveyed any units to buyers under the age-restricted program, and (2) agrees to set aside a percentage of units in the development not to exceed 20% to affordable housing. The bill originally provided the local land use board only the right to review parking standards, recreation and other amenities, water supply and sanitary sewer systems to ensure that those elements were adequate for the amended project.

While commending the sponsors of the bill for their efforts to stimulate the development of housing, affordable and otherwise, the Governor recommended the following changes:

An amendment to require 20% of the housing units be devoted to affordable housing, instead of “an amount not exceeding 20%.”

An amendment to allow the approving land use board discretion in approving the conversion based on whether the conversion can be granted “without substantial detriment to the public good,” and without “substantially impair[ing] the intent and purpose of the zone plan and zoning ordinance.”

An amendment restricting a court’s review of the land use board’s decision to grant or deny such a conversion to “the reasonableness of the decision of the approving board.”

Governor Corzine stated that he believed these changes would go further to ensure the provision of housing for those whose needs the private market has not addressed, and provide local governmental units with the additional approval authority necessary in matters of planning and residential development.

The bill will now be returned to the Legislature for a vote on the Governor’s recommendations. If you have an age-restricted housing development project that you believe may be affected by this bill, Fox Rothschild recommends that you consult a land use attorney.

Supreme Court Upholds Jackson Township Tree Clearing Ordinance

Jack Plackter — Wed, 13 May 2009 15:02:47 -0500

On May 13th 2009 the New Jersey Supreme Court reversed the Superior Court and Appellate Division and held that the Township of Jackson’s tree removal ordinance is a valid exercise of police power because the details of the ordinance, including the tree replacement fee, the escrow fund, and the planting of trees and shrubs on public property when replanting at the original location is not feasible, are rationally related to the broad environmental goals that inform the ordinance. Rather than a land use regulation the court viewed the ordinance as enabled under plenary state legislative authority using the police power, which justifies legislation to further
the public health, safety, welfare, and morals. The Township specifically declared that it was enacting the tree removal ordinance under the police power statute, N.J.S.A. 40:48-2. The Court distinguished the Ordinance from one enacted under the Municipal land Use Law and held that while the ordinance touches on the use of land, it is not a planning or zoning initiative that implicates the Municipal Land Use Law. As Police-power legislation the Ordinance must not be unreasonable, arbitrary, or capricious. Additionally, the means must have a real and substantial relation to the object sought to be obtained. Ordinances enacted pursuant to the police power are presumptively valid. Absent a sufficient showing to the contrary, it will be assumed that the legislation rested upon some rational basis within the knowledge and experience of the legislature.generic environmental regulation.

The Court concluded that the tree-removal ordinance was valid. The Ordinance recognized that the removal of trees on any property affects the health, safety and well-being of the Township’s inhabitants and that trees are an important ecological resource. Moreover the Court rejected the argument that the ordinance does not achieve its stated purpose because it permits large trees on private property to be replaced by smaller trees and shrubs on public property and the argument that the tree replacement fee is an invalid tax. As a result of the decision the ordinance remains in question, however, because the Appellate Division affirmed a determination by the trial court declaring the ordinance to be void for vagueness, including for failing to more specifically define when removal is for a “useful or beneficial purpose” and failing to provide standards for the use of the escrow fund.

Tax Appeals - Chapter 91 dismissal sanctions are not an "excessive fine" prohibited by the United States and New Jersey Constitutions

Alexander Wixted — Tue, 12 May 2009 18:05:42 -0500

A decision (.PDF) today from the New Jersey Appellate Division cemented the long-standing rule of tax appeal law that the failure to timely respond to a municipal tax assessor's request for income and expense information will likely prevent a taxpayer from seeking a reduction of its property assessment.

Known as a Chapter 91 request, a taxpayer has a mere forty-five days to respond to a tax assessor's request for information (which must be made by certified mail in accordance with the requirements of N.J.S.A. 54:4-34). Otherwise, the taxpayer risks a motion to dismiss a subsequent year's compliant for failure to timely respond to the Chapter 91 request. To promote timely compliance, the statute imposes an appeal-dismissal sanction upon taxpayers which municipalities are becoming increasing adept at wielding and weeding out the number of tax appeals, which were expected to rise this year.

In the instant case, the plaintiff taxpayer argued that the fair market value of the subject property was approximately $20,180,000, as opposed to the tax assessment's imputed a fair market value of $29,665,700. In dollars and cents, this difference of opinion amounted to approximately $192,551.71 of tax dollars in dispute.

Because the taxpayer here failed to timely file its Chapter 91 response, its Complaint was dismissed by the Tax Court on motion from the municipality. The Appellate Division was not persuaded by the taxpayer's argument on appeal that the sanction of paying the imposed taxes is an "excessive fine" prohibited by the Eighth Amendment of the United States Constitution and Article I, § 1, ¶ 12 of the New Jersey Constitution. According to the Appellate Division, the application of N.J.S.A. 54:4-34 did not impose any additional tax upon plaintiff for its failure to comply.

If you take away anything from this post, remember this. If you are the owner of an income-producing property, be on the lookout for a Chapter 91 request this summer. While serving a request is at the tax assessor's discretion, the receiving taxpayer is required to repond, even if the property is "owner-occupied". The tax assessor will direct the request to the addressee on record. Forty-five days may sound like a long time, but that is a little over six weeks, and time flies in the summertime. And if your management office is located outside of New Jersey, by the time the request is routed to the decision-maker, the clock is already ticking.

Legislation in support of Solar and Wind energy

Jack Plackter — Fri, 01 May 2009 09:03:26 -0500

The New Jersey Legislature has passed and is considering a number of bills to promote and facilitate the siting and development of solar and wind energy systems. They are Senate bills 1299, 1303 and 2528. S1299 permits the location of cetain renewable energy facilities in districts zoned for industrial use. A "renewable energy facility" is a facility that engages in the production of electric energy from solar technologies, photovoltaic technologies, or wind energy. Under the bill which became P.L. 2009 c. 35, a renewable energy facility is a permitted use in all industrial zones in every municipality provided the land consists of at least 20 contiguous acres. S1303 would make wind, solar or photovoltaic energy facilities "inherently beneficial uses". The bill if passed would have the effect of having all renewable energy facilities satisfy the positive criteria for the grant of a variance under N.J.S.A. 40:55D-70 and thereby facilitate such facilities siting and location throughout New Jersey municipalities. S1303 has passed the Senate and has been favorably reported out of committee in the Assembly. S2528 provides for the regulation of small wind energy systems and prohibits municipalities from adopting ordinances or resolutions that unreasonably limit or hinder the installations of such systems. Small wind energy systems are those that generate power that is to be used primarily for on-site consumption. Prohibitions in the proposed bill include: (i) prohibiting small wind energy systems in all districts; (ii) restricting tower height that does not address the typical tower height required for such systems; (iii) requiring a setback from a property boundary that is greater than 150 percent of the system height; and (iv) setting a noise limit lower than 55 decibels at the site property line. S 2528 was introduced February 2, 2009. These bills demonstrate that our legislature understands the importance of promoting renewable energy and green building initiatives.