Property Owners - Be Careful What You Wish For

In these times of falling property values, many property owners are quick to file tax appeals to reduce their tax burden.

Most of these appeals have merit. However, be mindful of the fact that a municipality has the right to file a counterclaim. Also, under certain circumstances, a municipality can argue for an increase in the assessment even without having filed a counterclaim.

In a recent decision, South Brunswick Twp. v. Princeton Orchards Assocs. LLC, the town went a step further and filed its own petition of appeal, asserting that the assessor’s valuation of the property was too low.  At the same time, the property owner filed a direct appeal in the Tax Court seeking a reduction of the assessment.  The town failed to file a timely counterclaim to challenge the property owner’s direct case.  On motion by the property owner, the town’s late filed counterclaim was dismissed.  When the town lost its petition at the County Tax Board, it filed an appeal to the Tax Court.  The property owner asserted that two separate cases cannot be maintained and that the town’s appeal must be dismissed.  Moreover, because the town had not timely filed a counterclaim in the property owner’s direct case, the property owner argued that the town was barred from arguing for an increase in assessment in defense of the property owner’s direct case.

The Tax Court disagreed and found that although the filing of a Complaint grants to the Tax Court overall jurisdiction as to all matters, the late filing of a counterclaim should not bar the timely filing of an appeal by the town from an adverse County Board ruling.  As a result, there are two cases filed for the exact same property by opposing parties which will now in all likelihood be consolidated into one action.

The result of this case highlights the fact that towns have the right to challenge an assessment just as much as property owners.  It serves to caution the practitioner not to file complaints with indifference to the town’s rights and without doing your homework.  Filing an appeal without proper analysis beforehand just might result in an increase to your client’s assessment- not the result for which you were hired.

Mark K. Follender is a Partner at Scarinci Hollenbeck and chair of the firm’s Real Property Tax Appeals Group, which represents private commercial property owners and municipalities throughout the State of New Jersey. Feel free to contact Mark Follender, if you would like to discuss your property tax appeal options or have questions about the article above.