Single Family Residence, Not Permitted By Local Zoning, Granted Exemption By Tax Court

by: Anthony F. Della Pelle
18 Apr 2019

A single family residence in Mahwah Township was recently granted a summary judgment, holding it exempt from property taxation pursuant to N.J.S.A. 54:4-3.6.   The plaintiff, Chai Lifeline, Inc. owns a single family home in Mahwah used as a retreat to assist families with children suffering from terminal, life-threatening or other serious illnesses.  The property includes a swimming pool, is “stocked with materials designed and intended to draw families in crisis together” in order “to encourage families to heal, communicate and recuperate.”  One family at a time is permitted to use the property as a retreat.  All expenses are paid for by Chai Lifeline through donations.

Chai Lifeline sought exemption of the property for the tax years 2016, 2017 and 2018, but was denied by the municipal tax assessor, in part because the use of the property as a retreat had been disallowed by zoning and was the subject of unsuccessful prior litigation in 2014 also disallowing such use.  After Chai Lifeline filed a motion for summary judgment in the Tax Court, the Township cross moved for summary judgment, contending that the use of the property as a retreat was unlawful from a zoning perspective and, as a result, was not entitled to local property tax exemption.

The summary judgment motions were adjudicated by Tax Court Presiding Judge Joseph Andresini, who noted that, under the applicable legislation, N.J.S.A. 54:4-3.6, exemption is to be granted where the property owner meets these three criteria:  (1) the organization must be organized exclusively for the moral and mental improvement of men, women and children; (2) the property must be actually and exclusively used for a tax-exempt purpose; and (3) the operation and use of the property must not be conducted for profit.  Paper Mill Playhouse v. Millburn Tp., 95 N.J. 530, 518 (1984).  The Tax Court concluded that Chai Lifeline met the three-prong test, notwithstanding the claims that the services may have been provided in violation of local zoning ordinances and, as a result, granted summary judgment in favor of the exemption.  Of interest, the Tax Court noted that, despite the fact that the prior zoning litigation resulted in judgments at trial and on appeal declaring that Chai Lifeline’s use of the property as a retreat did violate local zoning, the Township had abstained from enforcing those judgments and allowed Chai Lifeline to remain in operation as a retreat at the property.

A copy of the Tax Court’s opinion in Chai Lifeline, Inc. v. Township of Mahwah, Docket Nos. 010004-2016, 012599-2017 and 012127-2018 is available here.