This Just In: Property Owners May Not Have To Pay Taxes To File A Tax Appeal!

by: Allan Zhang
4 Dec 2020

A recent New Jersey Tax Court case discussed the issue of standing to file a tax appeal. The Court concluded that a titleholder of property maintains standing as an “aggrieved taxpayer” even if the titleholder is not making direct or indirect tax payments. The party making the tax payments also has standing as an aggrieved taxpayer and is arguably entitled to any refund.

In March 2017 and 2018, plaintiff, B & D Assoc., LTD (“B&D”) filed tax appeals challenging the 2017 and 2018 assessed values of its office building property. Defendant, Twp. of Franklin (“Franklin”) filed a motion for summary judgment requesting dismissal of the appeals citing that B&D was not an aggrieved taxpayer as B&D had not made any tax payments since 2014.

The background facts are that in 2008, B&D obtained a loan for $1,875,000 from lender Oritani which was secured by encumbering B&D’s office building property. B&D defaulted on the loan in October 2012 and, in 2018, the property was ultimately sold at a sheriff’s sale to Oritani which assigned its rights to an entity it owned. Beginning in 2014, Oritani made all tax payments, including in 2017 and 2018. During 2017 and 2018, the property was in foreclosure and B&D was the titleholder.

As with all motions for summary judgment, a moving party succeeds where there is no genuine issue as to any material fact and the moving party is be entitled to judgment as a matter of law. Here, there is no dispute of the material facts. The only issue is whether B&D is an “aggrieved taxpayer.”

Franklin argues that a property owner who does not pay taxes cannot be an aggrieved taxpayer and has no standing to file an appeal. The Court discussed New Jersey case law which reinforced that one does not need to be an owner of property to be aggrieved. In fact, New Jersey courts have held that tenants and mortgagees have standing to file tax appeals. Ewing Twp. v. Mercer Paper Tube Corp., 8 N.J. Tax 84, 91 (Tax 1985); Chemical Bank N.J., N.A. v. City of Absecon, 13 N.J. Tax 1 (Tax 1992); Aperion Enters., Inc. v. Borough of Fair Lawn, 25 N.J. Tax 70 (Tax 2009).  The Court further reasoned that “aggrieved taxpayer” status was designated to expand or extend affected litigants’ rights beyond just the property owner.  It was not intended to exclude a property owner.

Thus, the Tax Court held that B&D, as the title owner of the property, has standing to challenge a property’s tax assessment even if it does not make any tax payments. The Tax Court denied Franklin’s summary judgment motion. To view the full decision B & D Assoc., Ltd. v. Twp. of Franklin decision click here.