Jersey City Strikes Again – Appeals LLC’s Property Tax Assessment

A few weeks ago, we blogged about an LLC getting hit with an increased property tax assessment after failing to defend against a reverse appeal. Well, it wasn’t the only time this has happened in Jersey City. Today, we take a look at another LLC which failed to defend against a Jersey City reverse appeal. Spoiler alert, it doesn’t turn out well for the LLC.

Background

City of Jersey City v. Wright JC Suites LLC involves a 1,999 square foot two-family dwelling. The subject property was built all the way back in 1920. The defendant in this case, JC Suites LLC, bought the property in 2017 and completed a renovation in 2018, leaving two apartments fit for 21st century families.

For the 2023 tax year, the property’s assessed value was $342,600. Jersey City was not happy with that amount and filed a reverse appeal looking to increase the assessment. At the County Board hearing, the defendant property owner failed to make an appearance. The Board affirmed the assessed value, so Jersey City then appealed to the Tax Court of New Jersey.

Jersey City served the defendant via certified and ordinary mail to the last address of record on the tax role. The certified mail was returned as “refused,” but the regular mail was not returned. The court noted that serving a party with certified and regular mail simultaneously is valid for service purposes, even if the party refuses to claim the certified mail.

Since the defendant was an LLC and NJ requires LLCs to be represented by counsel, the tax court notified the defendant that an attorney must file a notice of appearance on its behalf. No notice of appearance was filed by the defendant, and it never filed an answer. As such, the court ordered that defendant was barred from raising defenses. The order was sent to defendant via regular mail, but it was returned with a “RETURN TO SENDER ATTEMPTED NOT KNOWN UNABLE TO FORWARD.” The court mailed another notice to defendant, but this was also returned with the same message. It was then discovered that the mailings were sent to the incorrect suite address, so the court mailed the notice to the correct address. This time, it was not returned. The Jersey City tax collector affirmed the defendant’s address, noting that property tax bills sent there have been paid.

In support of default judgment, Jersey City submitted an expert appraisal report for the property. The court gave the defendant an opportunity to respond, which it never did.

Court’s Findings

Just like last time, the court found that service of process was effective and that it could proceed with default judgment. It found that the taxpayer has an obligation to maintain a correct mailing address; it isn’t the municipality’s job to hunt down a taxpayer. However, the court also noted that the current rules regarding service may be outdated for 2025. Email has largely become the primary method of communication for businesses, yet the rules still require the use of USPS to mail paper copies. The court suggested that the legislature allow service by email to coexist with service by USPS.

The court also considered how default judgment cases affect the evidentiary standard. The court would normally weigh the evidence presented, but that wasn’t possible because the defendant hadn’t presented anything. Instead, it turned to case precedent which holds that the standard in these situations is “preponderance of the evidence.” Under this standard, the plaintiff must present evidence showing that the alleged facts may have occurred or could’ve been proven at trial. The court adopted this lower evidentiary standard.

After finding that Jersey City overcame the tax assessor’s presumption of validity, the court turned to the evidence to determine fair market value. The court determined that the sales comparison approach was the appropriate method of valuation. In this method, the sale prices of similar properties are used to calculate an estimated fair market value. Using the sales of four other properties, the court found that the fair market value for the 2022 tax year rounded up was $705,000.

In its ruling, the court explained the issue of discrimination in the context of property tax assessments. Discrimination occurs when taxable property does not result in a tax rate consistent with the law. Just as taxpayers can be discriminated by receiving assessments that are too high, municipalities can be discriminated by properties assessed too low. Since every property owner is required to pay their fair share in taxes, an owner who is underassessed pays less taxes relative to other owners. This causes the burden to shift onto other property owners.

Conclusion

Jersey City successfully appealed the tax assessment and raised it to $705,000, more than double the original amount! This case is yet another great example of what could happen if a municipality challenges a tax assessment and the property owner fails to appear. It also shows what could happen if a property owner fails to update their mailing address.

To read the full opinion, click here.