In Township of West Milford v. Van Decker (120 N.J. 354 576 A.2d 881), the New Jersey Supreme Court ruled in favor of the defendants who it said were singled out for property tax reassessment after purchasing a new home in the municipality. Argued and won by the property tax attorneys at Skoloff & Wolfe, P.C., the Court interpreted the New Jersey Constitution to require that taxpayers be treated in a manner comparable to other similarly-situated taxpayers, and that doing otherwise is discriminatory.
New Jersey has long been in the forefront mandating equal treatment in property taxation. Yet that hasn’t stopped some assessors from finding any excuse to change assessments on properties which have been recently sold. This goes for residential as well as commercial properties. Such spot assessments, known as the “welcome stranger” pattern, “are commonly recognized as intentional discriminatory practices” that violate the New Jersey Constitution’s uniformity clause.
Despite the unequivocal holding of the Supreme Court, the Tax Court has allowed exceptions to what seems to be a steadfast ruling. What does this mean for buyers of commercial real estate property? In order to protect the value of your investment and not get blind-sided, you should require an in-depth analysis of the reassessment practices and timetables of the municipality where the property is located.
Mitigating the risk of spot assessments through experienced analysis
Skoloff & Wolfe, P.C. are not only experienced in defending our clients against unfair property tax assessments, we excel in quantifying the risks of all manner of commercial property with detailed analysis of local jurisdictions before the sale. We routinely work with buyers and perform property tax due diligence to ensure further protection of their investment. Results may vary depending on your particular facts and legal circumstances.
While the vast majority of assessors comply with the spirit of the Van Decker decision, there are certainly assessors who look for any possible exception, including the exceptions that have been carved out by the Tax Court to allow themselves to reassess.
This is why it is vital to understand if there is an increased risk of reassessment in the municipality in which you are acquiring property prior to finalizing an acquisition. If there is a pattern of reassessment following acquisitions, as a buyer you need to know about it.
Rather than referring to case law, this means looking at an actual history of transactions. With actual data and thorough analysis, Skoloff & Wolfe, P.C. quantifies if and how much assessments are changing in relationship to sales.
How to determine if your property tax assessment is unconstitutional
If it can be determined that a reassessment is unconstitutional, for a commercial property owner it might be worth bringing a lawsuit against the municipality. Spot assessing is unconstitutional in New Jersey as well as in many other jurisdictions and states, including New York, Pennsylvania, and Connecticut.
However, not all reassessments are created equal. The fact that a property is reassessed or revalued is not necessarily a legal issue if it is purchased the year of a revaluation. Similarly, an owner or investor who is considering a purchase must know if there is a municipal wide revaluation in the upcoming year(s). Situations like these make it more challenging to prove that an assessor was in fact chasing a sale.
Skoloff & Wolfe, P.C. routinely examines whether there is a case to be made and whether or not it violates either the state constitution or the U.S. Constitution.
A law firm that can assess property tax risk levels in every jurisdiction
At Skoloff & Wolfe, P.C., we specialize in quantifying the property tax risks for owners and prospective buyers for all manner of commercial properties. In addition to fighting spot assessments, we have years of experience defending owners in jurisdictions that are actively filing third-party challenges, which are municipal lawsuits to increase assessments.
Rather than waiting until after you acquire a property to find out you may be subject to these cases, you need a firm that will identify these issues in advance.
Call Skoloff & Wolfe, P.C. and protect your investment against spot assessments
The best way to protect your investment is to have effective legal counsel backed by in-depth analysis and concrete data points representing your interests. To speak with a property tax attorney, call Skoloff & Wolfe, P.C. at 973.992.0900.