Opinion
Docket No. 10502-2009 Docket No. 5021-2010 Docket No. 8277-2011
05-03-2013
Re: Montclair '01, L.L.C. v. Township of Montclair Block 3106, Lot 10.
Robert M. Jacobs, Esq. Winne, Banta, Hetherington, Basralian & Kahn, P.C. Anthony Marchese, Esq. Nowell Amoroso Klein Bierman, P.A.
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Mala Sundar
JUDGE
BY ELECTRONIC MAIL
Robert M. Jacobs, Esq.
Winne, Banta, Hetherington, Basralian & Kahn, P.C.
Anthony Marchese, Esq.
Nowell Amoroso Klein Bierman, P.A.
Dear Counsel:
This is the court's decision in connection with Plaintiff's motion for summary judgment. Plaintiff contends that the judgments of the Essex County Board of Taxation ("County Board") removing the 2007 omitted assessment and the 2008 added assessment imposed by Defendant ("Township") upon the above captioned property ("Subject"), entitles it to protection under N.J.S.A. 54:3-26 (the "Freeze Act") for tax years 2009 through 2011. Alternatively, Taxpayer argues that the 2009 to 2011 assessments were illegal spot assessments because they improperly treated the Subject as being converted to a condominium with 12 taxable line items, when in fact the Subject was always owned as a condominium and the assessor's office was aware of this form of ownership since at least 2001 when Plaintiff became owner of the Subject; the Subject however, never operated as a condominium and was not permitted to operate as such; and the Subject was always assessed as one taxable line item, namely, as a Class 4A mixed-use commercial property.
The Township opposes summary judgment arguing that facts need to be established as to the nature and operation of the property. It also maintains that the assessment of the Subject as a Class 4A property for prior tax years were placed without knowledge of the fact that it was registered to be owned and operated as a condominium pursuant to N.J.S.A. 48:8B et seq. ("Condominium Act"). Once aware of this information sometime in 2008, the assessor simply corrected the assessments to reflect the legally required method of assessing the Subject as condominiums for tax years 2009 onwards. Thus, the 2009 to 2011 assessments were not invalid spot assessments.
The court finds that Plaintiff is not entitled to the protection of the Freeze Act because there are no final judgments by either the County Board or the Tax Court reflecting the adjudicated valuation of the Subject for the base tax years 2007 or 2008. The County Board judgments removing the omitted/added assessments for both these tax years are not judgments on the merits, and further, not adjudications of the true value of the Subject.
The court also finds that the assessor's revision of the Subject's assessment from a single line item, commercial property to separate condominium units is mandated by N.J.S.A. 46:8B-19. Further, the assessor is obligated to review and assess property to ensure uniformity in taxation under N.J.S.A. 54:4-23. Thus, the assessor must rectify any inequitable or improper assessments in this regard. Since the Township placed the 2009 to 2011 assessments upon the Subject as a condominium to comply with these statutory obligations and ensure that the Subject is treated similar to the other condominiums in the Township, the assessments are not invalid as discriminatory spot assessments. The court thus denies Plaintiff's motion for summary judgment. PROCEDURAL HISTORY AND FACTS
In January 1989, a Master Deed was recorded for the Subject by the prior owner, Wellmont Associates, L.P. ("Wellmont"). The Master Deed recited that Wellmont proposed to renovate and rehabilitate the existing building on the Subject into 3 commercial condominium units which could be used by the unit owners for personal or commercial use, and 10 residential condominium units. It also stated that the Subject was established as a condominium, thus, under a condominium form of ownership under the Condominium Act. The Deed also provided for the formation of a condominium association, The Wellmont III Condominium Association, which was formed as a non-profit organization with each unit owner as its member.
The Master Deed also provided that each unit owner had a fee simple ownership in the unit, and an undivided percentage interest in the general and limited common elements. Each unit was to be separately assessed and taxed for purposes of property taxes pursuant to the Condominium Act. If the property tax were not so separately assessed and taxed to each unit, but was imposed upon the Subject as a whole, then each unit owner was liable for the owner's proportionate share of such property taxes. Further, the Township was to have "a continuing lien against each unit for its proportionate share of all real estate taxes assessed against the Condominium."
By sale deed dated December 26, 1989, Wellmont sold one residential condominium unit ("Unit 10") in the Subject to Virginia Moore. The sale deed recited that the "conveyance" was made pursuant and "subject" to the Condominium Act.
In May of 2001, Plaintiff acquired the Subject for about $2 million. The sale deed included all units except Unit 10 sold by the predecessor in 1989. The property record card for the Subject reflected Plaintiff as the owner based upon the sale deed which was filed May 15, 2001.
Unit 10 was once again sold in February 2006 by an independent sale deed, and then, in 2007, both deeds conveying the unit as a condominium unit pursuant to the 1989 Master Deed. The deeds recited that the conveyance was subject to the Condominium Act. Plaintiff was not party to these transactions. According to the Township's assessor, she never received the sale deeds for Unit 10 through the routine method of receiving such deeds.
After Plaintiff became the title owner of the Subject (except for Unit 10) in 2001, the Township's tax collector sent annual property tax bills to Plaintiff. The Subject was identified as Block 3106, Lot 10, and was imposed with a single assessment. In other words, the tax was not separately assessed upon each of the 12 condominium units. Instead the Subject was treated as a single taxable line item, Class 4A, mixed use commercial property. This status continued for 2007 for which tax year a municipal-wide revaluation was in place.
Sometime either in 2007 or early 2008, the owner of Unit 10 personally visited the assessor's office and inquired about the non-receipt of any correspondence from the Township such as a tax or water bill. The assessor's assistant then checked the details of Unit 10 from the Township's tax list and discovered that the Subject was being taxed as "one line item." She therefore requested the owner of Unit 10 to provide her with a copy of the sale deed for Unit 10, and contacted the real estate closing attorney in this regard. After receipt of the 2007 sale deed, the assessor's assistant also requested and received the Master Deed from the closing attorney for Unit 10. Based upon the Master Deed, the assessor generated separate line items for each condominium, created separate property record cards, and also changed the tax map to diagram each unit on the map.
The assessor claimed that since 1994, her office received electronic copies of the abstracts of real estate transaction recorded deeds from the County Board via the MOD-IV computer link program after the County Board received an electronic copy of the recorded deed from the Essex County Registrar. Her office would then print out abstracts and place them in the file with the property record cards for the particular property. She stated that she would not change the assessment on a property simply because she had received the deed abstract, however if she noticed a "change in the property, such as a newly constructed house" on a previously vacant lot, she would first visit and inspect such property, review all records such as permits and certificates of occupancy, and then, if warranted, would place an added assessment.
Prior to 1994, the assessor's office received hard copies of the abstracts from the County Board by mail.
However, in the instant matter, her files did not contain copies of the Master Deed or sale deeds pertaining to Unit 10, until she received the same from Unit 10's real estate closing attorney and/or from the County Board/Registrar based upon her inquiry after Unit 10 owner's visit. She agreed that it was unusual for her office not to receive deeds or abstracts from the county tax board, and if it happens at all, it would occur about four-to-five times a year. She conceded that sometime in 2001, her office received the abstract of the 2001 sale deed whereby Plaintiff became owner of the Subject. She also conceded that the same abstract would have been available to the Tax Collector's office at or around the same time after her office processed the information from the deed. Nonetheless, she averred that she had no knowledge or awareness that the Subject was a condominium until Unit 10 owner's visit to the assessor's office. She maintained that based upon her office's investigation into the status of the Subject triggered by Unit 10 owner's visit and upon review of the Master Deed she received in the process, she changed the assessment on the Subject from a one taxable line item mixed use, Class 4A property, into 12 separate taxable condominium units, as required by law.
The December 1989 sale deed for Unit 10 has a fax number, date of fax (12/10/2008), and hand-written notations "Rec 2/27/89" and "DBK-5066-951." When deposed, the assessor did not know the fax number, and did not know who or what "Rec 2/27/1989" indicated. She stated that since the document was not in an abstract form, and did not contain her office receipt stamp, she was not familiar with it. The 2006 sale deed for Unit 10 has a stamp stating "Assessor's Office Received Feb 27, 2007." The assessor stated that she received this from the recording real estate attorney, and the fax information above the stamp and the fact that it was a 11x14 legal size document evidenced that she did not receive the same electronically from the County Board. The Recording Information Sheet for the 2007 Sale Deed for Unit 10 has a stamp stating "Received August 27 2007 Assessor's Office." The assessor stated that the 2007 sale deed was received through the County Board via the MOD IV link "after the fact" and in response to her inquiry for the same after Unit 10 owner's visit to the assessor's office in 2008. The Master Deed contained a stamp stating "Received Jan 07 2008 Assessor's Office." The assessor stated that she received the document, as a hard copy, upon her request, from the Hall of Records, i.e., the Registrar, by mail on January 7, 2008.
On September 28, 2008, the Township's assessor notified Plaintiff of "recent[] improvements" that had "been made to" the Subject requiring an omitted/added assessment for tax year 2007 of $2.58 million. The assessor listed the nature of such recent improvements as "Conv. to Condos" meaning that the Subject recently underwent a conversion to a condominium. The "completion month/day" was noted as "12/15" and the "number of months" for which the assessment was to be imposed was "12." An identical letter was sent for an added assessment for tax year 2008 on the same date.
On or about November 25, 2008, Plaintiff filed petitions of appeal with the County Board challenging the proposed added/omitted assessment for tax year 2007 and the proposed added assessment for tax year 2008.
Thereafter, by 12 separate notices dated December 1, 2008, the assessor sent a notice addressed to "Property Owner" stating that she had "reviewed the information regarding" the Subject, which she identified as "398-408 Bloomfield Ave., C0001" which required an assessment for tax year 2009 because of the Subject's "Conversion to Condos." All notices were sent to Plaintiff, as property owner. Each notice broke the Subject down into 9 residential condominiums identified as "CO001" to "CO009" and 3 commercial condominiums identified as "CO101" to "CO103." The Township admitted that the Subject did not have any improvements made nor was it converted in condominiums either in 2007 or anytime thereafter.
The Township admitted Plaintiff's Undisputed Statement of Material Facts to this effect.
Prior to and in preparation for the County Board hearing, Plaintiff obtained a confirmation from an employee of the New Jersey Department of Community Affairs ("DCA") by letter of December 11, 2008. The letter, which was drafted by Plaintiff but contained the DCA's signature as confirmation of the contents, stated that Plaintiff could not market for sale any of the remaining units in the Subject as condominium units "without first preparing and filing a full application for registration of the project . . . including a revised narrative portion of the Public Offering statement" and requisite fees under N.J.A.C. 5:26-21, and DCA "policies."
According to parties' counsel, the County Board heard oral arguments and then required the parties to submit written briefs as to their respective positions on the "conversion to condominium" issue. Plaintiff timely submitted one. The Township however, by its counsel letter of December 19, 2008, notified the County Board that the "Township will remove the omitted/added assessment for 2007 and the added assessment for 2008."
Consequently, the County Board entered two judgments on December 15, 2008, affirming the assessments for 2007 and 2008. By its letter of January 6, 2009, Plaintiff objected to the affirmances and requested that judgments be amended to reflect that the assessments are removed, as evidenced by the Township's December 19, 2008 letter to this effect. The County Board then issued an amended judgment for each tax year 2007 and 2008 respectively showing "0" amount in the judgment column, using Judgment Code #17 ("Omitted Assessment Removed") for tax year 2007 and #15 ("Added Assessment Removed") for tax year 2008.
Plaintiff then filed property tax appeals with the Tax Court for tax years 2009 through 2011 challenging the assessments which treated the Subject as a condominium.
Plaintiff never appealed the regular assessments imposed upon the Subject for tax year 2007, which was a revaluation year. Neither did it appeal the Subject's regular assessment for tax year 2008. Plaintiff also never sought a revocation of the Subject's status as a condominium under the Condominium Act. According to the assessor, none of Plaintiff's annual responses to the assessor's Chapter 91 requests indicated that the Subject was owned as a condominium.
During her deposition testimony, the assessor testified that she worked with the appraisal company which had performed the 2007 revaluation for the Township in developing the Subject's assessments as a condominium since the company remained in the Township's employ from 2007 until 2009. She stated that the company had developed values on the individual units; she relied upon their value conclusion; she reviewed the square footage for each unit; she consulted with the revaluation company as to "what the market was calling for;" and used the values developed by the revaluation company in generating the December 1, 2008 notices as well as the 2009 assessments. She also stated that the assessments were based upon the sales approach (residential units) and income approach (commercial units), and had used past sales based upon "a study of all condos or complexes in the town, which is common practice." She conceded that the Subject was assessed as a single line item for the 2007 revaluation year.
The assessor maintained that the assessment date for the 2009 separate assessments was October 1, 2007. However, the sales data chart used to develop individual unit values included sales occurring in 2007 and 2008. One such sale in the data was that of Unit 10. The assessor stated that the sales data chart, which was based on a sale study review, was not prepared by her, but by the appraisal company for either revaluation or appeal purposes.
The assessor conceded that the sales data chart incorrectly noted that Plaintiff was the seller.
The assessor affirmed that her receipt/review of the Master Deed, the sale deed of Unit 10 or the purchase price therein did not motivate or impel her to revise or increase the Subject's assessment. However, her receipt and review of the deeds did cause her to generate separate line items and a tax map change to account for the separate units in the Subject. She stated that she was required to place a value on each unit for which a sales approach was used and obtained information from the master deed as to each unit's dimensions, location, and square footage. She confirmed that she changed the Subject's assessment due to receipt of the Master Deed and due to the Condominium Act which requires her to assess the Subject as separate units.
The assessor also provided Plaintiff information regarding one property, 119 Walnut Street which was subject to revised but partial assessments due to conversion to condominiums in 2007, as well as property record cards for all of the condominiums in the Township. She stated that she does not receive any reports from the DCA as to the "status" of any condominium nor does her office have any reporting responsibilities to that State agency. SUMMARY JUDGMENT
A motion for summary judgment should be granted in the absence of genuine issues of material facts. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995) (summary judgment will be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law"). Denial is appropriate only where the evidence is such that reasonable minds could return a finding favorable to the party opposing the motion. Id. at 534, 540.
Plaintiff argues that the 2009 to 2011 assessments are erroneous as a matter of law because (a) the County Board judgments "removing" the 2007 and 2008 omitted/added assessments freeze the regular assessments for those two years to the two successive years (i.e. to 2009 through 2011), and, (b) the 2009 to 2011 assessments are illegal spot assessments. The issues thus framed makes summary judgment appropriate because they call for a statutory construction and application of law pertaining to the Freeze Act and spot assessments.
A. Freeze Act
The Freeze Act protects a taxpayer by "freezing" an assessment for the two years following a final judgment of a county board for a particular tax year. The statute reads:
Where no request for review is taken to the Tax Court to review the action or determination of the county board involving real property the judgment of the county board shall be conclusive and binding upon the municipal assessor and the taxing district for the assessment year, and for the two assessment years succeeding the assessment year, covered by the judgment, except as to changes in value of the property occurring after the assessment date. The conclusive and binding effect of such judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the district has been put into effect. If as of October 1 of the pretax year, the property in question has been the subject of an addition qualifying as an added assessment, a condominium or cooperative conversion, a subdivision or a zoning change, the conclusive and binding effect of such judgment shall terminate with said pretax year.A separate statute, almost identical in language and intent, requires final judgments of the Tax Court be subject to the Freeze Act. N.J.S.A. 54:51A-8.
[N.J.S.A. 54:3-26.]
The application of the Freeze Act is "mechanical and automatic" because it is "self-executing." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 95, 98 (Tax 1999) (quotations omitted). Thus, where there is a final judgment as of October 1 of the year preceding the freeze year, the assessor must "reduce the assessment for the freeze year in accordance with the base year judgment." Rockaway 80 Assocs. v. Township of Rockaway, 15 N.J. Tax 326, 331 (Tax 1996). If however, the "base year final judgment is entered after the assessing date for the freeze year, the taxpayer must apply for Freeze Act relief, and the municipality may resist such application on grounds of change in value." Ibid. "The freeze attaches to the assessment contained in the base year judgment." Ibid. "[T]he purpose of the Freeze Act is only to protect taxpayers from arbitrary repeated yearly changes in assessment and from harassment" which is "served by applying the Freeze Act to the assessment included in the base year Judgment and by excluding properly imposed added assessments from the scope of the [Freeze] Act." Id. at 335.
Plaintiff argues that the underlying basis for the 2009 to 2011 regular assessments is the same as the 2007/2008 omitted/added assessments, namely, the status of the Subject as a condominium, which it challenged, fully briefed and argued before the County Board. Therefore, the court must apply the 2007/2008 regular assessments to successive tax years through the Freeze Act. Montclair argues that the Freeze Act does not apply to the "status" of property but to its adjudicated value which here was not done. It also maintains that the Freeze Act cannot apply because the Subject changed from being a one line item in 2007/2008 to 13 line items from 2009 and onwards, thus, the assessments are different.
In Snyder v. Borough of South Plainfield, 1 N.J. Tax 3 (Tax 1980), the taxpayers appealed added assessments for improvements under construction as of the October 1 assessment date on grounds that they were imposed before the issuance of a certificate of occupancy, unlike for other similarly situated taxpayers. Id. at 5. The county board therefore issued judgments "remit[ing]" the added assessments entirely. Ibid. The municipality did not appeal the judgments. Subsequently, the municipality imposed an omitted assessment for the same tax year, and the county board issued a judgment ordering placement of the omitted assessment. Id. at 5-6. The taxpayers contended that the Freeze Act prohibited such assessment.
The court concluded that the Freeze Act is applicable "only to those decisions wherein the valuation of the taxpayers' property is at issue before the forum whose determination is sought to be held conclusive." Id. at 9. Since the taxpayers contended that the assessments were improper because of the non-issuance of a certificate of occupancy, and further, since the county board judgment was a zero dollar amount, the court held that the county board's decision was on "procedural grounds" with no valuation issues for the Freeze Act to apply. Ibid. (noting that "[i]t goes against logic and experience to suggest that the judgment of the county board reducing the assessments on the taxpayers' improvements to zero was based on a valuation of those partial improvements"); see also 1125-1127 Clinton Ave. Assocs. v. Township of Irvington, 2 N.J. Tax 386, 389 (Tax 1981) (Snyder, supra, held that the county board judgment, "in effect" was simply that "construction had not been completed" for the added assessment to apply, thus, "there had been no determination which gave a value to the taxpayer's property").
The court is not persuaded by Plaintiff's argument that the County Board's judgments zeroing out the added/omitted assessments for 2007 and 2008 were something more than procedural decisions. While there were oral arguments and Plaintiff also filed a legal brief, there is nothing in the record to establish that Plaintiff presented evidence of the Subject's value. The letter acknowledged by DCA that the units in the Subject cannot be sold as condominiums only goes to the status of the Subject for purposes of valuation, and does not establish that Plaintiff provided proofs of the Subject's value. See e.g. Newark v. Fischer, 8 N.J. 191, 199-200 (1951) (Freeze Act "was intended to govern the frequency of appeals as to disputed amounts of assessments and not the tax exempt status of real property").
Counsel for each party stated to the court that there may have been some testimony but neither was able to affirmatively state whether the testimony addressed the true value of the Subject.
Further, while Plaintiff may be correct that by zeroing out the omitted/added assessments, the Subject's assessments remained at the amounts originally assessed under N.J.S.A. 54:4-23 (i.e., their regular assessments), this does not require a conclusion that the County Board issued judgments affirming the regular assessments. Indeed, the County Board could not have done so because Plaintiff never filed timely petitions challenging those regular assessments. Thus, those assessments were not before the County Board for adjudication. All the County Board did was enter judgments removing the omitted/added assessments based upon the Township's representation that it had removed the same. In doing so, the County Board did not decide or adjudicate that the regular assessments for 2007 and 2008 represented the true value of the Subject for those years. The court is not persuaded that the County Board judgments of "removal," constructively, implicitly, or effectively, equated to an adjudicated finding of the Subject's value by the County Board, such value being the Subject's un-appealed regular assessment for each tax year, thus, voiding the 2009 through 2011 regular assessments. See e.g. Inwood Owners, Inc. v. Township of Little Falls, 216 N.J. Super. 485, 493 (App. Div. 1987) (omitted assessments based upon "conversion from rental units to cooperative units" was improper because it represented "a challenge to the original assessment for the units," however, Township "could seek an increased assessment pursuant to N.J.S.A. 54:3-21" in this regard); Troy Village Realty Co. v. Township of Springfield, 191 N.J. Super. 559, 564 (App. Div. 1983) (where "an assessor concludes that a conversion increased the property's overall value, he is ordinarily free to establish the initial unit assessments accordingly"), certif. denied, 96 N.J. 302 (1984).
It is undisputed that Plaintiff did not appeal the regular assessment (imposed under N.J.S.A. 54:4-23) for the base years, 2007 or 2008. Therefore, neither tax year had a "final" judgment in connection with the regular assessments for the Freeze Act to apply. See Newark v. Township of West Milford, 9 N.J. 295, 305 (1952) (the Freeze Act does not apply if there has been no appeal from an assessment). Thus, even if Plaintiff is correct that the omitted/added assessments were improper and the Township is correct that technically the assessments were different due to the change in the quantity of line items, the Freeze Act does not apply because there are no base year final judgments addressing the Subject's true value vis-à-vis the regular assessments for 2007 and 2008.
Even cases invalidating improper but un-appealed added assessments via Freeze Act application required there be a base year final judgment for the freeze to apply. See e.g. U.S. Postal Service v. Town of Kearny, 19 N.J. Tax 282, 289 (Tax 2001) (where township knew of improvements prior to the assessment date but failed to address the same in the stipulation of settlement, which settlement was the basis for a final Tax Court judgment, the Freeze Act required the assessment in the base year judgment be applied to the successive tax year), aff'd, 21 N.J. Tax 78 (App. Div. 2002); Fifth Roc Jersey Assocs., L.L.C. v. Town of Morristown, 26 N.J. Tax 212 (Tax 2011) (invalidating an improperly imposed added assessment through application of the Freeze Act).
Plaintiff notes that the "plain language contained within the" County Board judgments, captioned "Freeze Act" setting forth the conclusive effect of un-appealed county board judgments for the two successive years, requires application of the Freeze Act. Under Plaintiff's argument, if the county board were to issue a judgment affirming an assessment due to the taxpayer's withdrawal of its petition, then the Freeze Act should apply. However, precedent dictates otherwise. See Union City Assocs. v. City of Union City, 247 N.J. Super. 249, 251-52 (App. Div. 1991). Therefore, the standard form language appearing on every county board judgment does not control the substantive application of the Freeze Act.
In sum, Plaintiff did not appeal the Subject's 2007 or 2008 regular assessments. Consequently, there are no final County Board judgments in this regard. The judgments removing the 2007 omitted and 2008 added assessment are not an adjudication of the true value of the Subject. Therefore, the Freeze Act does not apply to the regular un-appealed assessments for tax years 2007 and 2008 regardless of the impropriety or otherwise of the omitted/added assessments for those tax years.
B. Spot Assessment
The argument that imposing a new form of assessment constitutes an illegal spot assessment is not novel. In Berkley Arms Apartment Corporation v. City of Hackensack, 6 N.J. Tax 260 (Tax 1983), the court found no spot assessment when the assessor imposed new assessments due to the property's conversion "to a cooperative arrangement . . . notwithstanding that the assessments for other properties were not revised." Id. at 267. The court ruled that while an assessor cannot "arbitrarily singl[e] out property for an assessment increase," he or she is also statutorily obligated to annually review and revise assessments "when deemed necessary," thus, mechanical carrying over of one year's assessment to the next is improper. Ibid.
Similarly, in Schwam v. Township of Cedar Grove, the court disagreed with the taxpayer's argument that Township's increase of a prior year's assessment (which was based upon the property's status as an apartment complex) due to the property's conversion to condominiums was "an arbitrary singling out of the garden apartment complex" and "relief from the alleged spot assessment can be accomplished simply by restoring the" earlier year's assessment "and fragmenting it into 56 units." 9 N.J. Tax 406, 417-18 (Tax 1987), aff'd, 228 N.J. Super. 522 (App. Div. 1988), certif. denied, 115 N.J. 76 (1989). The Tax Court noted that when Chapter 123 "provides [sufficient] relief" discrimination is not an issue "whether the source of the discrimination was disparate treatment (i.e., assessment at a higher ratio than other properties) or an alleged arbitrary singling out of a property for spot or selective assessment." 9 N.J. Tax at 418. The Appellate Division agreed and noted that "[m]ore than an increase in value and the amount of the assessment was involved here. There was a change in status and form of the building from apartments to condominiums which was sufficient to invoke the statute and require valuation of the units as separate entities." Schwam, supra, 228 N.J. Super. at 526-27.
The Tax Court noted that "[r]estoration of the pre-conversion assessment is not permitted." Schwam, supra, 9 N.J. Tax at 418, n.5 (citing Cigolini Assocs. v. Borough of Fairview, 208 N.J. Super. 654 (App. Div. 1986)). In this connection, N.J.S.A. 46:8B-19 provides that "[a]ll property taxes . . . imposed by any taxing authority shall be separately assessed against and collected on each unit as a single parcel, and not on the condominium property as a whole."
In dicta, the Appellate Division observed that "in situations not involving condominium conversions the mere recording of a deed and receipt by the tax assessor of an abstract of title [should not ordinarily] warrant[] new individual assessments limited to that property (to the exclusion of comparable properties at lower assessments) as opposed to general revaluation" and doing so "may very well run afoul of . . . constitutional provisions if equality means relative equality to other properties, notwithstanding the present availability of the Chapter 123 remedy." Id. at 526-28. See also Inwood Owners, supra, 216 N.J. Super. at 493-94 (where in dicta, the court observed that "the tax assessor was attempting to use the omitted assessment procedure to improperly single out the taxpayer for reassessment based merely on a sale, without proof of any omission from the tax rolls, and where there had been no physical changes or alterations to the property . . . could be construed as a prohibited spot assessment") (internal quotations marks omitted).
However, the court also balanced the bar against "arbitrarily singling out property for increased assessment," with the assessor's "statutory obligation to monitor all available indicia of property value and to correct inequities in tax years other than years of district-wide revaluations." Schwam, supra, 228 N.J. Super. at 528. It re-affirmed the duty of an assessor to be vigilant about the need to change assessments due to changes to the property, whether due to ownership or the market, and at the same time, avoid arbitrary increases by singling out one or one class of properties in Regent Care Center, Inc. v. City of Hackensack, 362 N.J. Super. 403 (App. Div. 2003) (upholding an assessment increase to certain commercial properties undertaken pursuant to an assessment maintenance program). The court noted that "the tension between the assessor's statutory duty to assess all properties each year at full value and the constitutional limitations mandating uniformity and equal treatment, must be evaluated in light of [the] guiding principle that 'it is arbitrary intentional discrimination that is unconstitutional.'" Id. at 415 (citing and quoting Township of West Milford v. Van Decker, 120 N.J. 354, 362 (1990).
The Appellate Division noted that it had "previously acknowledged the role of proper assessment maintenance" when the assessor increased an assessment due to change in the property's status (i.e., conversion to condominiums), and that such a change was "example[] of proper assessment maintenance practice[]." Regent Care, supra, 362 N.J. Super. at 416-18 (citing to Schwam, supra, and Van Decker, supra). Based upon this precedent, the court ruled:
Thus, adjusting an assessment for legitimate reasons is an appropriate exercise of the assessor's statutory obligation and is not arbitrary or discriminatory. This is the appropriate mechanism by which the assessor keeps the tax rolls current when individual properties, based upon particularized, legitimate reasons, requireSee also Fourmost, Inc. v. Township of Parsippany-Troy Hills, 11 N.J. Tax 57, 61-62 (Tax 1990) (holding that change in assessments due to conversion to condominium ownership, regardless of the unchanged use, did not constitute spot assessment because "change in legal status to condominium ownership requires that the units be individually assessed"), aff'd o.b. per curiam, 12 N.J. Tax 251 (App. Div. 1991); Brunetti v. Township of Cherry Hill, 21 N.J. Tax 80, 86 (App. Div. 2002) (no spot assessment where assessor's inspection revealed that there were no wetlands "that had served to depress its valuation previously" and taxpayer "offered no support for his position that an assessor must ignore facts demonstrating the need to reassess a single piece of property if all property in the municipality cannot be simultaneously examined"), certif. denied, 175 N.J. 547 (2003); Orban v. Township of Alexandria, 21 N.J. Tax 1, 14 (Tax 2003) ("reassessment of a former single parcel as individual subdivided lots is . . . outside the ambit of spot assessment") (internal quotations marks omitted).
adjustment. If other similarly-situated properties are overlooked and not also adjusted, the selection may be deemed arbitrary and discriminatory. There was no evidence of that in Schwam.
[Regent Care, supra, 362 N.J. Super. at 417]
Here, the court does not find the 2009 to 2011 assessments treating the Subject as a condominium complex to be invalid spot assessments. The assessor affirmed that she would not change an assessment simply because she received the abstract of a sale deed, but would ensure that an assessment is placed only after inspection, review and analysis of documents. She also affirmed that her knowledge of the sale of Unit 10 or of its sale price did not spur her to place increased assessments upon the Subject. She placed new assessments as condominiums upon her realization that the Subject should have been so assessed, and that the Condominium Act left her no discretion in this regard. She placed individual assessments with the assistance of the revaluation company and based upon recent condominium sales in the Township. Whether those sales are credible value indicators is not the issue for purposes of this summary judgment motion.
Plaintiff vigorously argues that the Subject's legal form was always that of a condominium form of ownership. Thus, there was no "conversion to condominiums." As a result, there was no change in either ownership or use of the Subject for the Schwam legacy of cases to even apply. However, these facts must be balanced with the truism that the assessor is statutorily obligated to assess condominiums as separate units under N.J.S.A. 46:8B-19 and to review and ensure that each property is being uniformly and fairly assessed under N.J.S.A. 54:4-23. This truism was set forth in Schwam, supra, and reaffirmed in Regent Care, supra. See also Cigolini, supra, 208 N.J. Super. at 664-66 (rejecting an expert's reasoning that regardless of the Condominium Act, the property should be valued as a single commercial building because the condominium units were not selling and all units were owned by the taxpayer alone).
Plaintiff points out that, while it is incredible for the assessor's office not to receive any of the sale deeds with respect to the Subject over the years (and the date stamps on some of them belie such non-receipt), it is nonetheless undisputed that her office received the sale deed between Wellmont and Plaintiff sometime in 2001. That sale deed clearly specified that the Subject was held as a condominium form of ownership and contained the list of the units being sold. For the assessor to then revise the Subject's assessment as separate line items only in 2009 is clear evidence of spot assessment.
However, the fact that the Subject had been mistakenly taxed as a single line item, mixed-use commercial property since at least 2001 does not estop or excuse the assessor from complying with N.J.S.A. 46:8B-19. Under Plaintiff's argument, the Subject can never be assessed as a condominium because the assessor's only chance to do so was either in 1989 (when the Master Deed was created) or at the latest in 2001 (when her office received the sale deed with Plaintiff as buyer). Such a result is unsupported by law or logic. See Fourmost, Inc., supra, 11 N.J. Tax at 61 (rejecting taxpayer's argument that "if an assessment is erroneous, the erroneous assessment must remain unchanged if the same use continues after a condominium conversion"); Orban, supra, 21 N.J. Tax at 14 ("a taxpayer does not acquire a vested interest in an initial assessment").
Plaintiff's final argument is that because the DCA has prohibited the Subject from being marketed for sale as condominiums until it complies with certain requirements, the 2009 to 2011 assessments must fail. The court is not persuaded. Plaintiff has never formally revoked its status as a condominium. It has not provided anything to show that the DCA's position is a substitute for requirements of revocation under N.J.S.A. 46:8B-26. Its inability to sell the units as a condominium may or may be an issue at a valuation trial. However, this alleged fact, in and of itself, does not prevent the assessor from complying with the Condominium Act and placing assessments upon the Subject based upon its status as a condominium.
This statute provides that a "condominium property may be removed from the provisions of this act by agreement of unit owners" with 80% voting rights, and such "[t]ermination" is "effective upon the filing of a deed of revocation duly executed by" these unit owners "or [by] the sole owner of the property and recorded in the same office as the master deed." N.J.S.A. 46:8B-27 provides that "[u]pon the recording of such deed of revocation, the unit owners as of the date of recording of such deed shall become tenants-in-common of the property."
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In sum, the assessor placed revised assessments upon the Subject because of the twin statutory obligations under N.J.S.A. 46:8B-19 and N.J.S.A. 54:4-23, which ensures that the Subject is uniformly and properly assessed. Those reasons, and her methodology of imposing the assessments, were independent of the sale or sale price of Unit 10. Therefore the assessments for tax years 2009 to 2011 were not invalid spot assessments. CONCLUSION
For the aforementioned reasons, Plaintiff's motion for summary judgment is denied. The matters will be set for a valuation trial.
Very truly yours,
Mala Sundar, J.T.C.