Most New Jersey tax appeals boil down to a classic battle of the experts. The taxpayer's appraiser squares off against the municipal appraiser, and the Tax Court decides who has the better part of the argument. While that's something of an oversimplification, it catches the essence of the trial. It also tends to some measure of predictability in the process, and facilitates settlement of many appeals.
Still, there are cases that can't be settled for one reason or another. If that's the case, one of the most important decisions a tax appeal litigant will make is the choice of appraisal expert. If you hire someone unfamiliar with the dynamics of appraising for Tax Court or inexperienced as a testifying witness, you run the risk of putting your claim in serious jeopardy. Even if the assessment is patently wrong, the appraiser has to show it, and then go on to prove the true value of the real estate.
What does all this have to do with the case recently decided by New Jersey's Appellate Division? Plenty. In VNO 1105 State Hwy 36, LLC %Stop & Shop v. Township of Hazlet, a property owner retained an expert who also happened to become the tax assessor for a nearby municipality. Shortly before the trial, the township moved to bar the taxpayer's expert on the grounds that tax assessors should be categorically barred from testifying in opposition to another tax assessor. The Tax Court agreed with the municipality and barred the expert from testifying.
The Appellate Division disagreed, and reversed the Tax Court's order. The appellate judge writing for the panel noted that there was no indication that there was any side-switching or breach of confidentiality that would require disqualifying the expert, and found that the public interest did not automatically require the disqualification of a sitting tax assessor from testifying as an expert on behalf of a taxpayer.
This is definitely good news for taxpayers, because the number of truly capable appraisal experts well versed in New Jersey property taxation is small; and the loss of even one well known and respected appraiser to property owners is significant. Practically speaking as well, the outcome makes sense; absent some genuine breach of confidence, there is no real reason to bar such individuals from testifying for property owners in other municipalities.
The full opinion can be accessed at the Tax Court's website here.
What can we learn from yet another New Jersey Tax Court opinion rejecting a taxpayer's assessment challenge? More than you might think.
In Faber v. Toms River, a self-represented taxpayer challenged her assessment by pointing out discrepancies between the property and the property record card, and by testifying about three sales of similar homes in town.
The property owner first argued that the property record card was wrong, and that both the size of the home and the lot were overstated. However, she attempted to prove the discrepancies through the testimony of the tax assessor, who had not set the assessment and was not subpoenaed to appear at trial. As a result, the assessor had little knowledge of the subject property, and the court found that the taxpayer failed to offer any evidence to support her claim as to either the square footage or the lot size except her own testimony to that effect.
The taxpayer also testified about three properties she identified as similar. However, the Tax Court rejected these sales as valid indicators of the subject's value for various reasons, including differences in location, style and lack of support for adjustments the taxpayer asserted were required.
What can we learn? The first highlight is the difference between a proceeding at the various county tax boards and Tax Court. Tax assessors are required by regulation to appear at the tax board hearings for their taxing district; This is why the Tax Court recognizes a taxpayer's right to call the assessor as a witness at their county hearings so as to avoid a dismissal for lack of prosecution. By contrast, there is no such requirement in Tax Court, and the taxpayer must use the proper procedures (i.e., a trial subpoena) to compel the assessor's appearance and testimony. Had this taxpayer done so, the assessor may have had more meaningful information to present to the court.
Second, we see the difficulties in challenging the assessment methodology. Had the plaintiff been aware, there is a possibility that errors in assessment - including in the size of the home or lot - may be corrected. In fact, such errors may even be corrected retroactively for up to three years preceding the year of the challenge. Such errors may be difficult to quantify and assess whether correction will yield a meaningful benefit; experienced advice (or lack of it) can make all the difference in the outcome.
Third and finally, it is a reminder that the taxpayer bears the ultimate burden to demonstrate that their assessment is wrong. It's not enough to show weaknesses in the assessment or in the town's comparable sales. The taxpayer must make a compelling case that their property is over assessed. Hands down, the best way to do that is to have an experienced property tax attorney and expert, who are familiar with the Tax Court's standards of proof and the evidence and arguments that have the best chance to carry the day, whether at the bargaining table with the town, or before the Tax Court.
Before too long, assessments will be issued for 2022, first in Monmouth County and then for the rest of New Jersey. If you think you might be over assessed or incorrectly assessed, don't wait - contact us for a free consultation as to whether a 2022 appeal might make sense for your New Jersey real estate.
You can read the full case here:
011106-2020 - Joanne Faber v. Toms River Township (njcourts.gov)