Peter Blond, Brandt,Steinberg, Lewis
& Blond LLP
Property owners are gradually cutting costs, wherever possible, to mitigate flat or declining income and the expenses they can’t control (e.g. real estate taxes). While that is an unsurprising approach, owners have started to cut costs where they should not. By every October 24th, in New York City, unresolved administrative real estate tax assessment protests must convert to supreme court petitions by state law. Failure to file a supreme court petition by the 24th effectively concludes the current tax year’s protest.
Conversely, filing the petition preserves the petitioner’s rights as against that tax year for at least four more years. Subsequent court filings can extend that preservation of rights for years longer. That extra time permits retained counsel to prosecute the matter as fully as possible; optimally concluding with a retroactive cash refund for the taxpayer. Thorough prosecution of a tax certiorari proceeding may necessitate use of consultants such as appraisers, architects, engineers or environmental experts; all of whom require substantial lead time to conduct research and prepare a report.
Yet each October generates hundreds of client inquiries as to the status of their annual protest and, more importantly, the likelihood of a favorable outcome. Too many property owners focus solely on the probability, and time frame, of a reduction instead of the protections afforded by a supreme court petition. For example, in the age of litigation, anyone operating as a fiduciary should think twice about “skipping” a petition to save roughly a few hundred dollars (supreme court - via the county clerk – charges $210 just to purchase the required index number). I routinely experience cooperative or condominium board members questioning the efficacy of “wasting another few hundred dollars.” Of course buildings with dozens, if not hundreds of units, could have numerous disgruntled owners over rising tax bills. One or more of these unit owners could sue their own building/board for failure to adequately protect the unit owners’ interests even if the taxes are “reasonable.”
In the age of “CYA” (cover your assessment), it is very rare indeed to find such a reasonably priced level of protection and simultaneous opportunity. Akin in some ways to other insurance purchased by property owners, a petition can also provide protection against the unknown or unexpected. The best recent example of this was a superstorm called Sandy which hit on October 29th, 2012, just five days after the petition filing deadline.
In early October of 2012, many property owners inquired – as usual – as to whether they should spend the money and file the petition. As is frequently the case for people, who deem something a luxury instead of a necessity, most elected to economize and did not file. An uncomfortable number of those frugal clients called me, in early November of 2012, to report damage or complete destruction of their properties. The question from all of them was the same, “what can we do about the real estate taxes?” I had to sadly inform each that nothing could formally or legally be done until the following tax year, because they chose not to file the supreme court petition by the 24th.
The harsh reality in dealing with municipalities is they do not change statutory filing deadlines to accommodate property owners that failed to safeguard themselves. As I tell existing and prospective clients, “the law doesn’t say the deadline is X… unless something goes wrong later.” It is important to note, relative to the Sandy example, that each upcoming New York City tax year is valued as of January 5th that calendar year (also known as the taxable status date). Accordingly, events which negatively impact a property’s value occurring after January 5th may not be recoverable under strict constructionism. With that having been said, legal options are empowering in any situation.
Other examples of why property owners should always file the petition include contractual matters. Broken promises to tenants, which are responsible for their proportionate share of the real estate taxes, could result in the landlord being sued for failure to fully comply with lease provisions. Sellers that commit in writing to protest the real estate taxes, and fail to do so, could be sued for breach of contract. Sponsors, of new condominiums in particular, could be the buyers’ target of a lawsuit should initial real estate taxes eclipse those indicated in the initial offering plan.
In the end, clients that retain certiorari counsel should enable their attorneys to protect their interests as fully as possible by filing their annual supreme court petition.
Peter Blond, Esq. is a partner at Brandt, Steinberg, Lewis & Blond LLP and the chair of the NYC Bar committee on condemnation & tax certiorari, New York, N.Y.