When Superstorm Sandy hit New Jersey on the evening of October 29, many local residents and businesses did not expect the devastation that followed. Numerous suffered substantial business and residential property losses as a result of the storm. While many have been busy and perhaps overwhelmed with filing insurance claims and claims with the Federal Emergency Management Agency (FEMA), property owners should not overlook another critical component of their available relief lifeline — real property tax relief.
New Jersey law is clear that when real property, containing any building or structure, has been destroyed or altered in such a way that the real property’s value has materially depreciated after October 1, the property owner may be entitled to tax relief. Specifically, the law provides that the value of a property depreciated as a result of a storm like Sandy can support an adjustment to the property’s tax assessment.
However, notice to the tax assessor must be provided before January 10, 2013. The relevant statute expressly provides: When any parcel of real property contains any building or other structure which has been destroyed, consumed by fire, demolished, or altered in such a way that its value has materially depreciated, either intentionally or by the action of storm, fire, cyclone, tornado, or earthquake, or other casualty, which depreciation of value occurred after October first in any year and before January first of the following year, the assessor shall, upon notice thereof being given to him by the property owner prior to January tenth of said year, and after examination and inquiry, determine the value of such parcel of real property as of said January first, and assess the same according to such value.
Because significant real property value has been lost in certain storm ravaged areas, the time to act is now to ensure that real property tax assessments are properly adjusted and property taxes reduced. There is simply no reason why the crippling losses suffered by so many should be further compounded by municipal overassessments on these same properties.
The devastation realized by our State’s shore communities represents just one example of an opportunity for application of the relief available under the law. For example, a property owner’s ocean front estate or business property is literally washed away from its foundation. In fact, even the foundation remains buried in a dune of eroded beach sand. In this instance, not only would the property owner’s building value be lost, but the real prospect exists that the land itself may have been permanently altered (reduced in size). A portion of the victimized property may have been consumed by the ocean and the physical square footage of the lot both physically reduced in size and in value.
Furthermore, with the obvious publicity surrounding the plain degradation of the local infrastructure, heightened prospect for similar events in the future, a compelling case can be made for a more generalized reduction in value for all similarly situated properties as well — especially when coupled with the new stigma likely attaching to these neighborhoods. The marshalling of facts and evidence supporting an appropriate reduction in the property assessment is therefore critical.
By providing the proper and timely notification of this material loss to local property tax assessors, prior to January 10, 2013, a property owner can ensure that a reassessment of the impacted property is undertaken. Taking such action also enables the property owner to later have standing to contest any inadequate adjustments made by the assessor through the filing of timely real property tax appeals. It must be recognized, that a failure to provide timely notice will likely result in the 2013 tax assessment remaining at its pre-storm level. As a result, such property owners could be saddled with assessments and tax bills on property that no longer exists. The property owners’ diligence is therefore essential to ensure that those properties impacted are assessed to reflect true value and not some higher value that may have existed prior to the devastation caused by the storm.
Significant real property tax relief is thus now available to many and should be included at the top of any list of actions to be taken during these most difficult times.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.