Deadline for NYC Real Estate Tax Appeals Approaching
Property owners in New York City should be mindful of the upcoming October 23 rd , 2020 deadline to file a Petition pursuant to Article 7 of New York’s Real Property Tax Law in the New York Supreme Court. This filing is required in order to preserve the right to contest the real property tax assessment for the 2020/21 fiscal year. This annual deadline is immovable and non-waivable – in other words, the failure to file a petition by October 23 rd will result in a total loss of a property owner’s right to contest its 2020/21 assessment.
By way of background, New York City, unlike most jurisdictions, reassesses real property for property tax purposes every year. While such a system recognizes and captures shorter-term fluctuations in property values, it also requires scrupulous adherence to a series of annual filing requirements and deadlines for those property owners who wish to contest their assessments in an effort to lower their property taxes. The late-October deadline for filing a Petition – which ordinarily occurs on October 24th unless, as is the case in 2020, that date falls on a weekend or holiday in which case it occurs on the last weekday before October 24th – is generally the last deadline within that annual cycle.
In New York City, the process to contest property tax assessments begins at the administrative level with the New York City Tax Commission. All owners who wish to contest their assessments must first file an Application for Correction with the Tax Commission and have their case heard by a Tax Commission hearing officer. If a settlement of the current assessment has not been reached and processed by the late-October Petition-filing deadline, a property owner must file a Petition to preserve the right to continue to protest that assessment (even if the case currently remains under appeal at the Tax Commission level but has not yet been resolved by that date).
The filing of a Petition brings the property tax assessment challenge to the level of judicial review. Unlike challenges to most administrative agency decisions in New York, judicial review of real property tax assessments is governed by its own separate statute, Article 7 of the New York Real Property Tax Law, which sets forth the procedures and specific grounds upon which an assessment may be challenged. (The review of other types agency decisions is governed principally by Article 78 of the New York Civil Practice Law and Rules.)
Article 7 sets forth four specific grounds for challenging an assessment: (1) excessiveness; (2) unlawfulness; (3) inequality; and (4) misclassification. Generally speaking, the most common assessment challenges are brought to achieve a lower valuation, thereby causing a reduction in the tax. Absent some other error on the part of the Department of Finance (for example the classification of a primarily commercial property in a residential tax class), cases actually pursued on other grounds are decidedly rarer.
The Petition itself adheres to an established, largely boilerplate format, naming both the Tax Commission and the New York City Commissioner of Finance as Respondents and setting forth a lengthy list of allegations based on all four grounds set forth in Article 7. This veritable “kitchen sink” approach effectively preserves a Petitioner’s right to contest its assessment from almost any angle, despite that its most likely grounds for relief will be the excessiveness of the assessment. Petitions are filed in the county in which the subject property is located, which in New York City corresponds to one of the five boroughs.
After a Petition is filed, property owners who wish to continue to pursue relief after receiving an adverse determination by the Tax Commission generally follow a set course. First, they will typically challenge their assessment once again at the next year’s Tax Commission hearing, as that agency has two-year jurisdiction over assessment challenges. Next, they will attempt to negotiate a settlement via pre-trial negotiations with the New York City Law Department, which represents the City in Article 7 proceedings. Finally, they can bring the case to trial before the Supreme Court, which, for cases pursued on the grounds of an assessment’s excessiveness,
would require the obtaining of a formal appraisal and testimony from an expert real estate appraiser. The timely filing on an Article 7 Petition is a perquisite to each of these steps, and for achieving post-administrative assessment relief.
