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Chapter 91 Follow Up

On January 28, 2008, I wrote an article for the New Jersey Law Journal discussing the consequences of a property owner’s failure to respond to a Tax Assessor’s Chapter 91 request. The article discussed the conflicting case law in this area, including the obligation of the owner of non-incoming producing property to respond to a Chapter 91 request. The cases went both ways, with some property owners experiencing the draconian remedy of the dismissal of their appeals for failure to provide income and expense information for owner-occupied properties.

On April 9, 2008, the Appellate Division of the Superior Court of New Jersey clarified the issue and held that Chapter 91's appeal-preclusion provision solely applies to income-producing properties. H.J. Bailey Company v. Neptune Township, 399 N.J. Super. 381 (App. Div. 2008). In this case, the tax assessor of Neptune sent the property owner a Chapter 91 request. The property owner failed to respond to the request within the statutory 45 day time period. When the property owner filed a tax appeal, the tax assessor moved to dismiss the appeal based upon the property owner’s failure to reply to the Chapter 91 request, relying principally upon Southland Corp. v. Dover Tp., 21 N.J.Tax 573 (Tax Ct. 2004) (discussed in NJ Law Journal Article). The property owner opposed the motion arguing that the property was owner-occupied and, under the applicable law, it had no obligation to respond to the Chapter 91 request. The Tax Court sided with the property owner and the Appellate Division affirmed holding that the appeal-preclusion provision of Chapter 91 does not apply to non-income producing property.

It is now clear that under New Jersey law, a owner of non-income producing properties is permitted to file a tax appeal even if it does not respond to the Chapter 91 request. Property owners must be aware of this decision since many assessors will seek to knock out appeals based upon a property owner’s failure to respond to a Chapter 91 Request, even if the property is owner-occupied.

It is important to note that this decision is limited to non-income producing properties. If a property owner receives any type of income from any source, it risks being found to be a “income producing property.” This is often problematic when an owner forms a separate company to hold title to a property, and enters into a lease with another company he or she owns. This will be found to be an income producing property. Often times it is beneficial to respond to a Chapter 91 request even if you are an owner-occupied property to avoid the potential of a tax court judge finding some type of income attributable to the property.

Full post as published by New Jersey Law Blog on May 28, 2008 (boomark / email).