Echelon Glen Cooperative, Inc. v. Voorhees Township
Court: New Jersey Superior Court Appellate Division; August 4, 1994; New Jersey; State Appellate Court
Defendant Voorhees Township appeals the Tax Court’s denial of its motion to dismiss the plaintiffs' appeal regarding the 1991 tax assessment on three properties. Richard Simon, who purchased tax sale certificates for two of the properties, also appeals the denial of his motion to intervene. Both the Township and Simon argue that the Tax Court cannot consider the appeal because the plaintiff failed to pay the required taxes under N.J.S.A. 54:3-27, asserting that the purchase of tax sale certificates does not fulfill this requirement. The Township further claims the Tax Court mistakenly excused the plaintiff from tax payment requirements due to its receivership status.
The plaintiff filed a complaint on August 13, 1991, contesting the assessments as arbitrary and discriminatory but did not make any tax payments. Simon purchased tax sale certificates for two properties in April 1992, but these certificates did not indicate an ongoing appeal. The estimated values of the properties were significantly lower than the assessed value, indicating possible over-assessment.
The Tax Court denied the Township's motion to dismiss based on a precedent that allows an indigent taxpayer to maintain a tax appeal without prior payment. It noted that the taxes had been effectively paid by Simon's purchase of the tax certificates. The court's ruling was supported by prior case law indicating that a taxpayer in receivership does not need to pay taxes to pursue an appeal. The plaintiff argues that its inability to pay taxes should exempt it from the payment requirement, and contends that the Tax Court erred by not allowing a hearing on its ability to pay.
The court affirms the lack of merit in the plaintiff's claims and references the precedent set by New York, Susquehanna and W.R.R. Co. The court asserts that any exceptions to legal principles must be established by the Supreme Court and notes that the case of Boddie v. Connecticut does not provide grounds for such an exception in this matter. The ruling addresses whether a property owner can appeal a tax assessment without fulfilling the payment requirement under N.J.S.A. 54:3-27 when a third party acquires a tax sale certificate. It is emphasized that the purchase of a tax sale certificate does not equate to the payment of taxes, which is a statutory prerequisite for appeal. The Township and Simon argue that the obligation to pay taxes remains intact despite the sale of the certificate, and they express concern that a ruling in favor of the property owner would deter the purchase of tax sale certificates by affecting the interest earned on them. The statute N.J.S.A. 54:3-27 mandates payment of all due taxes as a condition for filing an appeal and highlights that this requirement applies to both county board and direct appeals to the Tax Court. It is clarified that payment does not prejudge the appeal's status and is designed to prevent financial hardship to municipalities from delayed tax revenue. Historical context indicates that prior to 1975, taxpayers were only required to pay taxes they would owe if they were successful on appeal, which created significant financial burdens for municipalities.
The document addresses the implications of tax payment requirements during the appeal process for municipalities under New Jersey law. It outlines that municipalities are restricted from conducting tax sales while an appeal is pending, which is a significant hardship. The 1975 amendments to N.J.S.A. 54:3-27 aimed to protect tax revenues during such appeals, mandating payment of 90% of the assessment and later specifying payments for the first three quarters of current taxes. By 1991, the statute required payment of all taxes and municipal charges due up to the first quarter of the current tax year.
Importantly, the requirement to pay under N.J.S.A. 54:3-27 is not jurisdictional, meaning that non-payment does not automatically lead to dismissal of an appeal. Dismissal can only occur if the municipality actively seeks it through appropriate legal motions. If taxes are paid before a dismissal motion is heard, the Tax Court cannot dismiss the complaints. The document clarifies that while N.J.S.A. 54:51A-1(b) requires tax payment when filing an appeal post-county board judgment, this is not applicable to direct appeals under N.J.S.A. 54:3-21.
The key distinction lies in the less stringent payment requirements for direct appeals compared to those after county board judgments. The document concludes that if a municipality does not move to dismiss an appeal until after taxes are paid, the appeal should not be dismissed. Furthermore, it emphasizes that receiving revenue from a tax sale certificate is equivalent to receiving tax payments, thus fulfilling the necessary financial obligations for the appeal to proceed.
Freehold Office Park had not paid its 1990 property taxes when it appealed to the Tax Court in August 1990. After accepting partial payments, the municipality sold a tax certificate for the unpaid balance in August 1991. The municipality moved to dismiss the appeal for non-payment of taxes in September 1991, but the court denied the motion, noting that the sale of the tax certificate provided the municipality with tax revenues, fulfilling the purpose of N.J.S.A. 54:3-27, which aims to ensure continued tax revenue during appeals. The court argued that dismissing the appeal after the sale would not enhance municipal revenue, and since the municipality had received payment, the dismissal was inappropriate.
Concerns raised by amicus and Simon indicated that allowing the appeal could jeopardize the interests of tax sale purchasers, as a successful appeal might limit their return on investment. They argued that if an assessment were lowered, municipalities might only refund excess taxes with the legal interest rate instead of the higher rate from the tax certificate. However, the court, consistent with prior rulings, rejected these concerns, emphasizing that the rights of the tax sale certificate holder are limited to an inchoate interest and do not include title to the property. The holder has rights to collect the certificate amount with interest, redeem from other holders, and potentially acquire title through foreclosure. The Tax Court recently ruled that tax sale certificate purchasers lack standing to appeal assessments, a matter not explored in this case as Simon sought intervention based on procedural issues related to the tax appeal's dismissal.
The Township's change in position and consideration of Simon's arguments lead to the conclusion that Simon's motion to intervene is no longer a viable issue. The denial of Simon's motion is affirmed, and the case is remanded to the court for further appeal consideration. No costs are awarded for this appeal. Bala Properties Group, acting as receiver for Echelon Glen Cooperative, is authorized by the U.S. District Court to pursue the tax appeal. Richard Simon, as trustee for the tax sale certificate purchaser, was granted leave to appeal the Tax Court's denial of his intervention motion aimed at dismissing the tax appeal.
During the initial argument, the Township sought leave to appeal nunc pro tunc from the dismissal of the tax appeal, which was granted. The plaintiff has the option to appeal directly to the Tax Court due to assessments exceeding $750,000, as per N.J.S.A. 54:3-21 and R. 8:3-5(a)(3). It was noted that although an appeal was filed regarding the 1992 assessment, the record does not reflect this complaint, and the plaintiff did not pay the corresponding taxes. A third party purchased the tax certificate for one lot.
Legislative amendments to N.J.S.A. 54:3-27 have established specific payment requirements for tax appeals, transitioning from the requirement of paying the first three quarters of taxes to requiring total taxes and municipal charges due, effective January 1, 1992. The reference for tax appeals has shifted from the State Board of Tax Appeals to the Tax Court due to the 1991 amendments. N.J.S.A. 54:3-21 has allowed appeals for assessments over $750,000 since 1978. The 1991 amendments also modified the appeal timelines from August 15 to April 1. The court concluded that recent amendments support the interpretation of N.J.S.A. 54:3-27 without affecting the issues at hand and determined that the doctrines of estoppel and judicial estoppel need not be considered in relation to the Township's current stance.
