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City of Atlantic City v. Woolworth Corporation

A-1797-97T1 (N.J. Super. App. Div. 1998) (Unpublished)

PROPERTY TAXES; ASSESSMENTS—There are instances when a bona fide sale may not reflect the true value of a property and, in such cases, special factors affecting the sale price may be taken into account when assessing the property for real estate taxation purposes.

A taxpayer owned boardwalk property. Despite its proximity to hotels and casinos, the taxpayer was unable to sell the land and it lay vacant for several years. In 1996, a realty company purchased the land for $1,100,000 for commercial rental use. Two months later, the realty company entered into a contract to sell the property for $5,000,000. The sale fell through because of a title problem. Although both the taxpayer’s expert and the municipality’s expert used a sales comparison analysis, there was a wide discrepancy between their appraisals. For the municipality’s 1996 tax year, the tax assessor assessed the property at $3,231,800. The taxpayer appealed to the Board of Taxation, seeking an assessment of $1,000,000. The Board of Taxation partially granted the taxpayer’s petition and reassessed the property at $1,900,000. The municipality then filed an appeal with the tax court, alleging that the reassessment failed to reflect the true value of the property. The tax court agreed and reinstated the original tax assessment. The taxpayer then appealed contending that the tax court erred in: (1) failing to recognize the sale of property as the most appropriate indicator of value; (2) using a comparable sale that was too remote in time from the tax assessment date to be relevant; and (3) failing to make findings of fact and conclusions of law with regard to the weight to be given to an aborted sale of property. The Appellate Division affirmed the decision of the tax court, noting that although a bona fide sale may be true evidence of the value of a property, there are clearly instances when the sale price may not reflect the true value of the property. “In such circumstances it is for the Court to appraise the circumstances surrounding a sale to determine if there were special factors which affected the sale price without affecting the true value.”


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