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Keane v. The Township of Monroe

25 N.J. Tax 479 (2010)

TAXATION — Property owners who are not aggrieved by their own, individual assessments, but rather by the entire assessment list for a municipality, are not obligated to file an individual tax appeal and can petition the Director of Division of Taxation or apply to the County Tax Board for relief.

A group of residential housing development homeowners were dissatisfied with the administration and equalization of, real estate taxes assessments within their municipality and requested a revaluation. They claimed there were irregularities by the tax assessor in calculating the municipality’s average ratio of assessed value to true value. The homeowners believed that the average ratio should have been lower for several years because there were numerous sales transactions that were disregarded by the tax assessor’s office. According to them, the tax assessor disregarded sales transactions that she felt were “extremely below” the then average ratio. The assessor argued those transactions would have “distorted [the] sales to assessment ratio,” even though there was no indication that those sales were anything but fair market sales. According to the homeowners, the assessor should have included those sales for the purposes of calculating the average ratio, and this might have required the municipality to order a revaluation. However, the municipality refused to do a revaluation. The homeowners requested a meeting with the County Tax Board, but the Board did not deem one necessary because the most recent tax appeals from the municipality did not overcome the presumption that the municipality’s assessments were not irregular. The homeowners sued to compel a revaluation and the municipality moved for summary judgment. The municipality argued that the homeowners did not exhaust all of their administrative relief first, such as by filing tax appeals for their individual properties.

The Tax Court found in favor of the homeowners, noting that typically, when a municipality does not act voluntarily, a county tax board may act to order a revaluation to ensure that all properties are taxed correctly. Alternatively, the Director of the Division of Taxation has independent authority to order or undertake a revaluation where appropriate without waiting for the municipality or the Tax Board to act. The Court noted that the Director agreed with the homeowners that revaluation was appropriate, and the Director argued that the court should grant summary judgement in the homeowners’ favor. If the Director had ordered a revaluation after analyzing the tax data, then the Court could have ordered a revaluation on that basis alone. However, since the Director did not order a revaluation, but rather agreed with the homeowners’ demands in their suit, the Court needed to determine whether the Director had properly analyzed the tax data in concluding that a revaluation was necessary. The Court found that it was clear that the Director analyzed the criteria for evaluation in the same manner as it would have been analyzed if it were asked by the tax board to approve a revaluation and that Director concluded that a revaluation was required. Noting that the municipality refused to order a revaluation, but instead was insisting that the individual homeowners file tax appeals for their own properties. The Court held that, in this situation, the municipality’s proposed remedy would not help the homeowners. The municipality wanted each of the homeowners to file tax appeals, but the Court found that the homeowners were not aggrieved by their own, individual assessments, but rather by the entire assessment list for the municipality. Therefore, requiring them to appeal their particular assessments, as opposed to the municipality conducting a revaluation of all properties, would not help them.

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