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Society of the Holy Child Jesus v. City of Summit

418 N.J. Super. 365, 13 A.3d 886 (App. Div. 2011)

TAXATION; TAX EXEMPTIONS — New Jersey’s real property exemption statute does not bar a tax exemption for properties in violation of the Municipal Land Use Law; it is sufficient for the property to be legally used for an exempt purpose.

A non-profit corporation was affiliated with a church and organized for religious, charitable, and literary purposes. It owned a land parcel containing a former residence for nuns. The property was exempt from real estate taxes while it was used for that purpose. The corporation discontinued its use of the property as a residence, but continued to use the building for school purposes, including for meetings of the school’s board of trustees, parties, assemblies, and as office space for the school’s facilities director. The governing municipality’s tax assessor revoked the tax exemption. The matter was litigated in Tax Court, and the corporation moved for summary judgment on its complaint that the exemption should continue for a given tax year. While the motion was pending, the municipality charged that the corporation was violating a municipal zoning ordinance because the property was located in a single family residential zone where educational institutions were only a permitted conditional use. The property was deficient as to minimum lot area and frontage, so the municipality demanded that the corporation seek necessary variances. Ultimately, these were received. The issue before the court was whether the corporation was entitled to a tax exemption for the two calendar years when it was in violation of the municipal zoning ordinance. The Tax Court ruled it was not.

On appeal, the Appellate Division reversed, holding that the corporation was entitled to a tax exemption on the property that was to be used for school related purposes, even if use of the property did not comply with the municipal zoning ordinance. The Court said that property used for school purposes by a non-profit organization is exempt under New Jersey’s statutes, and this property clearly qualified for the exemption. It held that the exemption statute did not bar an exemption for properties in violation of the Municipal Land Use Law; it was sufficient for the property to be legally used for an exempt purpose.


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