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Volume 1 - Opinions of Counsel SBEA No. 72

Opinions of Counsel index

Municipal property (occupied by life tenant) - Real Property Tax Law, § 406:

Real property owned by a village and located within its corporate limits and occupied by a life tenant is subject to taxation.

Our opinion has been requested as to the manner of assessing certain real property purchased by a village.

A copy of an indenture attached to this inquiry indicates that the village purchased certain real property situated in the village and the seller (grantor) reserved to himself for his lifetime the use and occupancy of a portion of such property consisting of a house and a drive for access thereto. The indenture also indicates that this property was acquired by the village pursuant to Article 1, Title 7 of the Conservation Law which is known as the “Park and Recreation Land Acquisition Act” and is concerned with the acquisition of land for public parks and related purposes.

Section 300 of the Real Property Tax Law provides that all real property within the State of New York is subject to taxation unless it is specifically exempt therefrom by law.

Section 406 of the Real Property Tax Law, in subdivision 1, provides in part that “[r]eal property owned by a municipal corporation within its corporate limits held for a public use. . .shall be exempt from taxation. . .” (emphasis supplied).

The courts have held that real property “held for a public use” means property which is “. . . occupied, employed or availed of, by and for the benefit of the community at large and implies a possession, occupation and enjoyment by the public, or by the public agencies.” (Town of Harrison v. Westchester Co., 13 N.Y.2d 258, 196 N.E.2d 240, 246 N.Y.S.2d 593; Herkimer County v. Village of Herkimer, 251 App. Div. 126, 295 N.Y.S. 629). Thus, real property owned by a municipal corporation (i.e., a county, city, town or village) located within its corporate boundaries and actually used for a public purpose such as a park open to the public, is clearly entitled to exemption. Such property should be assessed and listed on the exempt portion of the assessment roll.

The portion of the property reserved by the seller for his own use and occupancy during his lifetime, since it does not comply with the provisions of an exemption statute, (section 406 of the Real Property Tax Law) is taxable and should be assessed upon the taxable portion of the assessment roll in the same manner as other taxable real property.

Property subject to a life estate should be assessed in the name of the life tenant since the law is well settled that a person who has a life estate, has a freehold estate and, during his lifetime, is considered the owner thereof and must pay taxes thereon. (Deraismes v. Deraismes, 72 N.Y. 154; In re Detmold’s Estate, 4 N.Y.S. 903; In re Kontir’s Estate, 101 N.Y.S.2d 879; In re McCarty’s Estate, 158 Misc. 287, 285 N.Y.S. 641).

For informational purposes attention is also called to section 1-0713 of the Conservation Law which provides for occupancy agreements with former owners of lands acquired by a municipality pursuant to Title 7 of the Conservation Law. That section expressly provides that the right of occupancy by the former owner is conditioned on his prompt payment of the full amount of taxes and assessments, including interest and penalties if any.

March 15, 1972