Volume 1 - Opinions of Counsel SBEA No. 88
Veterans’ exemption (contract of sale) (seller in possession) - Real Property Tax Law, § 458:
A veteran’s widow would continue to qualify for the exemption provided by section 458 of the Real Property Tax Law, even if she enters into a contract to sell her property to a corporation, provided she reserves for herself a life estate in the property.
Our opinion has been requested as to whether a veteran’s widow would continue to qualify for the exemption provided by section 458 of the Real Property Tax Law where she enters into a contract to sell her property to a corporation.
The contract relates to three separately described parcels of real property which were conveyed to the widow and her deceased husband in one instrument and which we assume is assessed as one parcel. The contract provides that the consideration for such purchase shall be payable in five annual installments and the widow reserved unto herself the full use of two houses and a restaurant on said premises as long as she lives or until she vacates such premises. Said agreement provides that the corporation shall have possession of one of the described parcels. The agreement further provides that the corporation shall be liable for and pay all real property taxes levied upon the premises.
In order to qualify for exemption pursuant to section 458 the applicant must be the owner of the subject property. However, this statute does not require that there be an ownership in fee, nor does it otherwise qualify the nature of ownership by one of the persons enumerated therein.
The law is well settled that a life tenant of real property has a freehold estate and is considered the owner thereof for assessment purposes (Deraismes v. Deraismes, 72 N.Y. 154; In re Detmold’s Estate, 52 Hun 142, 4 N.Y.S. 903; In re Kontir’s Estate, 101 N.Y.S.2d 879; Op.Atty.Gen. August 29, 1960; 1915 Op.Atty.Gen. 95). Thus a person who has a life estate would be considered the owner of the property within the meaning of section 458. Accordingly, the widow of a veteran who otherwise qualified for exemption would be entitled to a continuance of the exemption even if she conveyed the property to the corporation as long as she reserved unto herself a life estate in the property. This would apply only to that portion of the property in which a life estate was retained.
While a purchaser in possession under an executory contract of sale (title being retained in the seller notwithstanding) is deemed to be the owner for taxation purposes (People ex. rel. Donner-Union Coke Corp. v. Burke, 204 App. Div. 557, 198 N.Y.S. 601, aff’d 236 N.Y. 650, 142 N.E. 320; Wilson and Company v. City of New York, 73 N.Y.S.2d 206, aff’d 276 App.Div. 755, 92 N.Y.S.2d 918), it has been held that a seller in possession under an executory contract of sale is deemed to be the owner for purposes of real property taxation (Kissick v. Rees, 111 App. Div. 292, 97 N.Y.S. 692; Cooley on Taxation, 4th edition, section 602, page 1274).
A person who is deemed to be the owner of real property for taxation purposes is deemed to be the owner for exemption purposes (see, for example, 1 Op.State Compt. 249, 1954; 4 Op.State Compt. 140, 1948).
The agreement between the widow and the corporation wherein the corporation agreed to pay and be responsible for any taxes levied upon the property, in and of itself, would not disqualify the widow who is in possession of the property under an executory contract of sale from claiming this exemption. Whether such agreement exists or not is of no consequence as far as the real property tax is concerned since all assessments are made against the real property itself which is liable to sale pursuant to law for any unpaid taxes (Real Property Tax Law, section 304).
It is our opinion that the so-called Parcel 3 should be separately assessed to the corporation since it is in possession thereof pursuant to an executory contract of sale. The remaining two parcels should be assessed in the name of the widow and the exemption continued as long as she remains in possession thereof pursuant to the executory contract of sale. In the event that title is transferred to the corporation before the expiration of the five-year period set forth in the executory contract of sale, the widow would be entitled to a continuance of the exemption if she reserves unto herself a life estate in said premises. However, if she does not reserve a life estate, real property should be assessed to the corporation upon execution and delivery of the instrument of conveyance.
January 21, 1972