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Volume 12 - Opinions of Counsel SBRPS No. 7

Opinions of Counsel index

School tax relief (STAR) exemption (ownership) (reapplication when spouse added to deed) - Real Property Tax Law § 425:

When property is receiving a basic school tax relief (STAR) exemption and an owner adds his or her spouse’s name to the deed, a new application is not required for continuation of the exemption.

Our opinion has been requested concerning the school tax relief (STAR) exemption (Real Property Tax Law, § 425). The facts are that a man (herein “H”) has been the sole owner of a property and has been receiving the basic STAR exemption for a number of years. He recently married “W” and has recorded a new deed to the same property in his and his wife’s names. The assessor has suggested that the basic STAR exemption should be removed on the ground that the newlyweds have not filed a new application reflecting their joint ownership of the property. His theory is that title has been transferred to “a new owner or owners.” We believe this to be an erroneous interpretation of the pertinent statutory language and, under these circumstances, would ignore the legislative intent underlying this statute.  {1} 

In general, the basic STAR exemption proceeds on the assumption that once a proper application has been filed by an eligible owner (or owners) and that application has been approved by the assessor, the exemption “shall remain in effect” (i.e., from one year to the next) “until discontinued in the manner provided in this section” (RPTL, § 425(9-a)). Thus, once a qualified applicant has submitted an application and remains eligible for exemption, no subsequent application is required. The assessor is, however, directed to “discontinue any exemption [thus] granted” under certain circumstances, including that where “(ii) title to the property has been transferred to a new owner or owners . . .” (425(11)(a)).

The first and foremost reason for our conclusion is that, even where there are multiple owners, the residential property need be the primary residence of simply “one . . . of the owners thereof” (RPTL, § 425(3)(b)). As we understand the facts, here, the property was owned by “H” and served as his “primary residence” both before and after he married and conveyed an interest in the real property to his new wife.

Second, a plausible and more reasonable reading of the “discontinuance” language of section 425(11)(a)(ii) noted above is that it applies when a former owner (“H” in this case) has divested himself of his interest in the real property and conveyed that interest entirely to one or more other owners. That is not what happened here. Under New York law, there is a statutory presumption (Estates, Powers and Trusts Law, § 6-2.2(b)) that a conveyance of title to real property to a husband and wife creates a “tenancy by the entirety,” unless the terms of the deed provide for some other form of common ownership such as “joint tenancy with right of survivorship.” Under applicable principles of law, in a tenancy by the entirety, the husband and wife each hold an “undivided interest in the whole” (see Reister v. Town Board of the Town of Fleming, 18 NY2d 92, 218 NE2d 681, 271 NYS2d 965 (1966)). Thus, as a matter of law, “H” has not divested himself of any of his rights of ownership by conveying this joint interest in his property to “W.”

Moreover, there is nothing in the statute which suggests that, under these circumstances, a new application needs to be submitted. The former sole owner continues to maintain eligibility and there has not been a change in ownership which would render him or his property ineligible to continue to receive the exemption. (In order to keep assessment records current, the assessor could ask the new co-owner to submit a written statement of her ownership interest or, simply, a copy of the deed if the assessor has not already received the same. But, again, nothing in the statute suggests to us that a “new” application needs to be submitted where the former sole owner continues to satisfy the statutory requirements for exemption eligibility.)

Finally, it has been suggested that the assessor should automatically discontinue the exemption in these circumstances because the assessor has no assurances that the newlyweds will continue to reside on these premises. {2}  The premise seems illogical at best. Why should “H” convey ownership to himself and his wife, if they were planning to relocate? Even if the assessor is truly concerned with the issue of primary residence, the statute provides a simple, direct remedy, to wit: “From time to time, the assessor may request proof of residency from the owner or owners of any property which is exempt pursuant to this section” (RPTL, § 425(10)(a)).

Accordingly, if an assessor has improperly discontinued the STAR exemption in these circumstances, resort may be had to correction under the so-called “Correction of Errors Law” (RPTL, Article 5, Title 3).

October 20, 2005
Revised August 19, 2008

{1}  Our analysis would be different if the enhanced STAR exemption (RPTL, § 425(4)) were in issue. There, annual proof of income must be provided, and, as we concluded in 11 Op.Counsel SBRPS No. 4: “For purposes of determining income eligibility for the enhanced school tax relief (STAR) exemption, the income of the owner’s resident spouse must be considered, even if the marriage occurred during or after the income tax year upon which eligibility is determined.”

{2}  It should be noted that a husband and wife are entitled to a STAR exemption on no more than one residence, unless they are living apart due to legal separation (RPTL, § 425(4-a)(a)).