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Volume 12 - Opinions of Counsel SBRPS No. 27

Opinions of Counsel index

Assessment review, small claims (prohibition on increased assessment following assessment reduction) - Real Property Tax Law § 739:

Where a small claims assessment review proceeding is as yet undecided, the taxpayer must commence another small claims proceeding if any assessment reduction realized from the first proceeding is to “freeze” the assessment in that next year.

We have received an inquiry regarding the so-called “assessment freeze” provision applicable to small claims assessment review (Real Property Tax Law, § 739). Subdivision one of that section provides that, except in special assessing units (i.e., New York City and Nassau County) and where certain events (such as a revaluation of assessments) listed in section 739(2) occur:

where the decision of a small claims hearing officer orders a reduction in an assessment, the assessed valuation contained in such decision shall not be thereafter changed on such property for the next assessment roll prepared on the basis of the taxable status date next occurring on or after the taxable status date of the most recent assessment under review in the proceeding subject to such final order or judgment.

A property owner received a small claims reduction on his 2007 assessment and no section 739(2) event occurred. He did not grieve his 2008 assessment, and the question is whether the above-quoted language means that his 2008 assessment must be reduced to conform to his 2007 reduced amount. On the basis of judicial interpretation of the similarly worded section 727 of the RPTL, in our opinion, the 2008 assessment should not be reduced.

Section 727 applies a three year “freeze” to reductions ordered in a tax certiorari proceeding subject to the same exceptions (e.g., revaluation) applicable to small claims assessment review. In Scellen v. Assessor for the City of Glens Falls, 300 AD2d 979, 753 NYS2d 536 (3d Dept 2002), a property owner had sought reduction of her 1998 assessment and, in December 2000, the parties stipulated in court to a reduced value without any reference to section 727. The taxpayer had not commenced proceedings to challenge her 1999 and 2000 assessments but argued that section 727 should operate to freeze those assessments to the 1998 agreed upon value. The court found:

that petitioner was required to challenge the assessed valuations of her properties for the 1999 and 2000 tax years while her 1998 challenge was pending and, having failed to do so, is not entitled to relief for those years. In our view, the statutory scheme underlying RPTL article 7 evinces a clear legislative intent that a separate proceeding be timely commenced to challenge each tax assessment for which relief is sought (see RPTL 702, 704, 706; see also 22 NYCRR 202.59(d)(2)), and the legislative history of RPTL 727 gives no indication that the Legislature intended to relieve petitioner of this requirement in the case of assessment rolls established during the pendency of a prior RPTL article 7 proceeding (see Governor's Mem, Bill Jacket, L.1995, c.693; Sponsor's Mem, Bill Jacket, L.1995, c. 693). Accordingly, we find that petitioner, having failed to challenge the 1999 and 2000 assessments of her properties, is not entitled to relief for those tax years (300 AD2d at 980-81, 753 NYS2d at 537).

In a subsequent decision, which was not officially reported, a petitioner sought and through a consent judgment received reductions of its 1999, 2002 and 2003 assessments. In determining that section 727 should not be read to grant reductions to the 2000 and 2001 assessments for which no petitions had been filed, Justice Dickerson found Scellen to be “well reasoned, properly decided and on point with the instant matter” (MRE Realty Corp. v. Assessor of Town of Greenburgh, 8 Misc3d 1027(A), 806 NYS2d 446, 2005 NY Slip Op 51322U (Sup Ct, Westchester Co 2005), R.P.T.A.R., Vol. 13, No. 3, p.157). {1}  The Second Department of the Appellate Division affirmed the decision (at 33 AD3d 802, 822 NYS2d 629 (2d Dept 2006)) but did not cite or mention Scellen. It found:

Although the petitioner brought three separate tax certiorari proceedings to challenge assessments for the years 1999, 2002, and 2003, it sought, and achieved, a global resolution of all three in a single consent judgment in effect, consolidating them for purposes of disposition. Accordingly, the statutory moratorium applied prospectively from the year 2003, and the petitioner is not entitled to the relief it seeks for the years 2000 and 2001. Since the petitioner specifically disavows any challenge to the years following 2003, we affirm the order and judgment insofar as appealed from (33 AD3d at 804, 822 NYS2d at 631).

For whatever reason the Second Department failed to address the Third Department’s decision, Scellen remains a controlling precedent within the Third Department and other courts must also follow it pending a contrary decision of the Appellate Division in which they are located or of the Court of Appeals (Mountain View Coach Lines, Inc. v. Storms, 102 AD2d 663, 476 NYS2d 918 (2d Dept 1984); People v. Shakur, 215 AD2d 184, 627 NYS2d 341 (1st Dept 1995); 29 NY Jur2d, Courts and Judges §§ 483, 488 and cases cited therein).

While Scellen interprets only section 727, given the identity of the statutory language in section 739, we must conclude that its holding applies equally to that section. Of course, unlike tax certiorari proceedings, which are often consolidated and (even if not consolidated) may take several years to be heard by the court, it is hoped that small claims proceedings are quickly heard and decided so that no such proceeding from a preceding year is pending when the assessor prepares the subsequent year’s assessment roll. However, where a small claims assessment review proceeding is still pending, the taxpayer must commence another small claims proceeding if any assessment reduction realized from the first proceeding is to “freeze” the assessment in that next year.

April 17, 2009
Revised June 4, 2009

{1}  Citation is to The Real Property Tax Administration Reporter, a publication of the State Board of Real Property Services.