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Volume 4 - Opinions of Counsel SBEA No. 87

Opinions of Counsel index

Assessment review (standing) (tax certiorari proceeding) (mortgagee’s right to review) - Real Property Tax Law, §§ 512, 704:

A mortgagee has standing to seek review of the assessment of the real property upon which it holds a mortgage.

Our opinion has been requested as to whether or not a mortgagee is entitled to file a complaint pursuant to section 512 of the Real Property Tax Law in relation to the assessment of the mortgaged premises.

According to the facts presented, a complaint has been filed with the board of assessment review by the agent of the holder of a second mortgage on an apartment complex. The board of review questions the right of the mortgagee to complain since the mortgagee has neither the fee title interest nor the obligation to pay taxes levied on the property.

The law on this subject is not free from doubt.

Section 512, the section controlling grievance day complaints, provides that the complaint should be a statement “made by the person whose property is assessed, or by some person authorized to make such statement who has knowledge of the facts stated therein.”

This language strongly suggests that the complainant must be the “owner” of the property or his agent. However, this section has been construed in pari materia with Article 7 of the Real Property Tax Law, the article providing for judicial review of assessments (McLeans Dept. Stores v. Commissioner of Assessment, 2 App. Div.2d 98, 153 N.Y.S.2d 342; see also, 1963, Op.Atty.Gen. 132).

Under Article 7, any “aggrieved person” may bring the proceeding (Real Property Tax Law, § 704 [formerly Tax Law, § 290-b]) and the petition must show that a complaint was made in due time to the board of assessment review (Real Property Tax Law, § 706 [formerly Tax Law, § 290-c]) . In the aforementioned case, the court reasoned that any “aggrieved” person (in this case a lessee) as well as the owner is “entitled to complain to the Board and obtain the preliminary review necessarily precedent to the judicial proceeding” (153 N.Y.S.2d at 345) . This same case states that the Court of Appeals held a mortgagee to be “aggrieved” in Matter of Walter, 75 N.Y. 354.

The facts in the Walter case are not identical to those presented herein, but language in the opinion could be construed as holding that a mortgagee could be directly injured (the requirement for aggrievement). Therefore, he would have standing to seek a review of the assessment of the real property on which he holds a mortgage. The reasoning is that should a lien for unpaid taxes exist on the property at the time of a foreclosure, the property might not be worth the amount of the lien and the mortgage debt, in which event the mortgagee would be compelled to take less than his mortgage debt.

April 14, 1975

Note: Under Larchmont Pancake House v. Board of Assessors of the Town of Mamaroneck, __ NY3d __ (2019), a lessee who is not legally responsible for paying the real property tax on the leased property is not entitled to seek judicial review of the assessment under RPTL Article 7.