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Volume 9 - Opinions of Counsel SBEA No. 43

Opinions of Counsel index

Assessment review, small claims (mixed-use parcels) - Real Property Tax Law, § 730:

Mixed-use parcels, which are improved by qualifying residential structures, are eligible for small claims assessment review; however, such review should be limited to the portion of the parcel used for residential purposes.

We have been asked a question concerning the eligibility requirements for small claims assessment review, specifically, the extent to which an owner of a large tract or a mixed-use parcel, which is improved by a residential structure otherwise qualified for review, may seek review of the assessment of the entire parcel.

One of the eligibility requirements for small claims review is that the real property be improved by a one, two or three family owner-occupied structure used exclusively for residential purposes (RPTL, § 730(1)(a)(2)). As originally enacted, the statute did not include any exclusivity requirement. Questions arose as to the status of both mixed-use structures and mixed-use parcels (i.e., used partly for residential purposes and partly for commercial or other nonresidential purposes). The first issue was disposed of by chapter 531 of the Laws of 1982, which amended section 730(1)(a)(2) to explicitly provide that only structures used exclusively for residential purposes qualified for small claims assessment review. However, there has been no legislation to resolve the status of mixed-used parcels.

Assuming that mixed-use parcels do qualify-to some extent-for small claims review (and the absence of a statutory limitation similar to that imposed by chapter 531 of the Laws of 1982 supports this conclusion), a question remains as to whether the scope of the review of the assessment of such a parcel is in some way limited; that is, is the value of the nonresidential portion of the mixed-use parcel reviewable in a small claims proceeding?

In the analysis of this issue, there is an unstated presumption that the values attributable to the residential and nonresidential portions are readily identifiable. In this regard, it should be noted that there is no statutory requirement that the assessor make such separate calculations. The assessor must determine separate values for land and the “total” (i.e., land with any improvements); however, “only the total assessment . . . shall be subject to judicial review provided by article seven” (RPTL, § 502(3)). Although only the total assessment is subject to judicial review, separate factual determinations will ordinarily be made, assigning values to the land and building (People ex rel. Strong v. Hart, 216 N.Y. 513, 111 N.E. 56 (1916)). The sole restriction on judicial review of an assessment is that the total assessment cannot exceed the total assessment subject to the review; the components for land and improvements may be freely adjusted as warranted by the evidence (Shubert Organization v. Tax Commission of City of New York, 60 N.Y.2d 93, 456 N.E.2d 485, 468 N.Y.S.2d 594 (1983)).

It is axiomatic that in interpreting ambiguous statutes, the intent of the Legislature is controlling (Carr v. New York State Board of Education, 40 N.Y.2d 556, 356 N.E.2d 713,388 N.Y.S.2d 87 (1976)). Where statutes are in conflict, they should be harmonized and reconciled to the extent possible (Chamberlain v. Chamberlain, 43 N.Y. 424 (1871)).

In this case, the intent of the Legislature was indicated in the Memorandum in Support of the bill (1981 Senate Bill No. 6287-A) enacting Title 1-A (L.1981, cc.1022, 1023). Specifically, the memorandum states that the purpose was “to provide a simple, efficient and inexpensive method for the residential property owner to obtain prompt review of his . . . assessment” (emphasis added).

Upon our consideration of the relevant statutory and case law, we believe that small claims review should be limited to the “residential” portion of a parcel. This is consistent with both previously cited Legislative intent and our administrative opinions rendered in the context of the so-called senior citizens exemption authorized by RPTL, section 467 (2 Op.Counsel SBEA Nos. 14 and 17, 7 id. Nos. 16 and 65). In the latter cited Opinion, we concluded that the intent of the Legislature was to provide an exemption only for the residential portion of a parcel owned by an otherwise eligible applicant.

In several small claims cases, hearing officers have dismissed petitions without prejudice where the petitioner’s real property was improved by a residential structure otherwise qualified for review, because the petitioner was actually seeking review of the portion of the assessment attributable to the nonresidential use.

Some have questioned how this limitation on small claims review can be administered given the fact there is no requirement that the assessor segregate the values assigned to residential and nonresidential portions. We believe that each petition must be considered on a case-by-case basis with the hearing officer ultimately making the determination as to what is “residential.” In the vast majority of cases it will be quite obvious that review of the nonresidential portion of the parcel is sought.

There may also be a question as to how much value the assessor has attributed to the residential and nonresidential portion of a given parcel. In nearly all the instances of which we are aware in which the question of the eligibility of nonresidential portions of a parcel has arisen, the petitioners have based their challenges on the values attributed to such portion as shown on property record cards maintained by the assessor. {*}  The use of the data indicated on such cards and other work products of the assessor seems adequate for the purpose of ascertaining the value attributed to the respective portions of a parcel.

We also note that in each year since the inception of the small claims assessment review program, bills have been introduced in the Legislature to expand the jurisdiction of the program to include large tracts or farm buildings (see e.g., 1990 - S.1836/A.2856; 1988 - S.599/A.1044; 1986 - S.265/A.283; A.6434). None of these proposals has been enacted into law.

Accordingly, we believe that while mixed-use parcels improved by residential structures and otherwise meeting the requisites for review do qualify for small claims review, such review should be limited to the portions of the parcel used for residential purposes.

October 24, 1985
Revised June 11, 1991

{*}  Each assessor is required to maintain an inventory of assessment information relative to each parcel of real property (RPTL, § 501; 9 NYCRR 190-1.2)