We have been faced with issues of potential unconstitutional selective reassessments a great deal lately. Unconstitutional selective reassessment occurs when an assessing jurisdiction illegally increases the assessment on a property or changes the classification of a property without increasing the assessment or reclassifying all other similarly situated properties.

For example, a commercial property owner may notice an increase in the property’s assessment after purchasing the property. This may be a result of the municipality increasing the assessment to the sale price. In general, in New York, “[a]ll real property in each assessing unit shall be assessed at a uniform percentage of value . . . .”  N.Y. Real Prop. Tax Law § 305 (McKinney).  This means that assessments cannot exceed full value and that no person shall be denied equal protection of the laws of the state. See N.Y. Const. art. XVI, § 2; N.Y. Const. art. I, § 11.

Increasingly, assessing jurisdictions are using a recent sale price as a basis for increasing an assessment, colloquially referred to as “welcome stranger” assessment procedures.[1]  Municipalities typically justify these “welcome stranger” assessments by citing a physical change in the property.  However, not all physical changes permit a reassessment.  The filing of building permits alone and the repairs and replacements of pre-existing physical features and fixtures are not valid reasons for increasing an assessment.

Recently, in Bd. Of Managers of Wharfside Condo. V. Bd. Assessors of the Vill.of Freeport the court effectively determined that a change in the footprint of a property may be a justifiable rationale for increasing the assessment.  As the court explained, “physical changes” that would allow for an assessment increase were limited to “improvements”, defined as the “creation of a ‘new’ item which did not pre-exist before.” Bd. Of Managers of Wharfside Condo. V. Bd. Assessors of the Vill.of Freeport, Marano, J., Index. No. 402480/2015, 400296/2015, Sup. Ct., Nassau County, Dec. 16, 2015.  A new certificate of occupancy may indicate the property changes qualify as improvements and renovations that add square footage or convert unfinished, unusable, space to finished, usable space, may justify a reassessment.

Even if a reassessment is permissible, the increase in the assessment resulting from physical changes must be the sum of the value of the improvements added to the prior assessment.[2]  A wholesale adoption of the sale price is illegal unless the municipality employs a “comprehensive plan” to “reassess the entire tax roll to reflect the comparable market value of all appreciated properties. Stern v. Assessor of City of Rye, 268 A.D.2d 482, 483, 702 N.Y.S.2d 100, 102 (2d Dep’t 2000).  Otherwise, the selectively reassessed properties then become responsible for an unfair portion of the tax burden.

Property owners should always monitor their assessments for any changes. We have noticed increases are more likely to occur after a recent purchase or where there have been physical changes to the property over the previous year.[3]  However, we have also seen increases in assessments many years after the property is sold, and still based on the sale price.  It is not important when the illegal selective reassessment occurs, only that it does, and the proper steps are taken to remedy the issue.

[1] Averbach v. Bd. of Assessors of Town of Delhi, 176 A.D.2d 1151 (3d Dep’t 1991); Bock v. Town/Vill. of Scarsdale, 11 Misc. 3d 1052(A), 814 N.Y.S.2d 889 (Sup. Ct. Westchester Cty. 2006).

[2] Weiner v. Bd. of Assessors of Town of Harrison, 22 Misc. 3d 257 (Sup. Ct. Westchester Cty. 2008) aff’d sub nom. Weiner v. Bd. of Assessors, 69 A.D.3d 949 (2d Dep’t 2010).

[3] It is important to note that a change in the amount of taxes to be paid is not the same as a change in the assessment. The amount of taxes owed are calculated by multiplying the tax rate by the assessment.  While a property’s assessment should remain the same in municipalities that are not annually reassessing, the tax rate will likely increase.  Thus, increasing the amount of taxes owed.