Assessing Whether The Municipality Is Improperly Taxing

The Common Property

By: Damon M. Kress, Esq.

McGovern Legal Services, LLC

Is the municipality separately assessing property taxes against common elements (e.g. the clubhouse) in the community  If so, the assessments may be improper and the Association may need to take action to stop the assessments and prevent assessment in the future.  The New Jersey Condominium Act (the 'Condominium Act') states, 'all property taxes, special assessments and other charges imposed by any taxing authority shall be separately assessed against and collected on each unit as a single parcel, and not on the condominium property as a whole.' N.J.S.A. 46:8B-19.  The term "unit" includes the share of the common elements appurtenant to it. N.J.S.A. 46:8B-3(o).  Therefore, taxes may not be separately assessed against the common elements within the community because the assessment against each individual unit already includes a proportionate share of the value of the common elements. Glenpointe Associates v. Township of Teaneck, 10 N.J.Tax 288, 305 (Tax Ct. 1988). Also see, Olde Orchard Village Condo Apartments, Inc. v. Pequannock Township, 21 N.J.Tax 275 (Tax Ct. 2004).

Is The Property A Common Element

This is the key fact which must be determined when evaluating whether the tax assessment is appropriate.  See, Glenpointe, 10 N.J.Tax 288 (Tax Ct. 1988) and  Olde Orchard, 21 N.J.Tax 275 (Tax Ct. 2004).  The Condominium Act defines of common elements as including:

(i)         the land described in the master deed;

(ii)        as to any improvement, the foundations, structural and bearing parts, supports, main walls, roofs, basements, halls, corridors, lobbies, stairways, elevators, entrances, exits and other means of access, excluding any specifically reserved or limited to a particular unit or group of units;

(iii)       yards, gardens, walkways, parking areas and driveways, excluding any specifically reserved or limited to a particular unit or group of units;

(iv)       portions of the land or any improvement or appurtenance reserved exclusively for the management, operation or maintenance of the common elements or of the condominium property;

(v)        installations of all central services and utilities;

(vi)       all apparatus and installations existing or intended for common use;

(vii)      all other elements of any improvement necessary or convenient to the existence, management, operation, maintenance and safety of the condominium property or normally in common use; and

(viii)      such other elements and facilities as are designated in the master deed as common elements.

N.J.S.A. 46:8B-3(d)(iv).

Although the common elements are often clearly identified in the master deed some factors to consider when determining whether taxed property is a common element include:

1)         Does the space include a proportionate undivided interest in the common elements as assigned by the Master Deed or any amendment thereof;

2)         Does an obligation to contribute toward the common expenses of the community attach to ownership of the taxed property, and;

3)         Is ownership of the taxed property signified by the recording of a separate deed in the county clerk's office where the property is located

Olde Orchard, 21 N.J.Tax 275, 281 (Tax Ct. 2004).

If the property is a common element it may not be separately assessed. See N.J.S.A. 46:8B-19, Glenpointe, 10 N.J.Tax 288 (Tax Ct. 1988) and Olde Orchard, 21 N.J.Tax 275 (Tax Ct. 2004).  If the municipality is separately assessing property taxes against common elements in the community the Association should review the assessments with its counsel.  With counsel's assistance the Association should be able to determine whether the assessments are appropriate.  If the assessment is not proper, counsel can then advise the Association on how to: 1) appeal the assessment; 2) obtain a refund of taxes which were already paid (subject to limitations), and; 3) prevent improper assessment in the future.