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Department of Taxation and Finance

Volume 4 - Opinions of Counsel SBEA No. 46

Opinions of Counsel index

Assessment review (tax certiorari and Article 78 proceedings) (exhaustion of administrative remedies) - Civil Practice Law and Rules, Article 78; Real Property Tax Law, § 706:

A taxpayer claiming illegality of an assessment on the ground his property is totally exempt, may seek judicial review pursuant to Article 7 of the Real Property Tax Law, or may commence a proceeding brought pursuant to Article 78 of the Civil Practice Law and Rules, or an equity action. When action is commenced pursuant to either of the two latter methods, the petitioner need not show that he exhausted his administrative remedies.

Our opinion has been requested as to whether judicial review of the question of total exemption from real property taxation (for example, as provided in Real Property Tax Law, § 421) may be considered where the property owner has not first filed a timely complaint with the local board of assessment review for administrative review.

Real Property Tax Law, section 706, derived from former section 290 of the Tax Law, sets forth requirements for the contents of a petition seeking judicial review of an assessment pursuant to Article 7 of the Real Property Tax Law and provides, in part, as follows:

A proceeding to review an assessment shall be founded upon a petition duly verified setting forth that the assessment is illegal, specifying the grounds of the alleged illegality, or if erroneous by reason of overvaluation, stating the extent of such overvaluation, or if unequal in that the assessment has been made at a higher proportionate valuation than the assessment of other real property on the same roll by the same officers, and stating that the petitioner is or will be injured thereby. Such petition must show that a complaint was made in due time to the proper officers to correct such assessment. . . .

Therefore, pursuant to Article 7 a property owner must make a timely protest for administrative review alleging illegality, overvaluation or inequality in order to obtain judicial review under that article. The law is clearly established that, where it is alleged that the assessment of the owner’s parcel is erroneous as by overvaluation or inequality, the exclusive remedy is a proceeding to review an assessment under Article 7 of the Real Property Tax Law (e.g., see, Sikora Realty Corp. v. City of New York, 262 N.Y. 312, 186 N.E. 796). However, where the assessors have no jurisdiction as to territory or ownership, their acts are void, and the assessment may be collaterally attacked as, for example, in an Article 78 (Civil Practice Law and Rules) proceeding or an equity action to remove a cloud on title. It has been held that where property is wholly exempt from taxation, the assessors have no jurisdiction to assess, the assessment is illegal, and collateral attack is permissible (State Insurance Fund v. Boyland, 282 App. Div. 516, 125 N.Y.S.2d 169). Indicating that the remedy of certiorari under Article 7 of the Real Property Tax Law is not the sole and exclusive remedy available to a property owner claiming an exemption as a nonprofit organization under section 420 (now 421) of the Real Property Tax Law, the court permitted an action in equity on the issue (American-Russian Aid Ass’n v. City of Glen Cove, 41 Misc.2d 622, 246 N.Y.S.2d 123, aff’d, 23 App. Div.2d 966, 260 N.Y.S.2d 589).

Accordingly, where the question is illegality with a claim that property is totally exempt, such assessment may be reviewed judicially using the procedure called for by Article 7 of the Real Property Tax Law, or judicial review may be sought in an Article 78 proceeding or an equity action where a petitioner need not necessarily show that a complaint was timely made to a board of assessment review to correct such assessment.

November 18, 1974