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Volume 6 - Opinions of Counsel SBEA No. 116

Opinions of Counsel index

Assessment review (tax certiorari proceeding) (settlement ) - Real Property Tax Law, Article 7, § 726; Town Law, § 68:

A proceeding brought against a town pursuant to Article 7 of the Real Property Tax Law may be settled only by the town board. The settlement is binding on the school district which levied a tax based on the assessment only if the school district has received notice. It is binding on the county without notice.

We have been asked whether a town board has the authority to settle a pending Article 7 proceeding with a property owner and, if so, whether the settlement is binding on the county and the school district which levied taxes based on the assessment in question.

We have previously stated in 3 Op.Counsel SBEA No. 92 that a proceeding brought against a town pursuant to Article 7 of the Real Property Tax Law may be settled only upon the approval of the town board. Subdivision 4 of section 68 of the Town Law provides that the town board of a town with a population of two hundred thousand or more may compromise any action, proceeding or claim against-the town while the town boards of smaller towns may settle such actions where the amount claimed is three hundred dollars or less. In the case of the smaller towns, where the amount exceeds three hundred dollars, subdivision 1 of section 68 provides that a town board may compromise or settle such actions or proceedings against the town with the approval of the court in which such action or proceeding is pending.

As to the binding nature of a compromise or settlement upon the county and school district, a distinction must be drawn between the rights of the county and the school district. While a final order in an Article 7 proceeding is binding on both the county (Real Property Tax Law, § 726( 1 )(a)) and the school district (id., § 726(1)(c)), the courts have held that a school district has the right to participate in settlement negotiations and that a settlement order based on a compromise reached without notice to the school district is prejudicial and must be vacated (2 Op.Counsel SBEA No. 37 and cases cited therein). (The subject matter of former section 1316(5) referred to in that opinion is now covered by section 726(1)(c).)

The county may have the right to intervene in an Article 7 proceeding in accordance with section 1012 of the Civil Practice Law and Rules, but there is no requirement that a copy of the petition and notice be served upon it as there is in the case of the school district (Real Property Tax Law, § 708(3)). We find no statute or judicial interpretation that failure to notify a county of a proposed settlement of an Article 7 proceeding would be sufficient basis to vacate the settlement. In fact, there is case law to the contrary; in Seneca Hotel Corp. v. Board of Supervisors of Ontario County, 19 A.D.2d 183, 241 N.Y.S.2d 147, the court held that “[t]he County is bound by the order reducing the assessment made in the proceeding against the City Assessors, even though it was not a party to the proceeding (citations omitted).”

September 7, 1978

NOTE:  Opinion 8-74 modifies this Opinion.  Both Opinions construe law prior to L. 1995, c. 693.

Updated: