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Department of Taxation and Finance

Volume 7 - Opinions of Counsel SBEA No. 24

Opinions of Counsel index

Veterans exemption (ownership) (executory contract of sale - recording); Correction of errors (clerical error) (failure to grant partial exemption) - Real Property Law, § 294; Real Property Tax Law, §§ 458, 550:

A vendee in possession under an executory contract of sale is an “owner” of real property for purposes of section 458 of the Real Property Tax Law. Recording of a contract or a deed evidencing subsequent conveyance is not determinative of ownership. Failure to grant a veterans exemption to such vendee may have been a “clerical error” within section 550(2)(c) of the Real Property Tax Law.

Our opinion has been requested concerning eligibility for a veterans exemption (Real Property Tax Law, § 458). A veteran’s father acquired title to real property in September 1958. The veteran applied for exemption in 1960, declaring that his father held the mortgage on the property. An exemption was granted. In 1972 the veteran applied for and received an increase in his exemption based on the reduction of principal of the mortgage on the property.

In 1979 the veteran’s father transferred title to his son. There had been an unrecorded land contract between the two parties.

We have been asked whether the veteran was ever entitled to the exemption since he was not the record owner, whether he is currently entitled to the exemption, and whether he is entitled to a refund since the assessor failed to grant an exemption on the 1979 assessment roll after learning of the transfer from father to son.

Real property must be “owned” by the veteran or someone else designated in the statute for an exemption to be granted. With respect to ownership generally, we have stated:

The law is well settled that a purchaser in possession under an executory contract of sale (title being retained in the seller notwithstanding) is deemed to be the owner for purposes of taxation (People ex rel. Donner-Union Coke v. Burke, 204 App. Div. 557, 198 N.Y.S. 601, aff’d, 236 N.Y. 650, 142 N.E. 320; Wilson & Company v. City of New York, 73 N.Y.S.2d 206, aff’d, 276 App. Div. 755, 92 N.Y.S.2d 918) (1 Op. Counsel SBEA Nos. 52, 88; 3 id. No. 82).

In 1 Op. Counsel SBEA No. 52, we concluded, “If the vendee in possession is a veteran . . . and uses eligible funds in the purchase of . . . property he may apply for a veterans’ exemption.”

The fact that the veteran was not the owner of record is irrelevant. The recording of a conveyance is not required in New York (Real Property Law, § 291). Although executory contracts of sale are not included within the definition of “conveyance” in section 290 of the Real Property Law, they may be recorded pursuant to section 294. The fact that the veteran did not record his contract is not determinative of his right to exemption.

Assuming that the veteran was an “owner” by virtue of being a vendee in possession under an executory contract of sale and otherwise satisfied the requirements of section 458, he was entitled to a veterans exemption despite the fact that he was not the record owner of the property. He remained entitled to the exemption after title was transferred to him.

The assessor’s failure to grant the exemption in 1979 may have been a “clerical error” within the meaning of section 550(2)(c) of the Real Property Tax Law. If so, a refund of the amount paid in excess of that which would have been due had the veterans exemption been granted would be payable pursuant to section 556 of the Real Property Tax Law. If, however, the assessor denied the exemption (rather than simply “failing to act” thereon), no administrative relief would now be available.

January 31, 1980