Barclay Damon
Barclay Damon

Legal Alert

Fourth Department Eliminates Annual Tax Challenge Filings in Context of RPTL 727

In the recent case Matter of Torok Trust v. Town of Alexandria, __ A.D.3d __ (4th Dep’t Mar.27, 2015), the Appellate Division, Fourth Department, compelled a school district to issue tax refunds to Petitioner even though Petitioner had not commenced a tax certiorari proceeding for that tax year. This decision puts the Fourth Department directly at odds with the Third Department rule.

In 2007, Petitioner brought a Real Property Tax Law (“RPTL”) Article 7 proceeding challenging the Town of Alexandria (“Town”)’s tax assessment of its property. In 2008, Petitioner and the Town reached a settlement to reduce the assessment for the 2007 tax year. They also agreed that RPTL 727 applies and that refunds be made. The Alexandria Central School District (“District”) issued a refund to Petitioner for the 2007-08 tax year, but not the 2008-09 tax year, arguing Petitioner was barred from relief because it failed to challenge the 2008 assessment. Petitioner then moved to compel the District to pay refunds for the 2008-09 tax year.

The Supreme Court granted Petitioner’s motion and ordered the District to issue refunds. The Fourth Department affirmed. In reaching the decision, the Court examined the legislative history of RPTL 727, which imposes a three-year freeze on changes or challenges to a property’s assessment following a court-ordered reduction in value, and concluded: “the intent of RPTL 727 was to reduce the need for repeated litigation in challenging tax assessments.” Accordingly, the Court’s interpretation of RPTL 727 is “an automatic reduction” in assessment in the following year, without having to file a separate tax certiorari proceeding for that year.

The Fourth Department declined to follow Matter of Scellen v. City of Glens Falls, 300 A.D.2d 979 (3d Dep’t 2002), which held that a petitioner cannot obtain relief by relying on RPTL 727 if it failed to challenge the assessment while an earlier challenge was pending. The Court reasoned that “requiring petitioner here to commence a tax certiorari proceeding for the 2008-2009 school tax year would go against ‘[t]he interest in reduced litigation contemplated by the statutory respite period.’”

The Appellate Division, Third Department had recently reaffirmed the Scellen decision in Matter of Highbridge Broadway, LLC v Assessor of the City of Schenectady, 2015 N.Y. Slip.Op. 00682 (Jan.29, 2015), and held that because the petitioner did not file a separate proceeding, the school district should not pay refunds. The Third Department held: “…property owners must preserve their right to relief through annual challenges to the assessment pending a determination of the original assessment challenge.”

Torok creates a split between the Third and Fourth Department, Appellate Division. Unless reversed by the Court of Appeals, the Torok decision now controls in the Fourth Department and effectively eliminates the requirement to file an annual grievance or petition while an earlier year’s RPTL Article 7 proceeding is pending.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact Mark McNamara, Chair of the Real Property Tax & Condemnation practice area, at (716)566-1536 or