Joseph Meyerowitz v. Township of Monroe

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Mala Sundar R.J. Hughes Justice Complex

JUDGE P.O. Box 975

25 Market Street

Trenton, New Jersey 08625

Telephone (609) 943-4761

TeleFax: (609) 984-0805

taxcourttrenton2@judiciary.state.nj.us

October 31, 2014

BY ELECTRONIC MAIL

Joseph Meyerowitz (pro se)

45 Lakehurst Way

Monroe, New Jersey 08831

Gregory B. Pasquale, Esq.

Shain, Schaffer & Rafanello, P.C.

150 Morristown Road, Suite 105

Bernardsville, New Jersey 07924

Re: Joseph Meyerowitz v. Township of Monroe

Block 42, Lot 25, Unit C045 (45 Lakehurst Way)

Docket No. 015556-2013

Dear Mr. Meyerowitz and Counsel

This letter constitutes the court s decision following trial. Plaintiff, as owner of the above referenced property ( Subject ), appealed the Middlesex County Board of Taxation s judgment which affirmed the local property tax assessment imposed on the Subject for tax year 2013. Defendant ( Township ) filed a counterclaim. The contested assessment is as follows

Land: $ 40,000

Improvements: $167,200

Total: $207,200

The Chapter 123 ratio applicable to tax year 2013 was 54.37%, with an upper limit of 62.53% and a lower limit of 46.21%.

A bench trial was held.1 After presentation of plaintiff s testimonial evidence, the Township moved to dismiss the complaint under R. 4:37-2(b) on grounds plaintiff failed to overcome the presumptive correctness of the assessment. The court reserved decision. The Township then withdrew its counterclaim on the record.

For the reasons more fully explained below the court affirms the County Board s judgment. Although plaintiff correctly used the sales comparison approach, focused on sales within the Subject s development, used sales which were sold within or close to the assessment date, his value conclusion is unpersuasive because he simply averaged the sales prices. Such methodology has not only been disapproved by the higher court, but is also unreliable especially because plaintiff s evidence comprised of the developer s brochure description of the comparables, and/or plaintiff s inspection of the same as model homes when the development was being built sometime 2003 to 2005. In the absence of reliable evidence of the comparables physical characteristics as of the valuation date, the court finds that plaintiff failed to overcome the presumptive correctness of the County Board s judgment.

FACTS

The Subject is a single story ranch-styled home. It was built around 2003 as part of an active adult community (age 55+) development called Encore. Encore has approximately 400 single family homes consisting of both one-story and two-story townhouses. Each townhouse is constructed in a specific style or model, and homes constructed in the same model would have nearly identical floor plans and number of rooms.

Plaintiff is the original owner having purchased the home in 2005.2 It has two bedrooms, two full bathrooms, a den, and an attached two-car garage. The gross living area ( GLA ) per plaintiff s testimony is 2,185 square feet ( SF ). The court was not provided with any pictures of the Subject.

VALUATION

Plaintiff used the sales comparison approach. He chose five comparable sales all located within the Encore community. Since there were no sales of the Concerto model, plaintiff used sales of other models which were a cross-section of the community; were reasonably close to the valuation date; had comparable GLA as the Subject; were of similar age; and were not deemed non-usable estate sales.3 Four of the five sales were two-bedroom, two-bathroom, one-den and two-car garage as was the Subject. He derived the comparable sales information from the website maintained by the Monmouth County Board of Taxation which included the sale date, sale price, recording information, non-usable ( NU ) category if any, ownership history and assessment history of that property.4 He also relied upon information provided by the builder (including building plans, brochures and marketing materials) which he possessed as an original owner of the Subject.

Comparable One was located at 317 Greenleaf Way. It sold for $300,000 on June 22, 2012. Built in 2002, with GLA of 2,134 SF, it was a Sonata model which is single-story with two bedrooms, two full bathrooms, a den, and an attached two-car garage.

Comparable Two was located at 335 Greenleaf Way. It sold for $327,000 on March 8, 2013. Built in 2002, with GLA of 2453 SF,5 it was a Symphony model which is two-story with three bedrooms, three full bathrooms, a den, and an attached two-car garage.

Comparable Three was located at 85 Crescent Way. It sold for $ 355,000 on January 31, 2013. Built in 2005, with GLA of 2453 SF,6it was a Symphony model.

Comparable Four was located at 562 Becca Way. It sold for $315,000 on February 19, 2013. Built in 2005, with GLA of 1741 SF,7 it was a Beethoven model which is one-story, with two bed rooms, two full bathrooms, a den, and an attached two-car garage.

Comparable Five was located at 435 Harmony Way. It sold for $225,000 on September 18, 2012. Built sometime in 2002, with GLA of 1597 SF,8 it was Bach model which is one-story with two bed rooms, two full bathrooms, a den, and an attached two-car garage.

Plaintiff then averaged the sale prices of these comparables for a value conclusion of $304,400. Since this fell outside the common-level, he applied the average ratio or a reduced assessment of $165,502.

ANALYSIS

(A) Standard of Review

Original assessments and judgments of county boards of taxation are entitled to a presumption of validity. MSGW Real Estate Fund, L.L.C. v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). This presumption attaches to the quantum of the tax assessment. Based on this presumption, the appealing taxpayer has the burden of proving that the assessment is erroneous. Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985). The presumption of correctness . . . stands, until sufficient competent evidence to the contrary is adduced. Township of Little Egg Harbor v. Bonsangue, 316 N.J.Super. 271, 285-86 (App. Div. 1998).

A taxpayer can rebut the presumption by introducing cogent evidence which is one that is definite, positive, and certain in quality and quantity. Pantasote, supra, 100 N.J. at 413. Plaintiff must present the court with evidence sufficient to demonstrate the value of the subject property, thereby raising a debatable question as to the validity of the assessment. MSGW, supra, 18 N.J. Tax at 376.

If, at the close of plaintiff s proofs, the court is presented with a motion to dismiss under R. 4:37-2(b), in evaluating whether plaintiff s evidence meets the cogent evidence standard, the court must accept such evidence as true and accord the plaintiff all legitimate inferences which can be deduced from the evidence. Ibid. If the court decides that the plaintiff did not overcome the presumptive correctness, then the assessment should be affirmed. Ibid. Thus, if a party has not met this burden, the trial court need not engage in a further evaluation of the evidence to make an independent determination of value.

(B) Valuation

The sales comparable method is appropriate for valuation of a residential single-family property where sufficient recent, reliable transactions exist to provide a supportable indication of market value through value patterns or trends in the market. See Appraisal Institute, The Appraisal of Real Estate 297 (13th ed. 2008). Plaintiff s use of comparable sales as a method of valuing the Subject is therefore credible.

Plaintiff s choice of comparables was not unreasonable. The sales were within the Township, and in the same adult community development. The sale dates were in relative proximity to the valuation date. None of the sales were listed with an NU category.

Nonetheless they are not reliable or credible indicators of the Subject s value. First, and foremost, plaintiff s methodology used to determine value is problematic. Disagreement with an assessment must be based on sound theory and objective data, rather than on mere wishful thinking. MSGW, supra, 18 N.J. Tax at 376. Thus, valuation of real property is not simply a mathematical exercise, and cannot be replaced by a simplified mathematical computation. Cf. Willingboro Chrysler/Plymouth v. Township of Edgewater Park, 6 N.J. Tax 168, 180 (Tax 1983) ( [m]athematical calculations in appraisals should be closely scrutinized ).

Thus, the higher court has expressly disapproved the conclusion of a property s fair market value based upon an averaging of sale prices of the comparables. See Pansini Custom Design Assocs., LLC v. City of Ocean City, 407 N.J. Super. 137, 143-44 (App. Div. 2009) (criticizing the court s averaging comparable sale prices to arrive at the fair market value). The Appellate Division pointed out that averaging the adjusted sale prices of comparables reduces the court s responsibility of weighing all evidence before it to a simple mathematical formula and is [not only] an unacceptable methodology but is also an inappropriate appraisal technique. Id. at 144. After citing several cases (including out-of-state precedent), the higher court ruled

[A]veraging, whether of appraisals or comparable sales, is not an appropriate methodology for assessing divergent values. The reasoned weight of authority provides sound policy reasons for such a conclusion. Properties are not fungible. Even with adjustments during the appraisal process, there are sufficient differences that must be weighed and considered by the fact-finder in addressing the ultimate issue in dispute . . . .

[W]e view with caution the danger foreseen by those courts that have addressed this issue. To allow averaging will result in appraisals slanted to the extreme. Averaging will generate appraisals that will intentionally distort and skew the values to insure a high or low number without concern that the fact finder must resolve the issue with a careful analysis of data that may result in adoption of one appraisal figure over another.

[Id. at 146-147]

The concerns expressed by the Appellate Division are evident here. Plaintiff essentially treated all models within the development as fungible on grounds that their basic structure is the same (room count wise), and the only differences were external (brick, tone or vinyl siding). Because of this he did not obtain any information of the comparables (physical interior or exterior characteristics and condition), nor did he personally inspect the comparables at any time. Rather, he relied upon his recollection of his personal visits when they were being shown as model homes prior to their construction by the developer or upon the builder s marketing materials for the same.

Plaintiff s hypothesis is incorrect. Not only were the models displayed by the developer at least 7-8 years prior to the valuation date, but there were different floor plans for each model. Each model has different amenities especially if the original purchaser had negotiated with the builder for upgrades. The Subject s model (Concerto) was one of the more popular ones (thus higher-priced). Each homeowner for any model could opt for a different front fa ade, and choose stone, brick, or siding. Although this option would only include a small portion of the frontage of each home (the sides and rear would include vinyl siding), an owner would have to incur additional cost for an upgraded front fa ade. Plaintiff agreed that owners could also upgrade the interior such as a remodeled kitchen, refrigerator unit or cabinets. Thus, the model being used as advertisement by the developer is not necessarily the same as the comparable that sold during the valuation period. Plaintiff was unable to explain why Comparable Four which was much smaller than Comparable One (and also the Subject), sold for a price higher than Comparable One. Clearly, the facts prove that the Subject and the comparables are anything but fungible.

Second, the court has no credible evidence to make an independent value conclusion. There were no pictures of the comparables or the Subject. There was nothing to show the exterior or interior features or condition of the comparables or the Subject. The court has no way of knowing whether there were elements of comparability that required adjustments to the sale prices to account for superior or inferior features or conditions in either the Subject or the comparables. Although plaintiff maintained that the interior or exterior looks or conditions should not be a relevant factor for deciding valuation, he also agreed that he likely would market his home so he could maximize his return; that his home model was one of the more popular styles, thus, higher priced; and that unless market conditions were so bad, he would likely list his home for a higher price than the comparables he chose.

In sum, plaintiff s reliance upon the structural format of the comparables (bedroom, bathroom and garage count) based on the models developed by the builder 7-8 years prior to the valuation date, is not reliable or persuasive evidence of their comparability with the Subject. Without more, the court cannot deem these five comparables to be so similar or identical to the Subject and conclude a fair market value based only on the average of the undisputed sale prices.

CONCLUSION

For the aforementioned reasons, the court finds that plaintiff has failed to produce sufficient evidence to overcome the presumptive validity of the judgment of the County Board. An Order affirming the assessment will accompany this opinion.

Very truly yours

Mala Sundar, J.T.C.

1 The matter was tried to conclusion alongside another pro-se appeal, Blum v. Township of Monroe (Dkt. No. 015938-2013). Both appeals involved the same development, a senior/adult only community called Encore, and the same model townhome, Concerto. Both plaintiffs used the same five (5) comparable sales and averaged the sale prices to arrive at a value for their respective homes. Neither plaintiff called any additional witnesses or a real estate appraisal expert. The court will however issue two separate opinions.

2 Plaintiff testified that the model townhome he was shown prior to purchase was a mirror images of his current property.

3 Plaintiff stated that he did not go outside the development for more comparable sales because his attempt to do so was rejected during the County Board hearing, therefore, he was following the same directive for Tax Court purposes.

4 See www.njactb.org which is the website of the New Jersey Association of County Tax Boards.

5 The information on the records search drop down menu on the njactb.org shows the GLA as 2,497 SF.

6 The information on the records search drop down menu on the njactb.org shows the GLA as 2,497 SF.

7 The information on the records search drop down menu on the njactb.org shows the GLA as 1,867 SF.

8 The information on the records search drop down menu on the njactb.org shows the GLA as 1,610 SF.

*