Can Tenants/Lessees Challenge Their Property Tax Assessments?

The Appellate Division, Second Department, recently surprised many by answering “no” to this question in Matter of Larchmont Pancake House v. Town of Mamaroneck et al. The petitioner in that case was a restaurant that leased the property but never owned the property.

This is significant because an administrative complaint (often called a “Grievance”) is a prerequisite to commencing assessment litigation, and only owners may file a Grievance under RPTL §524(3).  Yet that same provision allows the Grievance to be filed “by some person authorized in writing by the complainant or his officer or agent to make such statement who has knowledge of the facts….”  In other words, owners can – and often do – authorize a lessee or law firm to challenge an assessment by filing a Grievance, well before the lawsuit stage. Unfortunately, this was never done by the Larchmont Pancake House, leaving it without the legal standing to challenge the assessment.

In the vast majority of cases, owners routinely authorize others to challenge their assessments on their behalf.  In fact, many leases require payment of property taxes as part of the rent, and grant lessees the corresponding right to challenge the assessments on which such taxes are based.  Consequently, it is prudent for tenants/lessees to anticipate this eventuality and to make sure that the authority to challenge the assessment is provided in the lease or other document in the event the need arises.

If you have any questions about property tax matters, commercial leases or other disputes, or if you would like assistance in reviewing existing leases or negotiating leases in an effort to avoid this or other difficulties, contact John Refermat at 324-5762 or jrefermat@lacykatzen.com.