Fabricatore v. Township of Toms River Block 192.56, Lot 41.04

• Court: New Jersey Tax Court
• Decided: February 22, 2018
• Docket: 009633-2017
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS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) 815-2922 TeleFax: (609) 376-3018 taxcourttrenton2@judiciary.state.nj.us February 21, 2018

UPLOADED AND BY FIRST-CLASS MAIL Paul Fabricatore, Self-Represented Toms River, New Jersey

UPLOADED Kenneth Fitzsimmons, Esq. 33 Washington Street Toms River, New Jersey 08753

Re: Fabricatore v. Township of Toms River Block 192.56, Lot 41.04 Docket No. 009633- 2017

Dear Mr. Fabricatore and Counsel:

This letter constitutes the court’s decision following trial of the above captioned matter.

Plaintiff owns a residence, the above-captioned property (“Subject”), in defendant (“Township”).

For tax year 2017, plaintiff petitioned the Ocean County Board of Taxation (“County Board”) to

reduce the Subject’s local property tax assessment from $400,000 (allocated $123,800 to land, and

$276,200 to improvements) to $329,582.1 By judgment dated May 26, 2017, the County Board

affirmed the original assessment of $400,000 using judgment code 2A (“assessed within range”).

Plaintiff timely appealed the County Board’s judgment to this court.

1 The assessment for tax year 2014 was $467,100 (allocated $123,800 to land and $343,300 to improvements). The assessment for tax years 2015-2016 was $400,000 (allocated $123,800 to land and $276,200 to improvements), which is the same assessment for 2017.

* The Subject is a single family residence consisting of a two-story building with three

bedrooms, two full baths, and two half baths with a total gross living area (“GLA”) of about 2,308

square feet (“SF”) located on about one acre of land. There is a full finished basement and a den

located within the Subject. The Subject has a two car garage and an in-ground pool. Furthermore,

plaintiff stated that the Subject is not located in a development with cookie-cutter homes. Plaintiff

was unsure of the exact age of the Subject, but estimated that the Subject was approximately

twenty-six years old.

Plaintiff relied upon six comparables, all of which were in the Township, and their sales

occurred as of, or proximate to, the assessment date of October 1, 2016, as follows:

Address Built Lot GLA Sale Sale Room Count Other Size Date Price 1 1939 Whitesville 1989 1.02 ac 2,443 SF 2/23/16 $325,000 4 beds; 2 1/2 baths Basement; In-ground Road pool; Attached garage 2 1440 Silverton Road 1.09 ac 2,695 SF 7/18/16 $345,000 4 beds; 2 baths Basement; In-ground pool; Detached garage 3 112 Peacock Place 1986 0.75 ac 2,444 SF 9/30/16 $329,000 3 beds; 2 ½ baths Basement; In-ground pool; Attached garage 4 1021 Gregory 1993 2,047 SF 01/25/16 $347,000 4 beds; 2 ½ baths Basement; In-ground Terrace pool; Attached garage 5 1784 Rolling Ridge 1986 0.57 ac 2,512 SF 04/06/16 $355,000 4 beds; 2 ½ baths Basement; In-ground Lane pool; Attached garage 6 183 Lamdan Lane 1988 2,496 SF 09/14/16 $375,100 4 beds; 2 ½ baths Basement; Attached garage

All the information that plaintiff presented to the court, in regards to the comparables was obtained

off the comparables’ Multiple Listing Services (“MLS’). In presenting his case to the court,

plaintiff relied upon a spreadsheet, which took the comparables’ MLS sale price for each

comparable and divided by the square footage of said comparable. The spreadsheet also took the

assessed value of the Subject and divided it by the square footage of the Subject. Plaintiff then

determined the total average per square foot of the comparables by adding the average cost per

2 square foot of all six comparables together and dividing that number by six (i.e. the number of

comparables). This calculation led plaintiff to the conclusion that the Subject’s average cost per

square foot is $30.51 more per square foot than the total average per square foot of all six

comparables.

FINDINGS

“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). “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 evidence

that is “‘definite, positive, and certain in quality and quantity.”’ Pantasote, 100 N.J. at 413 (citing

Aetna Life Ins. Co. v. Newark, 10 N.J. 99, 105 (1952)). 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, 18 N.J. Tax at 376. Disagreement with an

assessment must be based on “‘sound theory and objective data rather than on mere wishful

thinking.”’ Ibid.

If the court decides that the presumptive correctness is overcome, it can find value based

“on the evidence before it and the data that [is] properly at its disposal.” F.M.C. Stores Co. v.

Borough of Morris Plains, 100 N.J. 418, 430 (1985). The complainant bears the burden of

3 persuading the court that the “judgment under review” is erroneous. Ford Motor Co. v. Township

of Edison, 127 N.J. 290, 314-15 (1992).

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.” MSGW, 18 N.J. Tax at 376. 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.

The market approach (or using comparable sales) is the generally accepted appraisal

methodology to determine value of residential homes. See Appraisal Institute, The Appraisal of

Real Estate 377 (14th ed. 2013) (the comparable sales method is generally appropriate for valuation

of a residential property where value is derived “by comparing similar properties that have recently

sold with the property being appraised, identifying appropriate units of comparison, and making

adjustments to the sales prices . . . of the comparable properties based on relevant, market-derived

elements of comparison”). Market evidence must support any element of comparison that causes

“value differences.” Id. at 378.

Plaintiff chose sales of residences located in the Township, with similar bedroom count

and amenities, whose sales date was proximate to the assessment date. Plaintiff did not personally

inspect the interior or exterior of the comparables, and was unsure as to the exterior or interior

conditions of the comparables, whether or not the comparables were located in a development, and

whether or not the comparables had a basement. Moreover, plaintiff did not verify whether the

sales price of the comparables were usable sale prices.

4 While plaintiff’s selection of comparables is facially not at all unreasonable, the problem

lies in deeming them comparable to the Subject, based simply upon GLA (or room count) and

certain commonly shared amenities, such as a pool. Although the comparables are chronologically

older than the Subject by about five-to-seven years (except for comparable 4, which appears to be

the same as the Subject, and comparable 2 as to which plaintiff had no information), and given the

less than 10-year age difference may not require any adjustment, there are other issues with the

comparables that can be significant in terms of either requiring adjustments or deeming those sales

as not comparable. For instance, comparable 5’s lot size is half of the Subject’s lot size.

Comparable 3 is situated on a plot of land that is about .25 acres smaller than the Subject’s. There

was no information as to the lot sizes of comparables 4 and 6. Comparable 4’s GLA is about 400

SF smaller than the Subject. The calculations that plaintiff provided the court failed to account for

any adjustments due to these features.

Comparable 6 was marked with a NU-10 code, which applies to “[s]ales by guardians,

testamentary trustees, executors, and administrators.” 2 This raises a question whether the sale was

an arms-length transaction, between a willing buyer and a willing seller, neither under a

compulsion to buy or sell. If “non-market conditions of sale are detected in a transaction, the sale

can be used as a comparable sale but only with care,” thus, the “circumstances of the sale must be

thoroughly researched . . . [, and any] adjustment should be well supported with data,” otherwise

the sale should be “discarded” as a comparable. See id. at 410. Perhaps this is why comparable 6

2 In developing a credible sales-to-assessment ratio to be used in developing the table of equalized valuations for each taxing district, the Division of Taxation reviews “the sales prices and assessed values of all real property sold during the sampling period” and “discards those sales which fall into one or more of 27 categories of transactions [set forth in N.J.A.C. 18:12-1.1] deemed to yield unreliable results[.] . . . These are called nonusable sales.” Borough of Englewood Cliffs v. Director, Div. of Taxation, 18 N.J. Tax 662, 665 (App. Div. 2000) (citation and internal quotation marks omitted). The sales-to-assessment ratio is used to determine the “state school aid distribution,” the “assessment discrimination claims by property owners,” and also is “adopted in county equalization tables . . . which are used to allocate the cost of county government among a county's municipalities.” Id. at 666.

5 was on the market for 505 days. Comparable 3 on the other hand, was on the market for all of

nine days. Without any explanation as to the typical amount of time for market exposure in the

Township (and the Subject’s neighborhood), these facts can raise issues of comparability. Of

course, these issues could be satisfactorily explained, but that was not done here. Sole reliance on

the MLS data is thus, not always useful. There must always be independent verification of the

same. Thus, the statute itself provides:

In any action or proceeding . . . on review of the assessment for taxes of any real property, or in any action or proceeding in the Tax Court, any person offered as a witness in any such action or proceeding shall be competent to testify as to sales of comparable land, including any improvements thereon, contiguous or adjacent to the land in question, or in the vicinity or locality thereof, or otherwise comparable, from information or knowledge of such sales, obtained from the owner, seller, purchaser, lessee or occupant of such comparable land, or from information obtained from the broker or brokers or attorney or attorneys who negotiated or who are familiar with or cognizant of such sales, which testimony when so offered, shall be competent and admissible evidence in any such action or proceeding.

[N.J.S.A. 2A:83-1 (emphasis added)].

Yet another problem was the lack of information with respect to whether the comparables were all

in the same zone as the Subject, which then, due to minimum lot size requirements or other

limitations, may require adjustments, or may not even be comparable. Plaintiff testified that the

Subject was not located in a development, but was unable to speak to whether the comparables

were located in a development or whether the comparables were in an ordinary neighborhood.

Even if the lack of information on zoning or neighborhood is ignored, the above analysis

shows that comparables 3 to 6 cannot be used due to their differences in lot size and GLA, and the

NU code. Adjustments to a comparable could be warranted, or may not be warranted if it was an

updated comparable. Here, there is no information as to the age of comparable 2, which may

require an adjustment if it is considerably older than the Subject. However, there is no information

6 in this regard. This would then leave just one comparable to decide the Subject’s vale, which is

comparable 1 (sold in February of 2016 for $325,000). However, unless there is such a paucity of

sales, explained satisfactorily to the court, one sale is not reasonable or credible indication of value.

As stated:

a single sale is not a sufficient sampling to arrive at a firm conclusion. The inquiry relates to what purchasers of property of this kind will pay and what willing sellers will demand in sales of this type . . . . Until a sufficient number of samplings have been examined to establish a definite trend from which a reasonable conclusion can be drawn, this answer cannot be given.

[Lorenc v. Township of Bernards, 5 N.J. Tax 39, 49 (Tax 1982)].

Plaintiff’s calculation of the Subject’s true value (sale price of comparable divided by its

GLA), standing alone, oversimplifies the valuation technique and process, and dilutes the need for

qualitative cogent evidence. Presuming that the comparables are all in the same or similar

condition as the Subject, (thus, requiring no adjustments to the comparables’ sale prices) does not

equate to competent or credible evidence. Amenities present or absent in a comparable may or

may not add value to that property. See U.S. Life Realty Corp. v. Township of Jackson, 9 N.J.

Tax 66, 72 (Tax 1987) (“[D]ifferences between a comparable . . . and the subject property are

anticipated. They are dealt with by adjustments recognizing and explaining these differences, and

then relating the two properties to each other in a meaningful way so that an estimate of the value

of one can be determined from the value of the other.”). See also The Appraisal of Real Estate at

388 (“If all comparable properties are identical to the subject property, no adjustments to sale

prices will be required. However, this is rarely the case.”). Adjustments should be made to the

“sale prices of comparable properties for differences in location.” Id. at 379. The reason for this

adjustment is because two properties with “identical physical characteristics may have quite

different market values if one of the properties has less attractive surroundings.” Ibid.

7 In sum, plaintiff’s reliance upon the unadjusted sale prices of the comparables, because

they are the same or similar to the Subject in terms of bedroom count and proximity to the Subject

is not cogent or persuasive evidence of their comparability with the Subject, which would be

sufficient to render them credible indicators of the Subject’s value. Providing a list of comparable

sales with unadjusted sale prices, and asking the court to reduce the assessed value of the Subject

somewhere between such sale prices, does not meet a taxpayer’s burden of providing ‘“sufficient

competent evidence of true value of the (subject) property.”’ See Siegfried O. v. Township of

Holmdel, 20 N.J. Tax 8, 20 (Tax 2002).

The court is mindful that it must strive to find value. However, as stated in Township of

Warren v. Suffness, 225 N.J. Super. 399, 414 (App. Div. 1988), “the Tax Court’s right to make an

independent assessment is not boundless,” but must be “based on the evidence before it and the

data that are properly at its disposal.” (citation and quotation marks omitted). Thus, the court

cannot “arbitrarily assign a value to the property not supported in the record.” Ibid. (citation and

quotation marks omitted). Here, there was no such credible evidence for the court to independently

conclude the Subject’s value.

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 County Board’s judgment will accompany this opinion.

Very truly yours,

Mala Sundar, J.T.C.