In recent years, we are seeing more and more properties falling underwater, with owners handing the keys back to lenders, properties entering special servicing, and receivers or referees being appointed to manage them. Foreclosure proceedings have also become more common. Amid these changes, non-traditional potential property tax protest applicants, such as lenders, receivers, and special servicers, are increasingly involved in managing these distressed properties. Unfortunately, we have also seen some of these parties miss out on crucial opportunities by not filing the necessary annual Tax Commission applications by the March 1st deadline. Understanding the rules and procedures for standing and filing can help ensure that these entities don’t miss their chance to contest potentially burdensome property tax assessments.
Who Has Standing to File a Property Tax Protest?
In New York City, the Tax Commission’s rules are clear about who has the legal standing to contest a property tax assessment. Standing is reserved for those “aggrieved” by the assessment, meaning those directly and adversely affected by it. The following parties are considered to have standing:
1. 100% Owners and Net Lessees: The legal owner of the entire property or a lessee who pays all property expenses, including taxes and insurance (a net lessee), has the standing to file a protest.
2. Contract Vendees: Buyers under a contract of sale for the property, where the sale has not yet closed, also have standing. However, specific circumstances may apply, and additional documentation might be required.
3. Other Interested Parties: This category includes partial lessees, ground lessees, receivers, bankruptcy trustees, mortgagees in possession, and owners of a partial interest in the property. These parties must file additional documentation to establish their standing, such as Form TC200.
Filing Requirements and Documentation
For non-owners or those with partial interests, the process involves more than just submitting a protest application. You must establish your standing by filing Form TC200 and attaching the necessary documentation that proves your relationship to the property. This might include:
• Receivers and Bankruptcy Trustees: If you’re acting as a court-appointed receiver or trustee, you must attach a copy of the signed court order that grants you authority. Highlight the parts of the order that identify the property and name you as the appointee.
• Mortgagees in Possession: Lenders in possession of the property due to foreclosure or other reasons must provide a copy of the court order that either appoints a receiver, grants possession, or directs a sale of the property.
• Fiduciaries: Executors, administrators, or other fiduciaries must submit documentation such as letters testamentary, ensuring they are current or include a certification that they remain in effect.
Disclosure of Transactions
Maintaining standing throughout the protest process is essential. Any changes in the property’s status, such as sales or transfers, must be disclosed as they might affect your standing. Transactions that must be disclosed include:
• Sales or Contracts of Sale: If the property or an interest in the property has been sold or is under contract, this must be disclosed.
• Transfers of Interest: Any transfer of an interest in the property, including foreclosure transfers, deeds in lieu of foreclosure, or transfers under a will or trust, must be reported.
Failure to disclose such transactions can result in the loss of standing, disqualifying the application from consideration.
Key Takeaways
Navigating the property tax protest process requires careful attention to the details of standing and the documentation required. For lenders, receivers, and other interested parties, understanding these requirements and ensuring compliance is crucial to successfully contesting an assessment.
• Ensure Legal Standing: Confirm that you have the standing to file a protest by reviewing your relationship to the property and filing the necessary documentation.
• File Form TC200 When Required: If you are not the owner or a net lessee, or if your interest in the property is partial or through a fiduciary role, Form TC200 is required.
• Disclose Relevant Transactions: Keep the Tax Commission informed of any transactions that affect the property to avoid losing your standing.
By following these guidelines, lenders, receivers, and other interested parties can effectively manage the property tax protest process, ensuring their rights and interests are protected.
