Jun 9, 2011Tax Certiorari & Condemnation Law
The real estate world is becoming increasingly environmentally conscious and polluted properties are not well-tolerated. As the mindset has formed on the environment there is increasing vigilance through requiring remediation of polluted properties. Whether the pollution is from above with chemicals and oil permeating the ground or chemical and oil leaks from underground tanks or even flowing underground from another property, citations for cleaning up are issued in increasing numbers. The cost of clean up or remediation can be somewhat ameliorated by lower tax assessments due to the loss in market value. In a case of first impression litigated by my firm, the New York State Court of Appeals in Commerce Holding Corp. v. Board of Assessors of Babylon found that the taxpayer was entitled to deduct the cost of remediating from the market value of the property in its normal state. This decision has a substantial impact on property owners facing an environmental clean up. Under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) of 1980, a property owner is liable for the cost of cleaning up polluted property even if that owner can prove that they were not in any way responsible for the contamination, as was the case in Commerce. Under CERCLA, the owner is considered a “potentially responsible party” and will be strictly liable for the clean up costs. This is true even if the property is purchased after the contamination has been discovered. This standard requires owners of real estate to take extra precautions because the cost of any clean up will be imposed on them if the property is contaminated or becomes contaminated. To those owners who have been cited and must pay clean up costs, the decision in Commerce offers some relief because it allows them to petition the assessor to reduce their tax burden on the property. Under Commerce, the assessor must first determine the value of the property as if it was uncontaminated and then subtract the entire remaining cost of the clean up from that value. This reduction takes into account that anyone looking to purchase the property would require that the sale price reflect the cost of cleaning up the property. In effect, this decision recognizes that property worth $1 million if uncontaminated but requiring $500,000 worth of environmental clean up is only worth $500,000 and should be taxed accordingly. Purchasing and owning real estate is becoming more complicated all the time. The key to making a profit despite these complications is to be well-informed about all of your options, particularly when dealing with complex matters such as environmental clean up and taxes. If you have been cited for contamination, you have the ability to have your property taxes reduced to reflect the reduced value of your property. If you have been paying clean up costs, you should verify that your assessment was adjusted to reflect the cost of the clean up. You can check your property assessments in Nassau County by going to http://www.mynassauproperty.com/ or by logging on to http://www.mlsli.com/. Typically, the assessor will not adjust an assessment on its own, leaving it up to you to make an application to reduce the assessment through a tax certiorari proceeding.