Court of Appeals Resolves Uncertainty Over Right of Commercial Tenants to Challenge Taxes

Forchelli Deegan Terrana LLP (“FDT”) is pleased to announce that the New York Court of Appeals published a decision which has broad and profound impacts for commercial tenants who pay real estate taxes in Matter of DCH Auto v. Town of Mamaroneck, APL-2021-00103 (“DCH Auto”). The controversial DCH Auto decision by the Appellate Division contradicted the previously generally accepted right of taxpayers who are obligated to pay the taxes through a lease to challenge the tax assessment by filing an administrative complaint, instead limiting the ability to file to property owners. This ruling would have resulted in the dismissal of thousands of pending tax certiorari proceedings where the underlying administrative complaint had been filed by the tenant. In response, FDT filed an amicus curiae brief with the Court of Appeals on behalf of the International Council of Shopping Centers (ICSC), a global trade organization consisting of 70,000+ members in over 100 countries, which serves the retail real estate industry. In their amicus brief, FDT attorneys John V. Terrana, Peter B. Skelos, Nathan R. Jones and Douglas W. Atkins successfully argued that DCH Auto should be reversed due to the potentially disastrous impact on commercial net leases. The Court of Appeals unanimously reversed the Appellate Division’s DCH Auto decision and established binding precedent confirming that a tenant who is contractually obligated to pay real estate taxes has the statutory right to file the administrative complaint. As a result, commercial tenants who challenge real property taxes based on net leases are able to file the administrative complaint and can proceed with existing tax certiorari proceedings without risk of dismissal on that basis.

Click here to read the August 25, 2022 New York Law Journal feature by Nathan R. Jones, a Litigation partner at Forchelli Deegan Terrana LLP. He also works closely with the firm’s Tax Certiorari practice group.

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