Recent Blog Posts

• Stark & Stark Shareholder Quoted in Star Ledger Article
  Real Estate Tax Appeal Shareholder, Timothy P. Duggan, was quoted in the November 22, 2008 Star Ledger and Trenton Times article Reducing property taxes is possible, but not likely. The article discusses the recent rise in the number of homeowners filing for property tax appeals in New Jersey in the wake of the declining housing market and recent economic downturn. Mr. Duggan advises homeowners to take the necessary preliminary steps in understanding the tax appeal process in order to increase the chances that their appeal is heard and granted.   You can read the full article here. (PDF) ....
• The Next Shoe - Private Mortgage Insurance Policy Rescissions
  It is hard to know when the proverbial “next shoe” will drop in the current economic crisis but recently credit lenders in my practice have experienced attempted policy rescissions for their mortgage insured accounts where suddenly and without any notice the private mortgage insurer  (the “Company”) has attempted to rescind its insurance policy on specific accounts. This is especially true for policies issued on mortgage accounts closed during 2005-2006, the peak years of residential real estate values. Their letter often contains language to the effect that the application’s underlying appraisal was “false, incorrect or incomplete” and was “material to the decision to insure” or something similar thereto. The reality is that private mortgage insurers now realize that they are likely to be hit with a rash of claims on loans they have underwritten since the real estate bubble has burst and home values in many geographic regions ....
• Exclusion of Gain from Sale of Principal Residence
  When selling a home, whether due to an employment move, trading up, or downsizing, a homeowner-taxpayer should be aware that special tax treatment applies under certain situations when the sale is of the taxpayer's principal residence. Under certain circumstances, a single taxpayer can exclude up to $250,000.00 of gain on both federal and state income tax returns and married taxpayers can exclude up to $500,000.00. For married couples, the $500,000.00 exemption requires that they file a joint return in the year their residence is sold.   The determination of whether gain on the sale of a residence can be excluded from a homeowner's income for tax purposes depends on whether the property has been owned and used by the taxpayer for a period of two or more years during the five year period preceding the sale. The five year period ends on the date title is transferred. The two year time period, for both ownership and use, does not need to be a consecutive. The time can be aggregated ....
• Partition Actions When Property Co-Owners Can't Agree
  What happens when co-owners can’t agree on how to share the ownership responsibilities of a piece of real estate? Perhaps it is a residence, a commercial property or vacant land and the owners cannot agree on how to share the payment of taxes, costs of maintenance, or need for improvements to the property. Perhaps they cannot even agree on selling the property to resolve their disputes. In cases where co-owners cannot work out a resolution on their own, one or more may need to resort to the Courts for a solution. New Jersey provides an equitable remedy known as partition. The term “partition” means the division of property among co-owners. Real property held by co-owners as a tenancy in common or a joint tenancy (but not by spouses as tenants by the entirety or by N.J. registered domestic partners) may be partitioned. The process for doing this is governed by New Jersey statutory law. N.J.S.A. 2A:56-1 et seq. Any co-owner can seek a partition, provided he/she has not ....
• Reduce Real Estate Taxes Through Farmland Assessment
  The New Jersey Farmland Assessment Act of 1964 was enacted by the State Legislature to reduce property taxes for farmland and woodland to encourage property owners to keep land in agricultural or horticultural use, rather than develop it.  To qualify for this reduction in land taxes, the area of land involved must be not less than 5 adjoining acres and the land must be actively devoted to agricultural or horticultural use for at least 2 years prior to the tax year for which the lower valuation is requested.  Gross sales of products from the land must average at least $500 per year for the first 5 acres, with other requirements for any acreage over 5 acres.  Land used for boarding, training or rehabilitation of livestock and for forestlands under a woodlot management program have additional requirements.  If the municipal tax assessor approves the land for farmland assessment, the land will be assessed in accordance with its value for agricultural or horticultural ....
• Selling? Being Prepared May Help
  In a difficult sales market, Sellers may want to consider preparing their house for sale by addressing some of the issues which may arise from a buyer’s inspection prior to listing their property.  Some of these issues are: ASBESTOS: If asbestos is wrapped around pipes for insulation, a seller may want to have it removed by a licensed asbestos removal contractor.  If reported on a buyer’s home inspection, a buyer will most likely insist that the asbestos be removed, or, alternatively that the buyer be given a credit at closing for the cost of removal.  If the asbestos is in floor tiles or shingles, a seller may want to obtain an estimate in advance and provide a credit at closing.  Of course, if the seller is aware of asbestos in the home, its existence is subject to disclosure.   UNDERGROUND STORAGE TANK: If a Seller’s property contains an underground storage tank (UST) a buyer will most likely want it removed if it has not already been ....
• Buyers, Sellers - What An Attorney Does For You
  When buying and selling a home, many believe that they can represent themselves, or that the others involved in the house sales transaction will adequately protect their interests. But is this a penny-wise and pound foolish approach? Just what does an attorney do when representing a buyer or seller? The attorney’s obligation is to represent their client’s interest exclusively. They do not represent the lender, nor the realtors, nor the title company. Each of those parties are receiving payment based generally on the size of the transaction and their fees are contingent upon the sale going through. First, an attorney helps their client understand and negotiate the terms of the Contract of Sale. While frequently a standard real estate broker form contract is used to commence the purchase/sales process, a party’s interest may need to be protected with additional provisions. For a buyer, perhaps the contract needs to be conditioned upon the sale of their existing home. ....
• Protecting Spousal Rights in Real Estate
  New Jersey has always protected to some extent the rights of a married person in and to New Jersey real estate owned by his/her spouse. Prior to May 28, 1980, protection was provided by means of an interest in the real estate called dower for the wife and curtesy (and not courtesy) for the husband. Effective May 28, 1980, the Legislature created an elective share for a spouse to share in the estate of a decedent spouse and a right of joint possession in the principal marital residence. Dower and curtesy were abolished by the New Jersey Legislature as of May 28, 1980. (N.J.S.A. 3B:28-2). In New Jersey, the statutory rights of dower and curtesy gave the non-owning spouse a right to a life estate in one-half of the real property owned by the other spouse at the time of that spouse’s death. N.J.S.A. 3B:28-1. Dower and curtesy interests were created upon the acquisition of the property by a spouse in that spouse’s name only - or upon the date of the marriage between the two ....
• Short Sales When Loans Exceed the Value of a Home
  What is a short sale?  This a term which is being used with increasing frequency in today’s real estate market. A short sale is when the proceeds from the sale of a home are not sufficient to fully pay off all outstanding debts which are secured by the property (mortgages) after first deducting the homeowner’s costs of selling the property.  In such instances, the selling homeowner can either bring funds to closing to make up the difference, or obtain approval from his mortgage holders to accept a reduced amount to satisfy his outstanding loans.  Unless a homeowner is able to pay off all of the mortgages which are secured by his property, the homeowner will not be able to convey good title to a buyer.  If the homeowner is unable to obtain a sales price which enables him to pay off all loans and closing costs, and he does not have the funds to make up the difference, then he may want to try to obtain approval from his current lender(s) to accept an amount ....
• Eligibility for Property Tax Deductions
  While property taxes always seem to be rising, there are some property owners who are entitled to reductions in their real property taxes due to deductions which are authorized by State law.     Senior citizens who are residents of the State and are of the age of 65 or more years and meet certain income requirements are entitled to a deduction of $250.00 (N.J.S.A. 54:4-8.41).     Citizens and residents of the State who are less than 65 years of age and are permanently and totally disabled, and meet certain income limitations are also entitled to a reduction of $250.00 in their real estate taxes.  (N.J.S.A. 54:4-8.41).     The surviving spouse/civil union partner of a deceased citizen and resident of this State who had been entitled to a deduction as a senior citizen or due to a permanent and total disability shall also receive the real property tax deduction so long as he or she shall remain unmarried (or has not entered into another ....
• Eliminating an Old Mortgage
  When selling a home a buyer’s title search may uncover an old mortgage of the homeowner - or a prior owner, that was not discharged of record.  Frequently the mortgage has been paid off, but unfortunately just not discharged of record in the county clerk’s office.  There are ways to discharge such old mortgages depending on the particular situation. The easiest is if the original mortgage was discharged and returned to the homeowner’s possession and the homeowner can locate it.  The original mortgage, marked as paid and discharged, can then be sent to the county clerk’s office for recording. If the discharged mortgage has not been recorded, and cannot be located, the mortgage can be discharged of record by the filing of an affidavit provided the provisions of N.J.S.A. 46:18-11.5 et seq. apply.  The New Jersey Legislature enacted this law in 1999 to provide a relatively simple and expeditious means of removing mortgages from the record when a ....
• New Jersey Realty Transfer Fees Due on Sale of Residences
  Upon the sale of residential real estate, many Sellers are surprised to learn that the transfer is subject to a New Jersey Realty Transfer Fee.  This is a tax imposed on Sellers by the State of New Jersey pursuant to N.J.S.A. 46:15-5 et seq.  In certain instances the amount can be significant. First enacted in 1968, and comprised of a modest fee, the Realty Transfer Fee law has been amended several times, most recently in 2004.  Each time, not surprisingly, the Realty Transfer Fee has been increased on higher priced real estate. The Realty Transfer fees are calculated on a sliding scale, with the rate per $500.00 of sales price increasing as the sales price increases.  The table below summarizes the standard rates:     Sales Price                        Realty Transfer Fee     $500.00 to $350,000.00        ....
• Who Really Holds Your Mortgage?
  It used to be that homeowners went to their local banker to borrow funds to purchase a new home.  The local banker usually knew the home buyer as well as the property and its value.  If the homeowner later encountered trouble making timely payments, he or she would go back to the  bank which held their mortgage, meet with their banker, and together they would try to work out a solution acceptable to both sides to forestall a possible foreclosure.  Now, however, it is not unusual for a home buyer to use the internet or a mortgage broker to find a lender for them with whom they have had no prior contact.  And thus begins a confusing journey for a homeowner who may someday be in financial distress and need to find the ultimate holder of their mortgage.  In recent years a process called “securitization” has made mortgages much more easily available to home buyers.  At the same time, this process has made it much more difficult for a borrower ....
• Real Estate Taxes and Closing Adjustments
  One of the items commonly adjusted at real estate closings is municipal real estate taxes.  Real estate taxes are billed on a quarterly basis with a quarterly tax payment being due on the first day of the middle month of the quarter.  Thus, first quarter taxes, covering January, February and March are due February 1st.  Second quarter taxes, covering April, May and June are due May 1st.  The due date for third quarter taxes is  August 1st and fourth quarter taxes, November 1st.  The reason municipal real estate taxes are adjusted at closing, i.e., apportioned between the buyer and the seller as of the day of closing, and paid at closing is because the taxes become a lien on the property on and after the first day of January of the year for which they are assessed.  N.J.S.A. 54:5-6. Unless the sales contract provides otherwise, municipal taxes are adjusted based on the current year’s assessment.  If taxes for the current year have not yet ....
• Rights of Adjoining Property Owners: Overhanging Tree Branches and Encroaching Tree Roots
  Adjoining property owners frequently encounter overhanging branches from a neighbor’s tree, hedge or other vegetation.  Although the base of a tree may be in your neighbor’s yard, when branches, limbs or roots cross over the boundary line, they may constitute a nuisance.     Through two New Jersey Supreme Court cases, our Supreme Court recognized that encroaching branches may constitute an actionable nuisance and that a common law right exists to cut off overhanging branches to the property line, but no further.      In Ackerman v. Ellis, 81 N.J.L. 1, 79 A. 883 (Sup. Ct. 1911) the New Jersey Supreme Court held that tree branches which overhang the premises of another may constitute a nuisance. In such instances, the person over whose land they spread is entitled to an action for damages against the person responsible for their presence there.     In Wegener v. Sugerman, 104 N.J.L. 26, 138 A. 699 (Sup. Ct. 1927) the New ....
• Liens Which Affect Marketability of Title
  When selling your home, it is important to be able to convey marketable title.  Marketable title is a title free from encumbrances and any reasonable doubt as to its validity.  Some of the factors which can affect the marketability of title are various statutory liens.  Some of the most common ones include:     Existing Mortgages.  All recorded  mortgages will act as a lien against the property.  This includes any home-equity loan and lines of credit which are secured by a mortgage in addition to primary mortgages.  Payoff statements can be obtained from the lender prior to closing so that the mortgage lien can be paid off from the closing proceeds.  It is important that home-equity and line of credit accounts be terminated prior to or at closing and representations be made by the borrower that no additional withdrawals have been made beyond the amount indicated in the payoff statement.     Existing Judgments. State ....
• Selling A Home From An Estate
  It’s not uncommon for an executor or administrator of an Estate to find that the decedent has left a house which needs to be sold by the Estate.  In addition to the normal requirements for selling a house, there are some special issues to consider when the seller of real estate is the estate of a decedent. Real estate held by a decedent’s estate is subject to liens for the payment of any New Jersey Transfer Inheritance Tax, New Jersey Estate Tax, Federal Estate Tax and debts of the decedent.   The N.J. Transfer Inheritance Tax is a state tax imposed on the transfer of property  made upon the death of a New Jersey resident and certain non-residents, or made by such a decedent in contemplation of death. N.J.S.A. 54:34-1 et seq.  The Inheritance Tax lien lasts for a period of fifteen years following the date of death. N.J.S.A. 54:35-5.  This lien is discharged when the tax is paid or a bond given to the State.  The N.J. Division of Taxation issues ....
• When Issues Remain After Closing - Agreements for Post-Closing Obligations
  It is not unusual for a buyer and seller to want to close on their house sale, but there remains obligations on the part of the buyer or seller to fulfill.  It is always imperative that whatever the agreement is for post-closing obligations, that it be reduced to writing and signed by each party involved so that all parties have a clear understanding of what their agreement is.  This will help to avoid any later misunderstandings or disputes over what each party’s obligations were. Some agreements which address common issues include: Use & Occupancy Agreements: Sometimes a Seller seeks to remain in the home after closing and the Buyer agrees to this.  In such event, an agreement commonly called a Use & Occupancy Agreement should be prepared.  It should spell out what daily charges the Seller will be paying for the right to remain, what other charges, such as utilities, telephone, cable, the Seller will be paying, the date Seller will be vacating the ....
• Real Estate Tax Appeals: Who Has the Burden of Proof
  Recently, many municipalities have performed revaluations in order to make certain that all their assessments reflect the current market value of the properties located in their municipality. When a property owner files a tax appeal to challenge a tax assessment after a revaluation, who bears the burden of proving whether the new assessment is correct - the tax assessor or the property owner? The answer is the property owner by virtue of the “presumption of correctness”. When appealing a tax assessment, it is very important to understand how the presumption of correctness works. Once a tax assessor imposes an assessment, the County Tax Board and Tax Court are required to presume that the tax assessment is valid and the taxpayer is required to rebut the presumption by cogent evidence. The New Jersey Tax Court has held that in order to overcome the presumption, the taxpayer must produce evidence that is “definite, positive and certain in quality and quantity.” ....
• Property Revaluations: Myths and Facts
  The rise in property revaluations has caused confusion throughout the State of New Jersey. Property owners have been questioning the motives of their governing bodies and appealing assessments, often times without an understanding of the law. This blog is intended to clarify some of the myths surrounding revaluations. Myth No. 1: Townships perform revaluations in order to increase revenues for the town, county and school board. As a general rule, a revaluation only impacts the assessed value of properties in a municipality, not the municipal budget. The amount of tax revenue required by a municipality, school board and county are determined through the budgeting process. The overall budget is the numerator in determining the tax rate for a municipality. The denominator is the aggregate assessment of all properties in town which, in a revaluation year, is the total of all assessments in town as determined by the revaluation company. The revaluation may impact the overall tax rate, but ....