Lucas v Walters (2008 NY Slip Op 51391(U))

Lucas v Walters

2008 NY Slip Op 51391(U) [20 Misc 3d 1118(A)]

Decided on July 14, 2008

District Court Of Nassau County, Fourth District

Hirsh, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

Thomas J. Lucas does business under the assumed name of "Star" Tax Reduction Consultant ("STRC"). STRC is in the business of preparing and filing applications for the basic Star Tax Exemption.

STRC obtains its business by checking the Nassau County real property tax records to determine who has not made an application for a basic Star Tax Exemption. STRC then sends a letter to the listed record owner or the "Current Owner" of the real property. The letter states the owner has not applied for the basic Star Tax Exemption. The letter further indicates that by applying for the Star Tax Exemption, the homeowner can reduce his or her school taxes by more than $800 per year.

The letter indicates STRC is a private company not affiliated with Nassau County. The letter contains the following:

ONCE YOUR RECEIVE A BASIC EXEMPTION, YOU DO NOT HAVE TO REAPPLY YEAR AFTER YEAR.

EVERY YEAR THEREAFTER, "YOU" WILL RECEIVE THE TOTAL EXEMPTION

YOU WILL BE BILLED ONLY AFTER THE EXEMPTION HAS BEEN APPLIED TO YOUR TAXES.^[FN1]

Beneath the this information, the letter states that if the homeowner agrees to these terms, the homeowner should sign and return the authorization to STRC in the enclosed prepaid envelope or by fax.

The letter then advises the homeowner he or she can withdraw his or her authorization at any time prior to STRC filing the paperwork with Nassau County. The letter advises the homeowner that STRC will advise the homeowner when the documents have been filed. [*2]

The letter then has a space for the homeowner's signature, the section, block and lot of the premises, a line for the homeowner's telephone and cell phone number and e-mail address.

At the bottom of the letter, under the listing of the property's section, block and lot, the letter states:

Upon receipt of the authorization letter, STRC sent to the homeowner a copy of the signed agreement and a partially completed basic Star Exemption application. The letter asks the homeowner to check the type of residence (private residence, cooperative apartment, etc.), enclose proof of residence, enter the homeowner's telephone number and sign.

The letter advises the homeowner of the filing deadline and encourages the homeowner to return the completed application and proof of ownership to STRC as soon as possible.

The letter indicates STRC will notify the homeowner when the application has been filed.

STRC filed the basic Star Application with Nassau County. Once the application had been approved and the homeowner granted a basic Star exemption, STRC advised the homeowner the application had been filed and approved. STRC states it will bill the homeowner in October the tax savings resulting from the granting of the basic Star Exemption can be calculated.

The application for a basic Star Exemption must be filed with the Nassau County Assessor must be file by January 2nd. School District's in Nassau County operate on a fiscal year running from July 1 to June 30. School taxes are payable in equal semi-annual installments with the first payment being due in October and the second payment being due in May. Thus, the tax savings resulting from a homeowner being granted a basic Star Exemption cannot be determined until school tax bills are sent out in October.

In October, when the school tax bills were issued, STRC calculated the school tax savings resulting from the homeowner having received a basic Star exemption and billed the homeowner for the amount of the savings. When the homeowner did not pay the bill, STRC commenced this action.

Real Property Tax Law §425 provides that real property which meets the statutory requirements is exempt from real property school taxes. 98 NY Jur2d Taxation and Assessment §133.

Real Property Tax Law §425(2)(a) provides for a basic Star exemption and an [*3]enhanced Star Exemption.^[FN2]

In order to qualify for a basic Star Exemption, the property must be a one, two or three family residence, a farm dwelling or a residential cooperative or condominium used by the owner as the owner's primary residence. Real Property Tax Law §425(3)(a)(b).

Real Property Tax Law §425(5)(a) requires each school district to notify each owner of residential real property in the district of the availability of the Star Tax Exemption program.

In order to obtain a basic Star Tax Exemption, the owners of the property must file an application for the basic Star Tax Exemption with the assessor on or before the appropriate tax status date. 98 NY Jur2d Taxation and Assessment §133; and Real Property Tax Law §425(6). If the homeowner timely files the application on the prescribed form and files the other proof required or requested by the assessor and the assessor approves the application, such real property shall be exempt from school district real property taxes to the extent provided by the statute. Real Property Tax Law §425(6)(b).

School taxes are based upon the value of the assessment of the real property made by the County Assessor. The actual school taxes paid by each homeowner are calculated by multiplying the tax rate by the assessed value of the property.

In 1995, the Board of Supervisors, which was the Nassau County's legislative body, enacted Section 21-19.0, et. seq. of the Nassau County Administrative Code. The stated legislative intent was to prevent homeowners from being victimized by services which offer to obtain a reduction in the assessed valuation of their residences for a fee. Nassau County Administrative Code §21-19.0

Nassau County Administrative Code §21-19.1(D) defines a Tax Assessment Reduction Service as:

"...any person who provides or offers to provide, for any compensation or consideration, whether direct of indirect, any service to assist the owner or authorized agent of the owner of any dwelling located in Nassau County in obtaining a reduction

in the assessed valuation of such premises from the Nassau County Department of

Assessment."

STRC is a Tax Assessment Reduction Service as defined by Nassau County Administrative Code §21-19.1(D).

The Star program works by exempting a portion of the assessed value of the real property from school taxes. Therefore, the granting of a basic Star Tax Exemption reduces the homeowners school taxes by "...obtaining a reduction in the assessed [*4]valuation of such premises" for school tax purposes.^[FN3]

Nassau County Administrative Code §21-19.2(E) requires any agreement between a tax reduction assessment service and a homeowner to contain (1) a schedule of tees charged by the service, (2) a provisions permitting the owner to cancel the agreement within three (3) days of having entered into the agreement and to receive a full refund of any fee or deposit already paid, (3) a provision permitting the homeowner to receive a full of all fees paid except for disbursements incurred as evidenced by a receipt should the service not obtain a reduction in the assessment, (4) notification that the owner is not required to use a service to file or receive an assessment reduction, (5) the date the contract was entered into, (6) a provisions requiring the service to communicate all offers of settlement to the homeowner, and

A contract between a homeowner and a tax assessment reduction consultant that does not fully comply with Nassau County Administrative Code §21-19.2(E) "...shall be unenforceable by the tax assessment reduction service as against an owner and shall be voidable at the option of the owner. Nassau County Administrative Code §21-19.4.

The agreement between STRC and the homeowner does not comply with Nassau County Administrative Code §21-19.2(E) in that it does not contain any of the language of §21-19(2)(E)(7) quoted above. The language of the statute makes clear that in order to be enforceable, a contract between a tax reduction assessment service and a homeowner must clearly and conspicuously contain this exact statutory language. Any contract not containing this language is declared unenforceable.

In deciding a small claims action, the court is directed "....to do substantial justice between the parties according to the rules of substantive law." Uniform District Court Act 1804. The contract between STRC and the homeowner does not contain the language required by law. Therefore, substantial justice and the substantive law mandate a finding that the agreement upon which STRC sues is unenforceable.