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Volume 5 - Opinions of Counsel SBEA No. 120

Opinions of Counsel index

State equalization rates (rate in excess of 100) (assessment review - overvaluation) - Real Property Tax Law, §§ 720, 1200:

The State equalization rate is immaterial in an assessment review proceeding where the ground for the complaint is overvaluation.

Our opinion has been requested concerning whether an assessment should be reduced in an assessment review proceeding grounded on overvaluation as a matter of law upon proof that the state equalization rate determined for the assessment roll containing the assessment under review was in excess of 100 percent.

Section 306 of the Real Property Tax Law requires that all real property be assessed at the full value thereof. Full value has been held to be synonymous with market value (People ex rel. Parklin Operating Corp. v. Miller, 285 N.Y. 126, 38 N.E.2d 465) and market value has been defined as being the price which a willing buyer would pay to a willing seller for the property on the open market in an arms-length transaction (Lane Bryant Inc. v. Tax Commission of City of New York, 21 App. Div.2d 669, 249 N.Y.S.2d 994, aff’d, 19 N.Y.2d 715, 225 N.E.2d 882, 279 N.Y.S.2d 175).

Section 706 of the Real Property Tax Law provides, in part, as follows:

A proceeding to review an assessment shall be founded upon a petition setting forth that the assessment is illegal, specifying the grounds of the alleged illegality, or if erroneous by reason of overvaluation, stating the extent of such overvaluation, or if unequal in that the assessment has been made at a higher proportionate valuation than the assessment of other real property on the same assessment roll by the same officers, and stating that the petitioner is or will be injured thereby. . . .

Clearly, there are three grounds upon which an assessment may be reviewed: illegality, overvaluation or inequality.

Subdivision 3 of section 720 of the Real Property Tax Law provides, in part, as follows:

Evidence on the issue of whether an assessment is unequal shall be limited as hereinafter provided. . . . The parties shall be limited in their proof on the trial of such issue to such parcels and witnesses, except that in any event, whether or not parcels are selected as hereinabove provided, evidence may be given by either party as to (1) actual sales of real property within the assessing unit that occurred during the year in which the assessment under review was made and (2) the state equalization rate established for the roll containing the assessment under review. . . .

As stated by the Court of Appeals in Ed Guth Realty, Inc. v. Gingold, 34 N.Y.2d 440, 315 N.E.2d 441, 358 N.Y.S.2d 367:

There is a two-step process in proving an inequality case. The petitioner must prove a proper ratio of assessed value to fair market value, and then he must establish the fair market value of his property. Proof on these two points then leads to the application of a simple mathematical process whereby ratio times market value equals proper assessed valuation.

As stated by the Court of Appeals in Hellerstein v. Assessor of Town of Islip, 37 N.Y.2d 1, 332 N.E.2d 279, 371 N.Y.S.2d 388:

this provision was merely designed to ease the taxpayers’ burden of proof in inequality cases . . .

Accordingly, the only issue in an assessment review proceeding grounded in overvaluation is the market value of the subject property as of the taxable status date for the assessment roll containing the assessment under review.

Legal considerations aside (see, 3 Op.Counsel SBEA No. 57), a state equalization rate in excess of 100 percent does not mean that the assessor has assessed real property in excess of full value as of the taxable status date of such assessment roll. Indeed, if an assessor were to assess all real property on the assessment roll completed in 1975 as of its market value as of May 1, 1975, the state equalization rate for such roll would more than likely exceed 100 percent. The reason for this is that the state equalization rates determined for the assessment rolls which were completed in 1975 were determined on the basis of the State Board’s 1973 market value survey. In conducting such survey, randomly selected parcels were appraised at their value as of January 1, 1973. The sales used in such survey occurred between June 1, 1972 and July 31, 1973, the mid-point being January 1, 1973. An equalization rate of 108.39 percent for a 1975 assessment roll indicates that property on such roll was assessed at 108.39 percent of 1973 market values. It does not mean that the assessor has not assessed real property on such roll at 100 percent of 1975 market values. As indicated above, in a period during which market values are increasing, state equalization rates determined on the basis of a market value standard two to three years prior to that which the assessor is required louse would normally result in a state equalization rate in excess of 100 percent.

Accordingly, in our opinion, the state equalization rate is immaterial in an administrative assessment review proceeding grounded in overvaluation and that the only issue in such a proceeding is the market value of the subject property as of the taxable status date for the assessment roll containing the assessment under review.

February 8, 1977
Revised May 1, 1978

Updated: