Assemblyman TROY SINGLETON
District 7 (Burlington)
Assemblyman ALBERT COUTINHO
District 29 (Essex)
Assemblywoman BONNIE WATSON COLEMAN
District 15 (Hunterdon and Mercer)
Requires use of short sale data under certain circumstances to assess real property and determine assessment ratios.
CURRENT VERSION OF TEXT
An Act concerning the use of short sales for property assessment valuation under certain circumstances and amending P.L.1954, c.86 and P.L.1971, c.424.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1954, c.86 (C.54:1-35.3) is amended to read as follows:
3. True value for the purposes of this act shall be deemed to be valuation at current market prices or values, determined in such manner as the director may, in his discretion, select. Short sales, as sales conducted at below market prices or values for arms length transactions as a result of the seller's distressed financial circumstances, shall be included in determining true value within a community that is a portion of a taxing district, when such sales represent at least 20 percent of the cumulative reported sales data for comparable properties in that area over the previous three tax years. The director shall determine the ratio of aggregate assessed to aggregate true valuation of real estate of each taxing district. He may make such determination by reference to the county equalization table whenever he is satisfied that the table has been prepared according to accepted methods and practices and that it properly reflects true value or a known percentage thereof for the several taxing districts in the county. The director, with respect to any and all taxing districts, may use the assessment ratios reported in the Sixth Report of the Commission on State Tax Policy (Trenton, 1953) and may consider such other assessment ratio studies as may be available. He may make such further and different investigations of assessment practices as he may deem necessary or desirable for the establishment of the assessment ratios required by this act.
(cf: P.L.1954, c.86, s.3)
2. Section 1 of P.L.1971, c.424 (C.54:1-35.35) is amended to read as follows:
1. a. The Director of the Division of Taxation in the Department of the Treasury shall by rule establish standards to be used in the valuation and revaluation of real property to be used for assessment purposes and shall prescribe minimum qualifications for firms and individuals engaged in the business of valuing and revaluing all or designated portions of real property in a municipality under contract.
b. The rule establishing valuation standards shall include the use of short sale transactions, being sales conducted at below market prices or values for arms length transactions as a result of the seller's distressed financial circumstances, when such sales represent at least 20 percent of the cumulative reported sales data for comparable properties over the previous three tax years within a community that is a portion of a taxing district.
(cf: P.L.1971, c.424, s.1)
3. This act shall take effect immediately.
This bill would require the use of property sales data from "short sale" transactions under certain circumstances. As defined in the bill, short sales are real estate transactions made at below market prices or values for arms length transactions, as a result of the seller's distressed financial circumstances. Currently, short sale data are excluded from consideration as not being representative of true value. Examples of short sales are sales that are not made freely and independently, such as when foreclosure is involved, or sales in an age-restricted community by an estate or relative of a deceased owner when the local market is already saturated with for-sale units depressing sale prices. Under the bill, when short sales in a community represent a cumulative average of at least 20 percent of sales over the previous three tax years, the assessor would have to take those short sales into account when annually assessing comparable properties. The 20 percent cumulative average threshold over three years was chosen to represent a significant portion of the sales data for a community. The Director of the Division of Taxation in the Department of the Treasury would also be required to use short sales data when determining assessment ratios. The provisions of this bill also would allow taxpayers to use short sales as comparable sales when appealing their property assessments.