**NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS** 

**_______________________________ STEVEN KUGLER & MICHELE**  **: TAX COURT OF NEW JERSEY**  **YENIS, Plaintiff**  **s ,**  **: DOCKET NO: 01**  **0985**

**- 2020**  **: 011963** 

**- 2021** 
**vs. :** 
**: CITY OF ATLANTIC**  **CITY, :**

**Defendant. :**  **_______________________________:**

**Decided: J**  **une 24**  **, 20 22** 

**. Steven Kugler & Michele Yenis,**  **plaintiff s**  **, pro se**
**. Anthony Marchese**  **for defendant ( Chiesa Shahinian &**  **Giantomasi ,**  **attorney s).**  CIMINO, J.T.C.
I. INTRODUCTION . **Taxpayer s**  **, Steven Kugler and Michele Yenis**  **appealed the**  **assessment of**  **their property in the City of Atlantic City. While the appeal was pending, the property** 

**was leased**  **to a third party. The City wants to inspect the property in preparation for trial**  **. H owever, the**  **tenant has rebuffed requests for an inspection. The City has filed**  **a motion to dismiss for failure to allow discovery. The issue is who ha s**  **the burden to secure the inspection, and who should suffer the consequences if an inspection**  **cannot be completed. For the reasons set forth in much greater detail below, the -2-** 

**court determines that the onus in upon the taxpayer to secure the inspection, and failing the completion of an inspection, the matter must be dismissed.** 
II. STATEMENT OF FACTS. **The taxpayer s**  **, Steven Kugler and Michele Yenis**  **, are**  **the owner s of**  **Unit 2701 located at**  **3101 Boardwalk , in the City of**  **Atla ntic City**  **, in the County of Atlantic. The unit**  **is located on the 27**  **th floor of a housing tower.**  **The property is known as**  **Qualifier C2701 of Lot**  **1.01 of Block**  **28 on the City of**  **Atlantic City ’s tax maps.**  **On September 21**  **, 20 20**  **, the taxpayer s**  **filed their**  **appeal with the Tax Court for the 2020 tax year** 

**. Plaintiffs later appealed the 2021 assessment as well** 

**. On**  **August 23, 20 21**  **, the City requested an inspection of the property. However,**  **on October 17, 2020, the taxpayers**  **entered into a lease**  **of the p**  **remises to a third party**

**. In response to the inspection request, the taxpayers indicated the unit had been**  **rented to a tenant who is 93 years old. The taxpayers asserted the t enant “has**  **changed the locks so we do not have access.” The factual basis for the asserted lock change was not spelled out by the taxpayers. In subsequent correspondence the**  **taxpayers assert that they requested the tenant “allow an appraiser to enter.**
**U nfortunately, she refused.”**  **Taxpayers further stated “[**  **w ]e can**  **not force the tenant and jeopardize her tenancy.**  **We require her to stay, otherwise it would be devastating to our family.”** **-3-**

**The taxpayers and their tenant have entered into a written lease. The lease provides in pertinent part:** 

**11. Access. The Landlord shall have access to the Property upon reasonable notice to the Tenant to (a)**  **inspect the Property ,**  **(b) make necessary repairs, alterations, or improvements**  **, (c) supply services, and (d)**  **show it to possible buyers, lenders, contractors, appraisers**  **and insurers. The Landlord may show the Property to rental applicants at reasonable hours on notice to the**  **Tenant. Tenant agrees to allow Landlord, Landlord’s agent, or any municipal employee**  **s acces**  **s during daylight hours for the inspection of the Property for purposes of**  **determination/appeal of Real Estate Tax Assessments. The Landlord or the Landlord’s Authorized Agent may**  **enter the Property at any time without notice to the Tenant in case of emer**  **gency.**

**T he City filed the instant Motion to Dismiss the taxpayer’s**  **c omplaint for**  **failure to provide discovery.**
III. LEGAL CONCLUSIONS . **All propert y assessment appeals**  **with tax bills of less than**  **$25,000.00 in the prior tax year can be filed as a small claims case.**  **1 N.J.S.A.**  **2B: 13** 

**- 14;**  **R. 8:3** 

**- 4(d),** 
**R. 8:11**  **(a)( 2)**  **. For a small claims action, discovery from the taxpayer is limited to inspection of the subject premises, a closing statement if there**  **has been a sale of the subject premises within three years of the assessing date, the cost of improvem**  **ents**

**1 Assessment appeals of residential properties consisting of**  **one through four units**  **also qualify as small claims cases regardless of tax bill amount** 

**. -4-** 

**within three years of the assessing date, income, expense and lease infor mation for**  **income**

**- producing property and information relating to a claim of damage to the**  **property occurring be tween**  **October 1 st**  **of the pre**

**- tax year and January 1**  **st of the tax** 
**year. R.**  **8:6 -1(a)(4).**  **Discovery from the municipality is limited to the property record card.**  **Id. When**  **one party fails to provide discovery, the**  **other party entitled to the**  **discovery may move for an order dismissing the complaint. R.**  **4:23 -5(a)(1)**  **, see also** 
**R. 8:6** 

**- 1(a) (sett**  **ing R.**  **4:10**

**- 1 through**  **R. 4:18** 

**- 2 and**  **R. 4:22 through 4:25 as**  **framework for discovery) . In this case, the City has filed such a motion**  **after attempts to inspect the property were rebuffed by the**  **tenant**

**. The first question**  **t o be resolved is whether the municipality has the burden to**  **show a need for the inspection**  **. It goes without saying that parties may obtain relevant discovery.**  **R. 4:10** 

**- 2(a). Certainly, the inspection of a premises which is**  **the subject of a tax appeal is relevant. To be sure**  **, the court rules**  **specifically provide that such an inspection be allowed.**  **R. 8:6** 

**- 1(a)(4).**  **Thus, no further showing of**  **necessity by the municipality**  **is needed. The next question**  **is which party should have the onus to procure the**  **inspection. The City**  **contends that the taxpayer has th**  **e onus and the failure to**  **provide the inspection should result in dismissal. -5-** 

**An inspection is the one of the few t ype**  **s of discovery which a municipality**  **can pursue under the small claims practice of the**  **Tax Court. R.**  **8:6**

**- 1(**  **a)(4). It must**  **be remembered that as a practical matter, “local tax officials often cannot know whether a residence has undergone renovations which have increased its value**  **without entering the residence itself.” Smith v. Ayotte, 356 F. Supp. 2d 9**  **, 16 (D.N.H. 2005). In other words, an inspection is an important part of the tax appeal**  **process. Without an inspection, it would not be fair to the City, or to the other taxpayers in the City who would have to make up an**  **y shortfall in tax revenues if a**  **redu ction in assessment was determined based upon limited evidence.**  **Thus, the taxpayers have the onus of procuring an inspection.**  **The taxpayers assert they cannot procure an inspection due to tenant refusal.**
**Th e ability of the taxpayers to compel the tenant to allow an inspection turns on the**  **relationship between the taxpayers and the tenant. “ The existence of a landlord** 

**** **tenant relation is contractual in nature and may be express or implied.” WG Assoc.**  **v. Est. of Roman, 332 N.J. Super. 555, 5 60**  **(App. Div. 2000). A “lease is a contract**  **between [the parties] which set s**  **forth their rights and obligations to each other . . .” Town of Kearny v. Discount City of Old Bridge, Inc., 205 N.J. 386, 411 (2011). “A**  **residential lease consists of a set of mutually dependent covenants. The tenant ’s**  **covenant to pay rent is dependent upon the landlord’s covenant permitting the tenant**  **the quiet enjoyment of the leased premises. The landlord must see to it that the -6-** 

**tenant actually obtains full, complete, and exclusive possession.” Campi v. Seven Haven Realty Co.**  **, 294 N.J. Super. 37, 42 (App. Div. 1996). Generally, a “lease**  **gives exclusive possession of the premises against all the world, including the owner**
**. . .” Thiokol Chemical Corp. v. Morris County Bd.**  **of Tax’n.**  **, 4 1 N.J. 405, 417**  **(1964). However, such exclusive possession can be “subject to reservation of a right of possession in the landlord for any purpose or purposes not inconsistent with the**  **privileges granted the tenant.” Township of**  **Sandyston v.**  **Angerman , 13**  **4 N.J.**  **Super. 448, 451 (App. Div. 197 5).**  **Here, the parties entered into a lease. While the starting point of t he analysis**  **is that the tenant has exclusive possession, the terms of the lease provide that the taxpayer reserved the right to “acce**  **ss to the Property” to “show it to . . . appraisers.” The tenant also agreed to all**  **ow taxpayer, or**  **their agent, or any municipal employees**  **“access during daylight hours for the inspection of the Property for purposes of determination/appeal of Real Estate**  **Tax Assessments.” Having the right of inspection for the tax appeals is in keeping with the prior**  **decisions of this court**

**. These cases deal with the analogous situation of how**  **a property purchaser protects itself from the potential failure of**  **the seller to complete**  **a Chapter 91 request. ADP of New Jersey , Inc.**  **v. Township of**  **Parsippany**

**- Troy**  **Hills , 14 N.J. Tax 372 (Tax 1994); Yeshivat v. Borough of Paramus**  **, 26 N.J. Tax 335 (Tax 2012); 975 Holdings, LLC v. City of Egg Harbor, 30 N.J. Tax 124 (Tax** **-7-**

**2017). U**  **nder Chapter 91, a taxpayer**  **owning income producing property is required**  **to provide income and expense information within forty**

**- five days**  **of a request , or**  **otherwise face a bar to a full**  **tax appeal. L.**  **1979, c.**  **91 § 1. N.J.S.A. 54:4**

**- 34.**  **The purpose of C**  **hapter 91 is to encourage the remittance of financial**  **information so that the local assessor can arrive at an**  **accurate assessment. In prior**  **cases, t he issue has arisen whether the prohibition of a full**  **appeal applies to subsequent property owners**  **when the predecessor in title failed to comply with Chapter 91** 

**. This court has determined that**  **:**

**[i] t is the obligation of a purchaser** 

**. . . to protect itself in**  **its agreement with the seller as to any rights that**  **it may wish to assert with respect to the property tax.**  **[ ADP**  **, 14 N.J. Tax at 378** 

**- 79;**  **975 Holdings , 30 N.J. Tax**  **at 131** 

**- 32.**  **See also Yeshivat**  **, 26 N.J. Tax at**  **346. ]**  **Likewise , it is the obligation of**  **a landlord**  **to protect itself in an**  **agreement with**  **a tenant**  **as to any rights it may wish to assert with regard to inspection of the property for tax**  **appeal purposes. In other words, the**  **landlord c**  **an bargain**  **with the**
**tenant for inspection of the property.**  **Here, the taxpayers did bargain with the tenant to obtain the right to inspect the property. The tenant has refused**  **an inspection. This court is not going to insert**  **itself into a contractual**  **dispute between the taxpayer and its tenant. At this juncture,**  **the court is going to dismiss the complaint without prejudice per R.**  **4:23 -5**  **(a)(1). -8-** 

**Going forward the taxpayers essentially has three options. First, taxpayer can accept the refusal of the tenant as to inspection and t**  **he dismissal will stand. Second, the taxpayer**  **s can seek enforcement of the lease**  **provision through eviction or some other legal process. Certainly the law provides that a violation of a lease is grounds**  **for an eviction in certain instances. N.J.S.A. 2A: 18** 

**- 61.1(e)**  **(1) . However, it first has**  **to be determined whether the lease term is enforceable through eviction. Moreover, under the tedious procedures of the**  **Anti**

**- Eviction**  **Act, the taxpayers would have to first demand compliance through a notice to cease, then followed by a notice to quit,**  **both notices satisfying**  **the requisite timeframes ,**  **specificity and service**  **requirements . N.J.S.A. 2A:18** 

**- 61.**  **1(e)(1), 61.2(b). Third, the taxpayers can enter into negotiations with the t**  **enant to gain entry to the property.**  **There may be a multitude of reasons why the current tenant**  **oppose s**  **an inspection**  **ranging from COVID fears to privacy concerns to convenience to indifference to dissatisfaction with the premises** 

**. Those concerns can certainl**  **y be addressed through negotiations to allow an inspection, but is not for the court to**  **speculate or wander into such negotiations. Such negotiations may involve litigation**  **or the threat of litigation based upon the terms of the lease. It is none of the court’s**  **concern, nor should the court inject itself into such a dispute. It is better left to the parties to resolve, and to determine the appropriate consideration for any**  **inspection**

**. -9-** 

**Finally, placing the burden on the taxpayer to secure the inspection is**  **appropriate for one other reason. It prevents mischief of a taxpayer in thwarting an inspection through establishment of a tenancy. If the burden was placed on the**  **municipality to secure the inspection, a taxpayer could easily avoid**  **such inspection by**  **leasing the property to a related entity and then claiming that the inspection is not**  **possible. See**  **Yeshivat , 26 N.J. Tax at 348 (discussing concern of sham sale to avoid**  **limitations of Chapter 91 if law allowed new owner to avoid failure of prior owner**  **to answer Chapter 91 request.) Moreover, even in a legitimate transaction,**  **a friendly**  **landlord and**  **tenant may**  **achieve a litigatio**  **n advantage**  **benefitting the landlord by thwarting an inspection to put the municipality at a disadvantage.**  **Cf. ,**  **Ayotte ,**  **356 F.Supp.2d at 17 (“Allowing a taxpayer to prevent an inspection of his or her home**  **absent a warrant during the appraisal process and then to challenge the result of that process th**  **r ough abatement proceedings would adversely**  **impact property tax**  **receipts .”).**  **By placing the onus on the appealing**  **taxpayer with the sanction of dismissal protects against such subterfuge.**  **In summation, t he**  **m atter is dismissed without prejudice** 

**. R.**  **4:23 -5(a)**  **(1) . T**  **he taxpayer**  **s can arrange an inspection and apply for restorati**  **on of the case. Id.**  **Certainly, t he taxpayer**  **s can reach out to the**  **tenant and see if**  **they can reach a**  **n understanding**  **as to an ins**  **pection. The court is not going to w a**  **nder in to the thicket**  **of trying to set the appropriate value or parameters**  **of such entry . T**  **he taxpayer**  **s and** **- 10**  **-**

**tenant are free**  **to reach what they consider to be a fair and mutual bargain**  **as to**

**access**
**.** IV. CONCLUSION. **For the reasons stated in this opinion, Defendant’s Mo tion to Dismiss**  **Plaintiff’s Complaint is GRANTED. -**  **11 -**