Urmajesty Banktruckfit Solutions, Inc. v. Atlantic City

NOT FOR PUBLICATION WITHOUT APPROVAL OF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

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URMAJESTY BANKTRUCKFIT : TAX COURT OF NEW JERSEY
SOLUTIONS, INC., : DOCKET NO: 011899-2019
:
Plaintiff, :
:
v. :
:
CITY OF ATLANTIC CITY, :
:
Defendant. :
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Decided: September 15, 2020

Joseph P. Howard for plaintiff (Law Office of Joseph P.
Howard, L.L.C.)

Anthony J. Marchese for defendant (Chiesa, Shahinian &
Giantomasi, P.C.)

CIMINO, J.T.C.

I. INTRODUCTION

Plaintiff Urmajesty Banktruckfit Solutions, Inc. seeks summary judgment on

whether the property located at 718 Baltic Avenue, Atlantic City, New Jersey 08401

is exempt from property tax. Due to there being a genuine issue of material fact as

to the charitable purposes of plaintiff, as well as the identity of the true owner of the

property, summary judgment is denied.
II. STATEMENT OF FACTS
Plaintiff Urmajesty Banktruckfit Solutions, Inc. is organized as a non-profit

corporation in the state of New Jersey. On April 16, 2014, plaintiff was designated

as a tax-exempt charitable organization under section 501(c)(3) of the Internal

Revenue Code by the Internal Revenue Service. On January 31, 2018, Zumar

Dubose purchased the property known as 718 Baltic Avenue, Atlantic City, New

Jersey 08401 from the Atlantic City Housing Authority for $85,000. The property

is designated as Lot 4 of Block 310.01 on the Atlantic City tax maps.

A deed dated February 26, 2018 was recorded March 2, 2018 with the Atlantic

County Clerk transferring the property from “ZUMAR DUBOSE” to:

URMAJESTY BANKTRUCKFIT SOLUTIONS INC.
and ZUMAR DUBOSE

In addition, a Registration of Alternate Name dated February 25, 2018 was filed on

February 27, 2018 with the New Jersey Division of Revenue and Enterprise

Services, Department of Treasury indicating that the alternate name for

“URMAJESTY BANKTRUCKFIT SOLUTIONS INC.” is “URMAJESTY

BANKTRUCKFIT SOLUTIONS INC. and ZUMAR DUBOSE.” Finally, in a filing

on July 12, 2019, plaintiff asserts that its certificate of incorporation was amended

on February 26, 2018 to indicate it is “organized exclusively for the moral and

mental improvement of men, women, and children at 718 Baltic Ave Atlantic City,

NJ 08401 under the (N.J.S.A. 54:4-3.6) . . . .”

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Under ownership of the Atlantic City Housing Authority, the property was

exempt from taxation. After learning of the transfer, the assessor filed an added

assessment essentially removing the exemption. Plaintiff applied to have the

property exempt from taxation. Said application was denied by the assessor on

February 4, 2019. Plaintiff appealed to the Atlantic County Board of Taxation which

upheld the assessor on June 3, 2019. Plaintiff then appealed to this court.

III. LEGAL ANALYSIS

The issue presented in plaintiff’s summary judgment motion is whether

plaintiff is exempt from paying property tax on the property in question pursuant to

N.J.S.A. 54:4-3.6. Summary judgment may be granted only where a review of the

evidence presented demonstrates that there is no genuine issue as to any material

fact and that the moving party is entitled to prevail as a matter of law. R. 4:46-2(c);

Brill v. Guardian Life Ins. Co. of America, 142 N.J. 520, 536 (1995). The evidence

must be viewed in “the light most favorable to the non-moving party.” Mem’l

Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 524 (2012).

The first sentence of the pertinent statute governing property tax exemptions,

N.J.S.A. 54:4-3.6, states in relevant part:

The following property shall be exempt from taxation under this
chapter: . . . all buildings actually used in the work of associations and
corporations organized exclusively for the moral and mental
improvement of men, women and children . . . ; all buildings actually
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used in the work of associations and corporations organized exclusively
for . . . charitable purposes . . . ; provided . . . the buildings, or the lands
on which they stand, or the associations, corporations or institutions
using and occupying them as aforesaid, are not conducted for profit . .
..

[N.J.S.A. 54:4-3.6.]

In applying N.J.S.A. 54:4-3.6, this court must strictly construe its provisions against

those invoking the exemption. Advance Housing, Inc. v. Township of Teaneck, 215

N.J. 549, 566 (2013); Hunterdon Med. Cent. v. Township of Readington, 195 N.J.

549, 569 (2008); Paper Mill Playhouse v. Township of Millburn, 95 N.J. 503, 506-

07 (1984). Therefore, an entity that asserts their right to a tax exemption bears the

burden of showing its entitlement to the exemption. Advance Housing, 215 N.J. at

566.

Plaintiff’s I.R.C. § 501(c)(3) designation occurred in 2014. Plaintiff

purchased the property in 2018. Per the amended certificate of the incorporation

dated from 2018 and filed in 2019, plaintiff now exists exclusively for the moral and

mental improvement of individuals at the property. Thus, the Internal Revenue

Service seemingly did not consider the plaintiff’s now exclusive activities at the

property.

Even if the Internal Revenue Service did consider the activities at the property,

the designation for federal taxation purposes pursuant to I.R.C. § 501(c)(3), is not,

in and of itself, enough to qualify plaintiff for a property tax exemption

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under N.J.S.A. 54:4-3.6. Essex Properties Urban Renewal Assocs., Inc. v. City of

Newark, 20 N.J. Tax 360, 368 (Tax Ct. 2002). See also N.J. Carpenters Apprentice

Training & Educ. Fund v. Borough of Kenilworth, 147 N.J. 171, 189 (1996). “The

standards for federal tax exemption under 26 U.S.C. §501(c)(3) have no relation to

state law governing property tax exemption.” Center for Molecular Med. And

Immunology v. Township of Belleville, 357 N.J. Super. 41, 50 (App. Div. 2003)

(quoting Presbyterian Homes of Synod of N.J. v. Div. of Tax Appeals, 55 N.J. 275,

286 n. 3 (1970)). “Nonprofit status . . . cannot be equated with charitableness.

Rather, it is but one factor which merits consideration in the determination whether

property is being used for charitable purposes.” Presbyterian Homes, 55 N.J. at 286.

To establish a right to a property tax exemption, plaintiff must satisfy a three-

part test that flows from N.J.S.A. 54:4-3.6 by showing that: (1) plaintiff is organized

exclusively for a purpose which is charitable or for the moral and mental

improvement of individuals; (2) the property is actually used for such purposes; and

(3) the use and operation of the property is not for profit. Advance Housing, 215

N.J. at 567-68. International Schools Services, Inc. v. Township of West Windsor,

207 N.J. 3, 16 (2011). Whether property is devoted to charitable or individual

improvement purposes depends upon the facts or circumstances of each case.

Advance Housing, 215 N.J. at 568 (quoting Presbyterian Homes, 55 N.J. at 285);

International Schools Services, 207 N.J. at 22. All relevant considerations cannot

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be captured by any list given the ever-changing scenarios that will arise, and each

consideration may not necessarily deserve the same weight. 1 Advance Housing, 215

N.J. at 572.

The unique circumstances of this case can be gleaned from the interrogatory

answers provided by plaintiff. However, such circumstances must be fully

supported by competent evidence to determine whether the property is used for

charitable purposes or the improvement of individuals. These circumstances

include, but are not limited to, evidence of rent-free housing for low or no-income

individuals, the occupants in the house, any familial, personal or business

relationship of the occupants to the principals of plaintiff, mental health services

provided, the terms of the lease, days when free food is provided, clothing provided,

scholarship funding for college provided, and free computers provided for schooling

and mental health services. See Advance Housing, 215 N.J. at 572-73.

Currently, plaintiff has not offered sufficient material evidence concerning

any of the criteria set forth. In addition, when the tax assessor inspected the property,

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Relevant considerations that have been useful in the past have been: (1) that
charitable work done by the private entity will spare the government an expense that
ultimately it must bear, Presbyterian Homes, 55 N.J. at 285; (2) the private entity
must not be engaged in a seeming commercial enterprise, International Schools
Services, 207 N.J. at 23-24; and (3) financial support and recognition by the state of
a private entity’s charitable work may be indicative that its property is used for a
charitable purpose, Paper Mill Playhouse, 95 N.J. at 515. Advance Housing, 215
N.J. at 572-573.
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the tax assessor concluded that the property was being used as a typical single-family

home and not being used for a tax-exempt purpose. While the opinion of the tax

assessor is not dispositive, neither is the opinion of the plaintiff. The court will need

to evaluate the facts and apply the law as to whether an exemption is appropriate.

The second sentence of the pertinent exemption statute, N.J.S.A. 54:4-3.6,

provides in relevant part:

The foregoing exemption shall apply only where the association,
corporation or institution claiming the exemption owns the property in
question . . . .

[N.J.S.A. 54:4-3.6]

The statute does not provide exemption for property owned by individuals.

Ehrlich v. Passaic City, 15 N.J. Tax 561, 565 (Tax 1995). In Ehrlich, a property tax

exemption was denied since the property at issue was owned by the officiant of the

congregation and not the exempt entity. Id. at 562-63. Tax-exempt status requires

a confluence of ownership and use. Mega Care, Inc. v. Union Township, 15 N.J.

Tax 566, 573 (Tax 1996), aff’d, 22 N.J. Tax 604 (App. Div. 2004). “[C]onfluence

of ownership and use is to assure that exempt property is not only put to an eligible

use, but also that it is held for and appropriated to the user’s exempt purposes.” Id.

at 574. See also Clarmont Health Systems, Inc. v. Borough of Point Pleasant, 16

N.J. Tax 604, 624-25 (Tax 1997) (necessity of ownership).

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The deed of February 26, 2018 indicates the owner of the property as

“URMAJESTY BANKTRUCKFIT SOLUTIONS INC. and ZUMAR DUBOSE.”

Factually, there are a number of things notable as to how the name appears on the

deed. First, the names are in all capitals, whereas the “and” is all lower case. Second,

the term “INC.” appears in the middle. Third, the corporate name is on one line; the

next line indicating “and” and then the individual name. On its face, the deed

appears to indicate a transfer to both the entity, Urmajesty Banktruckfit Solutions,

Inc., as well as an individual, Zumar DuBose.

Nonetheless, plaintiff asserts that the deed only transferred the property to

Urmajesty Banktrucklift Solutions, Inc. Supporting this assertion is a filing of an

alternate name with the New Jersey Division of Revenue and Enterprise Services

indicating that the alternate name for “URMAJESTY BANKTRUCKFIT

SOLUTIONS INC.” is “URMAJESTY BANKTRUCKFIT SOLUTIONS INC. and

ZUMAR DUBOSE.”

After a deed is executed, the deed is to be delivered to the county recording

officer who officially records the document. N.J.S.A. 46:26A-6. Depending on the

county, the county recording officer is either the county clerk or the registrar of

deeds. N.J.S.A. 40A:9-90. The county recording officer is required to provide

notice of the filing, including the name of the grantee, to the municipal tax assessor

within one week. N.J.S.A. 54:4-31. That way, an assessor can monitor whether an

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exempt property has been transferred and no longer eligible for exemption. In fact,

when the assessor in this case discovered that the property was transferred from the

Atlantic City Housing Authority, an exempt entity, the city sought an added

assessment asserting the property was no longer owned by an exempt entity.2

While it may be true that an alternate name was filed, there is not any

indication outside the records of the New Jersey Division of Revenue and Enterprise

Services in Trenton. If this alternate name designation changes, the assessor has no

way of knowing unless the records of the Division of Revenue and Enterprise

Services records are continually searched. Moreover, an alternate name designation

is not perpetual and must be renewed every five years. N.J.S.A. 15A:2-3(c).

A recorded document which affects title to real property provides constructive

notice to all subsequent purchasers, mortgagees and judgment creditors of the

execution of the document recorded and its contents. N.J.S.A. 46:26A-12(a). Unless

actual notice of an unrecorded document is shown, it is of no effect against

subsequent judgment creditors, and bona fide purchasers and mortgagees for

valuable consideration. N.J.S.A. 46:26A-12(c). See Pearson v. DMH 2 L.L.C., 449

N.J. Super. 30, 59-60 (App. Div. 2016) (reviewing actual notice in lieu of the

constructive notice provided by recording).

2
It is unclear whether the assessor first obtained this transfer information from the
county recording officer or from some other source. The point is that the assessor
took steps to remove the exempt status.
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A recorded deed which lists the grantees as “URMAJESTY

BANKTRUCKFIT SOLUTIONS INC. and ZUMAR DUBOSE” gives constructive

notice that the property is held by both Urmajesty and Mr. Dubose. Therefore, an

open question exists as to what happens if a judgment is entered against Zumar

Dubose and then docketed in Superior Court as a lien against any real estate held by

him. See generally N.J.S.A. 2A:16-1. 3 At the very least, Urmajesty would have to

litigate whether the judgment impairs its interest in the property. There is also the

question of what is preventing Mr. Dubose from taking out a mortgage on the

property. While it is not the place for this court to decide whether a mortgagee needs

to search beyond the records of the county recording officer (as well as the judgment

records), the court is concerned with the arrangement as it now stands – with the

only purported evidence of sole ownership by Urmajesty filed with the Division of

Revenue and Enterprise Services. This is not to suggest that Mr. Dubose is planning

to encumber the property or faces judgment creditors. Rather, it points to the

practical difficulties that an assessor would face in monitoring whether a property

continues to be owned by an exempt entity, as well as used for an exempt purpose.4

3
A related question to this is what happens if a judgment is entered against Mr.
Dubose five years from the alternate name registration and the alternate name has
expired. N.J.S.A. 15A:2-3(c).
4
It is worth noting this entanglement of interests may be such to preclude an
exemption under the first sentence of N.J.S.A. 54:4-3.6. International Schools
Services, 207 N.J. at 23-24.
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There are strict standards for being exempt from taxes. Taxes fund vital

governmental services and when an exemption is granted, the other taxpayers have

to make up the revenue lost to the exemption. Savage Mills Enters. v. Borough of

Little Silver, 29 N.J. Tax 295, 308-09 (Tax 2016). The court recognizes it may be

impracticable for the assessor to rely upon records outside the county recording

office to determine ownership or a change in ownership which may affect eligibility

for an exemption. Additionally, the court is reluctant to grant an exemption in a

situation in which the potential for private benefit exists (i.e., mortgaging the

property). The law is clear that exemptions from taxation are limited to certain

instances such as for charitable and social improvement endeavors. Allowing

exemptions without strict standards could undermine confidence in our taxing

system.

IV. CONCLUSION

For the reasons stated in this opinion, plaintiff’s motion for summary

judgment is denied.

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