Real Estate Tax Funds: Did you recieve your share? ©
Many leases provide that the tenant must pay its prorata share of real estate taxes on the “Property”. In many jurisdictions, the Landlord has to actually pay the taxes as billed before they can appeal the assessment. If the landlord is successful in its appeal and receives a refund (for one or more years), the tenant may not always receive it’s prorata share of the refund from the landlord. How do you check to see if the real estate taxes have been appealed and if the landlord has received a refund? Different ways: 1) have the landlord provide a copy of its full general ledger, not just the expense side, to see if Landlord recorded refunds as income as opposed to reduction in expenses, 2) check the records of the court that handles tax appeals in your jurisdiction, and 3) contact the local assessor.
In certain instances a Landlord may try to claim that the Tenant is not entitled to a refund unless the Lease states otherwise. Courts have disagreed with this contention. In Rudd, v. 176 W. 87th st., 283 A.D.2d 202 (NY 1st Dept. 2001) the court stated that “We reject the landlord's argument that the tenants are not entitled to the refund they seek simply because the lease does not expressly provide therefor. To hold otherwise would allow the landlord to realize a profit from the tenants' compliance with a clause that was not intended to provide the landlord with a windfall."