NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
MATRIX BORDENTOWN, : TAX COURT OF NEW JERSEY LOT 2, LLC, :
: DOCKET NO. 013007-2019
Plaintiff, :
:
v. :
:
DIRECTOR, DIVISION OF : Approved for Publication TAXATION, : In the New Jersey
: Tax Court Reports
Defendant. :
:
:
Decided: March 25, 2025
Joseph G. Buro for plaintiff (Zipp & Tannenbaum, LLC, attorneys).
Anthony D. Tancini for defendant (Matthew J. Platkin, Attorney
General of New Jersey, attorney).
BEDRIN MURRAY, J.T.C. *
I. Introduction
Before the court is plaintiff’s motion for summary judgment against
defendant, Director, Division of Taxation, and defendant’s cross-motion for
summary judgment dismissing plaintiff’s complaint. The novel issue to be
determined is the interpretation of a subsection of N.J.S.A. 46:15-7.2, a realty
transfer fee commonly referred to as the “mansion tax,” which imposes a fee on the
grantee of a deed in certain real property transfers over $1,000,000. The fee amounts
*Judges Brennan and Duffy were recused from consideration of this matter. to 1% of the consideration stated on the deed and must be tendered when the deed is
presented to the county clerk for recording. The fee is termed an “additional” fee
because it is in addition to the realty transfer fees imposed on the grantor of a deed
upon recordation, with certain exceptions, under N.J.S.A. 46:15-7.
In the matter at bar, plaintiff challenges the final determination of defendant,
Director, Division of Taxation, denying plaintiff’s claim for a refund of the realty
transfer fee it was required to pay in order to have the deed recorded. In short, the
fee was imposed under N.J.S.A. 46:15-7(a)(2)(a), which applies to real property
transfers over $1,000,000 of “farm property (regular)” provided “the property
includes a building or structure intended or suited for residential use . . . .” Ibid.
The legal issue in this matter turns on the interpretation of the phrase “building
or structure intended or suited for residential use.” There is no dispute that on the
date the subject property was transferred to plaintiff, a two-story house sat on the
land. Previously used as a residence, the house was vacant and uninhabitable at the
time of plaintiff’s acquisition of the subject property. Plaintiff contends that the
condition of the dwelling made it unsuited for residential use. Further, plaintiff
maintains that the phrase “intended for residential use” refers to the intention of the
purchaser of the property. In this case, plaintiff’s intent was to demolish the structure
and convert it and its adjoining parcels to industrial use.1 Defendant, conversely,
1
The subject house was demolished sometime after the closing of title.
2
contends that the phrase “building or structure intended or suited for residential use”
refers to what the structure was intended for and suited for at the time of its
construction. For the reasons set forth more fully below, the court concludes that
the plain language of the statute militates in favor of defendant. As such, summary
judgment is granted in favor of defendant, and plaintiff’s complaint is dismissed with
prejudice.
II. Findings of Fact and Procedural Posture
The material facts in this matter are not in dispute. On November 19, 2018,
plaintiff acquired title to property designated as Block 130, Lot 2 on the municipal
tax map of the Township of Bordentown, consisting of approximately forty-six acres
of land. The deed consideration was $4,703,160. Prior to the closing of title, an
entity affiliated with plaintiff obtained preliminary and final site plan approval from
the Planning Board of Bordentown Township (“Planning Board”) to develop the
property for industrial use and to construct a warehouse building thereon. The
Planning Board’s amended resolution granting approval of the application cites, in
part, the applicant’s request “to remove the existing structures on the subject
property, including barns and a residential dwelling.” The Planning Board’s
approval was granted subject to twenty-three conditions.
At the time of the transfer of title to plaintiff, the property consisted of three
separate subparcels, each with its own property classification. The largest subparcel
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consisted of approximately forty-five acres and was classified as 3B – Farmland
Qualified, indicating that it received preferential tax treatment due to it being
actively devoted to agricultural or horticultural use under the Farmland Assessment
Act of 1964, N.J.S.A. 54:4-23.1 to -23.23. The adjoining parcel, one-half acre in
size, was classified as 3A – Farmland Regular. This parcel contained a house, also
described by plaintiff as a farmhouse, previously used as a residence. At the time of
closing, the structure was vacant and partially, if not fully, gutted. 2 The assessment
on this parcel was $230,200, with the improvement, or house, assessed at $142,200.
See Property MOD4 Record, July 26, 2019. The third parcel was a 900 square foot
parcel containing a cellular tower and classified as 4A – Commercial.
On or about November 26, 2018, plaintiff attempted to record the deed with
the Clerk of Burlington County. The Clerk’s Office would not record the deed
without plaintiff remitting 1% of the deed consideration, or $47,031, based on the
designation of the half-acre parcel with the house upon it as 3A – Farmland Regular.
On or about January 8, 2019, plaintiff remitted the 1% fee to the Clerk of Burlington
County. The deed was recorded on January 11, 2019. On or about February 5, 2019,
2
It is noted that defendant does not dispute that the house was vacant and in the condition depicted in plaintiff’s photographic exhibits, which include one interior view of a gutted area. Defendant, however, does dispute plaintiff’s contention that there was asbestos throughout the structure. The court does not find the issue of whether asbestos was present in the structure to be a material fact but mentions it for the sake of thoroughness. Moreover, the parties agree there are no material facts in dispute.
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plaintiff filed a claim with defendant for a refund of the realty transfer fee. On July
5, 2019, defendant issued a denial notice to plaintiff, stating that “[t]his property
included a structure intended for residential use, which is why your claim for refund
is denied.” On September 5, 2019, plaintiff initiated the matter at bar, seeking relief
from defendant’s determination.
III. Summary Judgment Standard
Applications for summary judgment are governed by R. 4:46-2, which
provides in pertinent part that:
The judgment or order sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact challenged and that the
moving party is entitled to a judgment or order as a matter of law.
[R. 4:46-2(c).]
In Brill v. Guardian Life Ins. Co. of America, 142 N.J. 520 (1995), the Court
reframed the standard for summary review by holding that:
[T]he determination whether there exists a genuine issue with
respect to a material fact challenged requires the motion judge to
consider whether the competent evidential materials presented,
when viewed in the light most favorable to the non-moving party
in consideration of the applicable evidentiary standard, are
sufficient to permit a rational factfinder to resolve the alleged
disputed issue in favor of the non-moving party.
[Id. at 523.]
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In the matter before the court, there is no genuine issue of material fact that
would thwart a summary determination. As aptly set forth in the parties’ briefs and
at oral argument, the question presented is strictly a legal one. Thus, the matter is
ripe for summary judgment.
IV. Conclusions of Law
As the issue before the court has not been previously decided, the court begins
with a brief legislative history of N.J.S.A. 46:15-7.2. On June 30, 2004, the New
Jersey Legislature enacted L. 2004, c. 66, § 8 (C. 46:15-7.2) which imposed a new,
1% fee on the transfer of real property “zoned for residential use, whether improved
or not” with a deed consideration greater than $1,000,000. The new fee was assessed
to the deed grantee. Ibid.
The law was amended and supplemented by L. 2005, c. 19, enacted January
19, 2005. The purpose of the amendment was to limit the type of property subject
to the fee, as the state was collecting unanticipated revenue from the transfer of
unimproved lots with a deed consideration greater than $1,000,000. A.
Appropriations Comm. Statement to A. 3302 1 (Oct. 21, 2004). The Assembly
amendment removed the language in § 8, transfer of real property “zoned for
residential use, whether improved or not,” and replaced it with transfer of real
property “upon which there is a building or structure intended or suited for
residential use for which the consideration is more than $1,000,000.” Ibid. The New
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Jersey Senate further refined the application of Assembly Bill No. 3302 by
enumerating the specific classes of property subject to the 1% grantee’s fee on
transfers in excess of $1,000,000. S. Budget and Appropriations Comm. Statement
to First Reprint of A. 3302 1 (Dec. 6, 2004). In short, the Legislature replaced zoning
status with property classification as the determinant of those transfers subject to the
added 1% fee. Ibid. As enacted, the amendment to Section 8 of L. 2004, c. 66 (C.
46:15-7.2) provided, in pertinent part:
8. a. In addition to all other fees imposed under [N.J.S.A. 46:15-5, et seq.], there is imposed a fee upon the grantee of a deed for the
transfer of real property:
(1) that is classified pursuant to the requirements of N.J.A.C.
18:12-2.2 as Class 2 “residential”;
(2) (a) that includes property classified pursuant to the
requirements of N.J.A.C. 18:12-2.2 as Class 3A: “farm property
(regular)” but only if the property includes a building or structure
intended or suited for residential use, and
(b) any other real property, regardless of class, that is effectively
transferred to the same grantee in conjunction with the property
described in subparagraph (a) of this paragraph; or
(3) that is a cooperative unit as defined in [N.J.S.A. 46:8D-3(f)]
that is transferred for consideration in excess of $1,000,000 recited
in the deed, which fee shall be an amount equal to 1 percent of the
entire amount of such consideration, which fee shall be collected
by the county recording officer at the time the deed is offered for
recording . . . .
[L. 2005, c. 19.] (emphasis added).
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The 2005 amendment to N.J.S.A. 46:15-7.2 implicitly exempted purchases of
vacant land, hotels, apartment houses, multiple dwelling houses, and health care
facilities from the 1% fee. Legis. Fiscal Estimate, Second Reprint, for A. 3302 1-2
(Dec. 30, 2004). In addition, the amendment explicitly exempted charitable entities
with federal tax-exempt status under I.R.C. § 501(c)(3). Id. at 2. See N.J.S.A. 46:15-7.2(b)(1).
On July 8, 2006, a third amendment to N.J.S.A. 46:15-7.2 was enacted. L.
2006, c. 33 effectively expanded the reach of N.J.S.A. 46:15-7.2(a) by adding
transfers of Class 4A “commercial properties” to the types of transfers subject to the
1% realty transfer fee. See N.J.S.A. 46:15-7.2(a)(4).
In the instant matter, the subject property consisted of three subparcels: (1)
the half-acre parcel with the farmhouse classified as 3A Farm Regular (Lot 2), (2)
an approximately 45-acre parcel classified as 3B Farm Qualified (Lot 2, qualified
farm), and (3) a 900 square foot parcel containing a cell tower (Lot 2, T01). Each
of the three subparcels was separately assessed, although together they were known
as Block 130, Lot 2. The two latter parcels, individually, were not subject to the 1%
realty transfer fee. However, when the property transferred to plaintiff, all three
subparcels were transferred together on one deed for a total consideration of
$4,703,160. The inclusion of the half-acre lot with the farmhouse triggered the 1%
fee on the entire transaction under N.J.S.A. 46:15-7.2(a)(2)(b), which imposes the
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fee on “any other real property, regardless of class, that is effectively transferred to
the same grantee in conjunction with [the 3A farm property with the farmhouse].
Ibid.
The issue before the court is confined to the proper interpretation of the
language employed in N.J.S.A. 46:15-7.2(a)(2)(a), underlined below, that imposes
the 1% fee on property classified as Class 3A: “farm property (regular)” but only if
the property includes a building or structure intended or suited for residential use.
Plaintiff does not dispute that the classification of the subject parcel as Class 3A:
“farm property (regular)” was proper at the time of transfer of title. However,
plaintiff contends that it did not intend to use the farmhouse as a residence at the
time of purchase of the property, as evidenced by its application for a preliminary
and final major site plan prior to the transfer of title. As mentioned above, the
application sought, among other things, to remove the existing structures on the
property, including a “residential dwelling.” Plaintiff construes the word “intended”
to mean the intent of the purchaser with respect to the structure at the time of closing
of title. As for whether the structure was suited for residential use, plaintiff contends
that this, too, is determined as of the closing date. Plaintiff uses a subjective standard
in assessing suitability, asserting the house, vacant and dilapidated, was not suited
for residential use at the time of the closing.
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Defendant, on the other hand, maintains that the term “intended or suited for
residential use” refers to how the structure was intended to be used at the time of its
construction, or its suitability for residential use at the time of its construction. This
interpretation would subject the property to the 1% fee.
“The Legislature’s intent is the paramount goal when interpreting a statute
and, generally, the best indicator of that intent is the statutory language.” Di Prospero
v. Penn, 183 N.J. 477, 492 (2005). “We ascribe to the statutory words their ordinary
meaning and significance, and read them in context with related provisions so as to
give sense to the legislation as a whole.” Ibid. (citations omitted).
When examining the statutory language at issue, it is useful to separate the
key words “intended” and “suited for.” In doing so, the court finds the ordinary
meaning of “a building or structure intended . . . for residential use” to be a building
or structure meant for residential use. N.J.S.A. 46:15-7.2(a)(2)(a). This is the
interpretation used by defendant in denying plaintiff’s refund claim. The word
“intended” relates to the building or structure, not to the intent of the purchaser of
the property, as plaintiff asserts. Moreover, the statute uses the words “a building or
structure” instead of simply using the word “house.” Ibid. A building intended, or
meant, for residential use is generally a house. However, “a building or structure
. . . suited for residential use” is not necessarily a house. Ibid. It can be a structure
with another purpose that is also suited for use as a residence. Similarly, the word
10
“suited” relates to the building or structure, and whether such structure was suited
for residential use. Hence, the use of the words “intended or suited for residential
use” relate to and differentiate the type of building or structure included on the 3A
farm property. Ibid.
In contrast, plaintiff’s interpretation of the phrase “a building or structure
intended . . . for residential use” goes well beyond the ordinary meaning of the words.
Ibid. Plaintiff contends that it is the deed grantee’s intent with regard to the structure
that determines if the 1% fee is due. Since plaintiff’s intent was to demolish the
house, the fee should not have been imposed. However, the plain language of the
statute does not support such an interpretation. It is not the domain of the court to
“rewrite a plainly-written enactment of the Legislature nor presume that the
Legislature intended something other than that expressed by way of the plain
language.” O’Connell v. State, 171 N.J. 484, 488 (2002). “We cannot ‘write in an
additional qualification which the Legislature pointedly omitted in drafting its own
enactment . . . .’” DiProspero, 183 N.J. at 492 (quoting Craster v. Bd. of Comm’rs
of Newark, 9 N.J. 225, 230 (1952)). It is not reasonable to conclude that the
Legislature would intend for the application of the 1% fee on Class 3A farm property
to be decided based on subjective measurements, namely the intent of the deed
grantee as to the fate of the structure, or the grantee’s evaluation of the
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appropriateness, or suitability, of the structure for habitation. As expressed by
defendant in oral argument, “Beauty is in the eye of the beholder.”
On the other hand, the court does not agree with defendant that the issues of
how the structure was intended to be used and its suitability for residential use are
determined as of the time of its construction. Instead, the court concludes that these
issues are determined at the time title is closed. In the present case, at the time of
closing, a farmhouse stood on the 3A farm property that was intended or meant to
be a residence. What the purchaser of the property intended to do with it after the
transfer of title is immaterial. Likewise, the purchaser’s assessment of the property
is wholly subjective. While plaintiff viewed the structure as a negative value on the
land, as urged at oral argument, another purchaser might view the house as a
worthwhile renovation project.
“When ‘the statutory language is clear and unambiguous . . .’ as it is in this
matter, the court need not ‘resort to extrinsic interpretative aids.’” Lozano v. Frank
DeLuca Const.,178 N.J. 513, 522 (2004) (quoting In re Passaic County Utils. Auth.,
164 N.J. 270, 299 (2000). Nevertheless, an inquiry into the legislative intent
resulting in the enactment of the statute at bar reveals only that it was a means of
raising revenue for general State purposes, and would “help[] to balance the State
budget without raising sales or income taxes.” Governor’s Statement to A. 3115
(June 30, 2004).
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Moreover, the Director, Division of Taxation’s (“Director”) July 5, 2019
determination denying plaintiff’s refund claim comports with the plain language of
N.J.S.A. 46:15-7.2(a)(2)(a). It is an established principle that the Director’s
interpretation of tax statutes carries a presumption of validity. Ridgewood
Commons Group v. Dir., Div. of Taxation, 25 N.J. Tax 188, 195 (Tax 2009). In
Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 327 (1984), our Supreme
Court recognized that the courts should treat the Director’s implementation of tax
statutes with “great respect.” “[T]he agency’s interpretation of the operative law is
entitled to prevail, so long as it is not plainly unreasonable.” Ibid. The court
concludes that in the present matter, the Director’s interpretation of the applicable
statute is reasonable and proper.
Based on the foregoing, the court affirms defendant’s denial of plaintiff’s
claim for a refund of the 1% realty transfer fee. Defendant’s cross-motion for
summary judgment is granted. Plaintiff’s motion for summary judgment is denied.
An Order and Final Judgment dismissing plaintiff’s complaint with prejudice will
be entered accordingly.
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