Purely Economic Loss Caused by COVID-19 Without Physical Damage to Buildings Does Not Support Claim for Proration of Taxes

Clearview Realty Ventures v. Laconia
New Hampshire Supreme Court Case No. 2022-0196
Tuesday, April 18, 2023

Nine owners of hotels sought proration of real estate taxes under RSA 76:21, I due to being closed or partially closed due to COVID-19. The statute requires assessing officials to prorate taxes when a taxable building is damaged due to unintended fire or natural disaster. The proration is based on the number of days that the building was available for its intended use divided by the number of days in the tax year, multiplied by the building assessment. RSA 76:21, II. Each owner claimed their commercial properties were damaged because they were not allowed to carry on business and the reduced income negatively affected the fair market value of the taxable buildings.

Upon examination of the plain and ordinary meaning of the statute, the court reasoned that to qualify for proration the aggrieved owners must establish that their buildings were damaged due to unintended fire or natural disaster. However, the basis for the alleged damage in this instance was purely economic loss, not actual physical damage to buildings. The court ruled that RSA 76:21, I requires physical damage to the buildings before considering any economic loss. Consequently, the court concluded that the taxable buildings were not “damaged” so as to be entitled to a proration of real estate taxes under RSA 76:21, I.

Additional Information: 

Practice Pointer: In order to be eligible for a proration of taxes under RSA 76:21 the taxable buildings must suffer physical damage to the structure due to unintended fire or natural disaster. Purely economic loss not resulting from physical damage to a taxable building will not support a proration claim under the statute.