A brother and sister, who received three apartments from their father as a gift and recorded them under joint ownership, signed a partition agreement. Under the agreement, they transferred rights to one another to establish exclusive ownership of each apartment ("distribution in kind"), but refused to pay a betterment levy, contending that the transfer was "without consideration" between relatives.
The Court accepted the claim of the city to pay taxes and held that the siblings must pay the full betterment levy. "Betterment" is defined as an increase in property value due to the approval of a plan, a relaxation, or the permit of a non-conforming use. The payment obligation is triggered upon the "realization of rights" which includes the transfer of property rights. While the law exempts a "transfer without consideration from a person to a relative", this exemption is interpreted to be limited to a "gift" - the granting of an asset without the expectation of counter-consideration. In this case, the partition agreement created an exchange transaction where the transfer of rights in one apartment was conditional upon and intertwined with the transfer of rights in the second apartment. These agreements created mutual obligations serving a clear economic interest of exclusive ownership. Therefore, they cannot be viewed as a transfer "without consideration" and are subject to betterment levy.