Kolovsky, Bischoff and Botter. The opinion of the court was delivered by Botter, J.A.D.
[138 NJSuper Page 219] The Division of Tax Appeals (Division) upheld certain of Newark's challenges to the 1974 Essex County Equalization Table adopted on March 10, 1974 pursuant to N.J.S.A. 54:3-17 and 18. The Division ordered the table revised and recomputed by subtracting from the sales price of certain real property sales the amount of mortgage "points" and closing costs paid by the sellers. Federal Housing Authority (F.H.A.) or Veterans Administration (V.A.) mortgage financing represented 90% or more of the sales price of each such sale, and the costs paid by the seller for the mortgage ("points") and/or closing charges were
conceded below to represent "extraordinary charges" within the meaning of Trenton v. Mercer Cty. Bd. of Taxation , 127 N.J. Super. 588 (App. Div. 1974).*fn1
This court's decision in Trenton was thereafter modified, 66 N.J. 470, 473 (1975), by the Supreme Court's rejection of the Appellate Division's holding that such sales can be made usable for sales-ratio studies by subtracting the costs from the selling price. The Supreme Court held:
Once the sales price in an F.H.A. financed sale is shown to have been substantially distorted by extraordinary charges so that it does not reflect the true consideration for the property as between the buyer and the seller, it should be discarded and not used in the sales-ratio study at all. [66 N.J. at 473]
On this appeal the sole contention of appellant County Board of Taxation is that competent proof of the sellers' payments for "points" and closing costs was not offered, since only hearsay evidence of said expenses was offered. Most of the pertinent information contained in Exhibit P-2 listing the sales in question and the extraordinary costs was compiled from responses to questionnaires mailed by Newark's tax assessor to attorneys for mortgagees. The exhibit was compiled from their unsworn responses and in some cases from information furnished orally by brokers. Appellant stipulated that the exhibit reflected a compilation of such data, but objected to its legal sufficiency in proving the extraordinary costs.
Pursuant to the Administrative Procedure Act hearsay is admissible in administrative proceedings. N.J.S.A. 52:14B-10(a); Evid. R. 2(3); Weston v. State , 60 N.J. 36, 51 (1972). In quasi -judicial proceedings hearsay may be employed to corroborate or reenforce competent proof, but "a fact finding or a legal determination cannot be based upon hearsay alone." Id. at 51. Thus, for the "substantial rights of a party" to be affected, a "residuum of legal and competent evidence" is required. Id.
County boards of taxation have the duty to equalize aggregate assessments. N.J.S.A. 54:3-17; Kearny v. Division of Tax Appeals , 35 N.J. 299, 305 (1961); Newark v. Essex Cty. Bd. of Taxation , 124 N.J. Super. 76, 85 (App. Div. 1973). In the performance of such functions the boards are authorized to utilize records and other data which undoubtedly are hearsay. Little Ferry Boro. v. Bergen Cty. Bd. of Taxation , 18 N.J. 400, 404 (1955); Newark v. Essex Cty. Bd. of Taxation, supra. As stated in Kearny v. Division of Tax Appeals, supra:
* * * the entire equalization process does not and should not lend itself to rigid technicality and formalism. The legislative and judicial purpose is to secure as far as possible the equal distribution * * * of the county tax load among the municipalities. [35 N.J. at 311]
When reliable data is presented bearing on the performance of its equalization functions, the boards should "welcome such aid from the municipalities." Little Ferry v. Bergen Cty. Bd. of Taxation, supra , 18 N.J. at 405. The board cannot escape the performance of its duties if a municipality offers "credible evidence" that the use of certain sales has a distorting effect upon its equalization ratio. Newark v. Essex Cty. Bd. of Taxation, supra , 124 N.J. Super. at 85.
The legislative or quasi -legislative responsibilities of county boards of taxation and the Division of Tax Appeals as regards the equalization of aggregate assessments has been described in the seminal opinion of Justice Brennan in Passaic v. Passaic Cty. Bd. of Taxation , 18 N.J. 371 (1955). Speaking first of the mode of operation of the county boards, the Passaic court said they may avail themselves of "general information and expert knowledge which they may obtain in the ...