In a recent Appellate Division decision (Orient Way Corp. v. Tp. of Lyndhurst), the Tax Court’s prior determination that an arms’ length sale of the subject contaminated property provided credible evidence of true market value was upheld.  The import of this decision is that where an arms’ length transaction exists with respect to the subject property, the reliance on the highly subjective process of determining the appropriate deduction to be made for contamination can now be avoided.  As confirmed by a long line of cases, discussed in a piece I recently authored, the valuation methodology previously applicable required three critical elements:  First,  a determination of the level of cleanup costs required to return the property to a “clean” state; second, establishment of the expected duration of the cleanup; and third, proof that there has been a cessation of the cause of the property contamination.  Once these three elements are satisfied,  the cleanup costs are then capitalized over the expected cleanup period to determine the amount of the appropriate deduction to apply when fixing a final true value for the property in its current contaminated state.  While a taxpayer’s necessary proofs will undoubtedly continue to include each of these elements, the holding in Orient Way makes plain that our courts will now have to afford great weight to an arms’ length sale of the property made with full knowledge of the existing contamination.  As the Tax Court recognized, the impact and effect of the cleanup obligations will have been appropriately built into the sales price and therefore represents the best indicator of the value of the property in its contaminated state.