John Daniels v. Zimmerman (SLCO)

JOHN DANIELS,	)
	)
Complainant,	)
	)
v.	)	Appeal Number 12-10850
	)
JAKE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

 

 

DECISION AND ORDER 

HOLDING 

Assessment made by the Assessor is SET ASIDE.Complainant presented substantial and persuasive evidence to establish the true value in money of the property under appeal as of January 1, 2011.

True value in money for the subject property for tax year 2012 is set at $475,000, residential assessed value of $90,250.

Complainant appeared in person and by Counsel Patrick Keefe, Keefe Law Firm, Clayton, Missouri.

Respondent appeared by Counsel, Paula Lemerman, Associate County Counselor.

Case heard and decided by Senior Hearing Officer W. B. Tichenor.

ISSUE

Complainant appeals, on the ground of overvaluation, the Assessor’s valuation.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011.

[1]The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission.Property was purchased after the deadline for filing an appeal to the Board of Equalization.

2.Evidentiary Hearing.The Evidentiary Hearing was held on January 22, 2014, at the St. Louis County Government Center, Clayton, Missouri.

3.Identification of Subject Property.The subject property is identified by locator number 18O330782.It is further identified as being located at 19 Woodbridge Manor Road, Creve Coeur, Missouri.[2]

4.Description of Subject Property.The subject property consists of a 1 and a half story, 4,619 square foot condominium (detailed description found in Exhibit 1).[3]The property as of 1/1/11 had been vacant for nearly 5 years and suffered deferred maintenance.

5.Condition of Subject Property.The condition of the subject property at the time of purchase and during its time on the market was described as, “The improvements feature obvious deferred maintenance and are in need of some significant repairs.Some building components need repairs, rehabilitation, or updating.The functional utility and overall livability is somewhat diminished due to condition, but the dwelling remains useable and functional as a residence.”[4]

5.Assessment.The Assessor appraised the property at $735,500, an assessed residential value of $139,740.[5]

6.Complainant’s Evidence.Complainant offered into evidence the following Exhibits:

 

No objections or rebuttal exhibits were submitted prior to the deadline set by the Exchange Schedule in the appeal.Exhibits A through D were received into evidence.

7.Sale of Subject.The subject property was purchased by Complainant on 7/15/12 for $475,000.[6]See, Methods of Valuation, infra.

8.Subject’s Listing History.[7]

a.The subject was listed for sale on 10/22/09 at $950,000.The listing expired on 11/15/10 without the property being sold.

b.On 5/9/11 the property was again listed at $825,000.On 9/6/11 the listing price was reduced to $750,000.No offers had been made during this listing period.

c.On 3/20/12 the asking price was reduced to $690,000, no offers having been received at the $750,000 price.

d.On 4/10/12 the asking price was reduced to $630,000, no offers having been received at the $690,000 price.

e.On 7/9/12 the asking prices was reduced to $530,000, no offers having been received at the $630,000 price.

f.In June 2012, Complainant made an offer of $430,000, the seller did not accept.In July, Complainant made an offer of $475,000 which was accepted.

g.The property was on the market for 414 days before Complainant’s purchase.

 

9.Complainant’s Purchase.The purchase of the subject property in July, 2012 constituted an open-market, arm’s-length transaction.This was a sale of the property at a time relevant to the valuation date of 1/1/11.See, Standard For Valuation, Presumption of Market Transaction, Methods of Valuation, infra.

10.Fair Market Value of Subject Property.Complainant’s evidence was substantial and persuasive to establish the fair market value of his property as of 1/1/11 to be $475,000.

11.No Evidence of New Construction & Improvement.There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.[8]

12.Respondent’s Evidence.Respondent offered into evidence the following Exhibits:

 

No objections or rebuttal exhibits were submitted prior to the deadline set by the Exchange Schedule in the appeal.Exhibits 1 & 2 were received into evidence.[9]The opinion of value tendered by Respondent’s appraiser was rebutted by the listing history and purchase price of the subject as detailed above.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.[10]

Basis of Assessment

The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass.[11]The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[12]

No Presumption In Appeal

By statutory mandate, in a hearing before the Commission there is no presumption that the Assessor’s value is correct.[13]

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.[14]True value in money is defined in terms of value in exchange and not value in use.[15]It is the fair market value of the subject property on the valuation date.[16]Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

1.Buyer and seller are typically motivated. 

2.Both parties are well informed and well advised, and both acting in what they consider their own best interests. 

3.A reasonable time is allowed for exposure in the open market. 

4.Payment is made in cash or its equivalent. 

5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale. 

6.The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.[17] 

The purchase price for the property in August, 2012 qualifies as meeting the Standard For Valuation, See, Presumption of Market Transaction, infra.No evidence was presented that would establish that the July, 2012 purchase did not meet the standard set forth and each of the specific elements implicit in an arms-length transaction.

Presumption of Market Transaction

Subject’s Purchase

A price agreed to between a willing buyer and seller creates a presumption that the transaction was a market transaction.[18]The evidence presented on behalf of Complainant, in particular the testimony of both Mr. Daniels and Ms. Freeman, established that the July, 2012 transaction was between a willing buyer and a willing seller.Accordingly, the sale of the subject was a market transaction – open market, arm’s-length.

A party seeking to admit sales evidence bears the burden of showing the sale was voluntary.[19] In this instance the sales evidence was tendered on behalf of Complainant supported by both the taxpayer’s written direct testimony, as well as the testimony of the sales agent involved in the transaction that the purchase of the subject was a voluntary sale, hence a willing buyer and willing seller.However, this burden to establish a voluntary sale is actually discharged prima facie, because the law presumes the sale price was “freely fixed and no under compulsion.”The evidence established in this instance what the law presumed.However, the burden, under case law, shifts to the opposing party to produce evidence that the sale was not voluntary.[20]

Appraisal Does Not Rebut Presumption of Market Transaction

The presentation of an appraisal report never can establish whether a sale was voluntary or not.The purpose of an appraisal is to tender an opinion of value by one qualified by education, training and experience to appraise the real estate.An appraisal has no purpose relative to the rules of evidence or the admissibility of evidence or even a determination that a given sale was or was not a market transaction.Therefore, the fact that Respondent presented an appraisal report and the testimony of the appraiser in support, as foundation, for the admissibility of the appraisal does not provide any basis to conclude that the presumption of a market transaction has been rebutted.An appraisal may, as in this case, tender an opinion of that that is different than the actual sale price of the property being appraised.That however, says nothing as to whether the sale was a market transaction or not.At the most it simply provides the opinion of an appraiser that fair market value may have been more, or even less, than what the sales price was.

Implicit Conditions of Market Transaction Satisfied

Complainant’s testimony was quite simply to the effect that his purchase in 2012 of the property was an arms-length, open market transaction.From his perspective, he was certainly a willing buyer and considered the seller to be a willing seller.There was nothing in the transaction from which he could conclude, under the specific circumstances involved with the subject property that he and the seller were anything but typically motivated participants.There was no loan against the property at the time of the Daniels’ purchase.The seller did not have to sell, but had come to the place where, in the testimony of Ms. Freeman, it was “time to sell.”No evidence was put forth that would negate any of these factors.

There is no evidence from which the Hearing Office can conclude that the seller and buyer were not well informed and knowledgeable participants.There is no evidentiary foundation to support a conclusion that either of the parties were not acting in their own best interest.It is beyond dispute that the property was adequately exposed to the market, having been marketed for over 400 days.No evidence was provided that would support a conclusion that the payment was anything other than cash or its equivalent.No evidence established that there was any special financing agreement that would not have otherwise been available to any other buyer-participant in the market when the property sold.

Conclusion

Therefore, in the present case the evidence presented by Complainant relating to his purchase of the property under appeal creates the presumption that it was a transaction between a willing buyer and seller. More importantly, the affirmative evidence presented on behalf of Complainant establishes that the July, 2012 purchase was an open-market transaction that set the fair market value for the property for the purpose of this appeal.See, Methods of Valuation, infra.

Investigation by Hearing Officer

In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property.The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties.[21]The Hearing Officer during the evidentiary hearing made inquiry of Mr. Daniels, Ms. Freeman and Mr. Keeven regarding matters relevant to his determination of the valuation of the property under appeal.

 

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.[22]

The Hearing Officer as the trier of fact may consider the testimony of lay or expert witnesses and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.[23]Greater weight must be given to the testimony of both Mr. Daniels and Ms. Freeman relative to the circumstances surrounding the marketing and sale of the subject, as well as condition and deferred maintenance issues that affected the Complainant’s purchase price.

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.[24]Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value.[25] The Supreme Court of Missouri has also held that evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.The actual sale price is a method that may be considered for estimating true value.

[26]

Accordingly, the consideration of the actual purchase price in this appeal is warranted.The sale in July, 2012 was at a time relevant for a 1/1/11 valuation.The only real issue becomes whether the evidentiary record is sufficient to establish a basis for a time of sale adjustment on the Daniels purchase.That will be addressed later in this Decision.

Complainant Proves Value

In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2011.[27]There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof.The taxpayer is the moving party seeking affirmative relief.Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”[28]A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.The valuation made by the Assessor of $735,000 does not represent the fair market value of the subject property. Accordingly, the assessment was unlawful, unfair and improper.It is therefore rejected.

Owner’s Opinion Persuasive

The owner of property is generally held competent to testify to its reasonable market value.[29]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[30]However, in this instance the reliance by the taxpayer for his opinion of value on the actual purchase price of the property under appeal establishes an opinion based upon a proper element and a proper and persuasive foundation.The only possible question that might be raised relative to the purchase price of $475,000 would be whether it was also reflective of what a willing buyer and seller would have paid for the property approximately 20 months earlier.The Hearing Officer is convinced that it is.

Time of Sale Adjustment Not Persuasive

The only evidence in the record that might warrant or support a time of sale adjustment was the adjustment made by Respondent’s appraiser.Mr. Keeven added $36,900 to Complainant’s purchase price to account for what he deemed was a decline in value from January 2011 to August 2012.The Keeven time of sale adjustment was describe in his appraisal as follows:

“Too few sales of similar condominiums in this area exist in order to establish a statistically significant and reliable percentage of increase or decrease in value due to time.It is noted that after adjusting for the basic differences, in the comparables utilized, a steady decline is apparent from 1/1/2011 through the beginning of 2013, therefore, a time adjustment was required.With the exception of the subject property, 3 of the 4 other comparable sales indicated a decline of 4.56% to 5.5%.Therefore, an adjustment of 4.9% per annum was made.Comp. 3 sold within 3 months of the effective date of the appraisal and was considered equal.”[31] 

The opening sentence of the comment negates everything that follows and renders the methodology employed as flawed.Given that there were not sufficient sales to establish a “statistically significant and reliable percentage of increase or decrease in value due to time” there is no valid basis for any time of sale adjustment within the four corners of the Keeven appraisal report.Furthermore, the methodology that was employed lacks any basis as being a recognized and established tool for calculating a time of sale adjustment.Mr. Keeven’s method was not a paired sales analysis, nor was it based upon a generally accepted sales study to ascertain a trend over a given period of time.The Hearing Officer was unable to find any authoritative source that even described the procedure utilized by the appraiser for this exercise, let alone a recognized text that endorsed the technique.For all of the foregoing reasons, the Hearing Officer can only conclude that the record does not contain any basis upon which it can be established that the market for homes similar to the subject for the period from 1/1/11 to 7/15/12 experienced any significant increase or decrease in value.Accordingly, no time of sale adjustment can be established for the 7/15/12 sale price.

Keeven Appraisal Not Persuasive

Had there been no sale of the subject, and no other countervailing evidence in the record on the fair market value of the Daniels property, the Keeven appraisal would have been sufficient to establish the fair market value which the appraiser proposed.Mr. Keeven rejected the July, 2012 sale of the property because it was his opinion that the property sold under duress because no one was living in the home and the seller wanted to sell.[32]The Hearing Officer finds the conclusion of the appraiser on this point neither persuasive, nor substantiated by the events surrounding the sale of the property.

Mr. Keeven’s sale comparable had days on the market ranging from 80 to 369 and yet they were not deemed to be duress sales.It would appear that each comparable sale had sold because a seller wanted to sell.No evidence was presented to establish that each of the comparables was occupied at the time of sale.The facts concerning the July, 2012 sale of the subject provide no basis to conclude in any way, shape or form that the sale was under duress.Duress involves a threat, use of force, or at the least a compulsion.[33]Nothing of that order existed in conjunction with the 2012 sale.The prior owner had moved from the state some five years earlier with his invalid wife.She had died a few years prior to the sale.The prior owner when the property originally went on the market in 2009 had no real desire to sell, as the asking price was one that in the opinion of Ms. Freeman was not obtainable in the market at that time.

Homes sell all the time without being occupied, this does not make a sale a duress sale.The seller in this transaction had reached the point where as Ms. Freeman testified, it was “time to sell.”There was no reason to continue to hold onto the property.The facts leading up to the purchase by Mr. Daniel establish anything but a sale under duress.The 2012 sale was a market transaction which established value and simply trumps the value tendered in the Respondent’s appraisal.

In light of the foregoing, the Hearing Officer finds no probative weight can be accorded the Keeven appraisal.

Conclusion

The July, 2012 sale established the fair market value as of 1/1/11 to be $475,000

ORDER

The assessed valuation for the subject property as determined by the Assessor is SET ASIDE.

The assessed value for the subject property for tax year 2012 is set at $90,250.

Application for Review

A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri,P.O. Box 146,Jefferson City,MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

Failure to state specific facts or law upon which the application for review is based will result in summary denial. [34]

Disputed Taxes

The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED March 12, 2014.

STATE TAX COMMISSION OFMISSOURI

W. B. Tichenor

Senior Hearing Officer