State Tax Commission of Missouri
MICHAEL BRAMLETT,)
)
Complainant,)
)
v.) Appeal No.11-57005
)
TOM COPELAND, ASSESSOR,)
FRANKLIN COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Franklin County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2011 and 2012 is set at $87,000, residential assessed value of $16,530.
Complainant appeared in person and by Counsel, Cathy Steele, The Law Office of Cathy Steele, P.C., Clayton, Missouri.
Respondent appeared in person and by County Counselor, Mark Vincent.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation, the decision of the Franklin County Board of Equalization, which reduced the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011.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 from the decision of the Franklin County Board of Equalization.A hearing was conducted on June 12, 2012, at the Franklin County Administration Building, Union, Missouri.
2.Assessment.The Assessor appraised the property at $117,370, a residential assessed value of $22,395.[1]The Board reduced the value to $113,000, a residential assessed value of $21,470.[2]
3.Subject Property.The subject property is located at 223 Berry Drive, Gray Summit, Missouri.The property is identified by map parcel number 19-3-5-4-7-36.The property consists of a 70 feet by 150 feet lot containing 10,500 square feet.It is improved by a single-story wood framed residential dwelling with aluminum sided exterior constructed in 1964.The house has five rooms with two bedrooms and two baths.It contains 912 square feet of living area, and a full basement with 228 square feet of finished area.There is a two-car attached garage and a two-car detached garage.[3]
4.Complainant’s Evidence.The following exhibits were received into evidence on behalf of Complainant.
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EXHIBIT |
DESCRIPTION |
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A |
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B |
9 – photographs of subject’s deferred maintenance |
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C |
Inspection Report on Subject house, dtd 11/19/10 |
Mr. Bramlett and Mr. Noonan testified at hearing.
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.[5]
Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as January 1, 2011, to be $87,000.
5.Sale of Subject.Complainant purchased the property on December 17, 2010, for $87,000.The property had been listed during 2009 with Century 21.It was then listed for 320 days during 2010 with Prudential until Complainant’s purchase.The bank appraisal at the time of Mr. Bramlett’s purchase came in at $100,000.The house was vacant during the two years it was being marketed.[6]The purchase of the subject by Complainant on 12/17/10 meets the requirements of the Standard For Valuation, infra.
6.Condition of Subject.The house had significant deferred maintenance items in November, 2010, when it was inspected in conjunction with Mr. Bramlett’s purchase of the property.The deferred maintenance and condition items include, but are not limited to: patio door – wood rot on door frame; deck is below acceptable building standards; roof is beyond its design life; one garage door track is damaged; garae door opener inoperative; wiring is generally undersized and outdated; basement windows are cracked, foundation cracks and damage, roof rafters have separated from roof frame, resulting in a sag in the roof.[7]There was no evidence that any of these items had been corrected when Complainant purchased the property or as of 1/1/11.A knowledgeable purchaser on 1/1/11 would take the condition of the subject into account when determining the price to be offered.
7.Respondent’s Evidence. Respondent presented the appraisal report[8] and testimony of Donald Dwain Dodd.[9]Mr. Dodd’s appraisal was received into evidence.He opined a value of $115,000.
8.True Value in Money and Assessed Value.The true value in money of the subject property as of January 1, 2011, was $87,000, a residential assessed value of $16,530.See, Conclusion of Value, infra.
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]In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[13]This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.When some substantial evidence is produced by the Complainant, “however slight,” the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption.[14]The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.[15]Upon presentation of the Complainant’s evidence[16] the presumption in this appeal disappeared.The case is decided free of the presumption.
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.[17]True value in money is defined in terms of value in exchange and not value in use.[18]It is the fair market value of the subject property on the valuation date.[19]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.[20]
Both appraisers concluded their values under the Standard For Valuation.[21]Mr. Bramlett’s purchase was between a willing buyer and seller.This was established by the testimony of Mr. Bramlett and is also presumed as a matter of law.
Presumption of Market Transaction
The law presumes that the sale and purchase of real property involves a willing buyer and seller.[22]A party seeking to admit sales evidence bears the burden of showing the sale was voluntary.[23] This burden is discharged prima facie, however, because the law presumes the sale price was “freely fixed and no under compulsion.”The burden then shifts to the opposing party to produce evidence that the sale was not voluntary.[24]Therefore, in the present case the evidence presented by Complainant relating to his purchase of the property under appeal established the presumption that it was a transaction between a willing buyer and seller.
This is the standard for valuation under which value must be found.No evidence was presented rebutting that the December, 2010 purchase was anything other than a willing buyer – willing seller transaction.Accordingly, Mr. Bramlett’s purchase in December, 2010 stands as an open market, arms length transaction between a willing buyer and seller with all of the conditions implicit in such a transaction.See, Standard For Valuation, supra.
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.[25]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.[26] The appraisers for Complainant and Respondent both utilized the sales comparison approach to value.The Supreme Court of Missouri has also recognized that the actual sale of the property under appeal is a method that may be considered for estimating true value.[27]Mr. Bramlett testified as to his purchase of the property under appeal just fourteen days before the valuation date of 1/1/11.
Complainant’s Burden of Proof
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.[28]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.”[29]The assessment of a property that overvalues the property is an unlawful, unfair and improper assessment.
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[30]Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.[31]Complainant’s evidence satisfied the required burden of proof.
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[32]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[33]In the present case, the owner’s opinion of value is based upon his purchase, as well as, the Noonan appraisal.Each factor constitutes proper elements and a proper foundation for that opinion.Accordingly, it is incumbent upon the Hearing Officer to give probative weight to the owner’s opinion.
Conclusion of Value
Under ordinary circumstances, absent the sale of the subject, the Hearing Officer would be making the determination of value after a detailed analysis of the two competing appraisal reports.The record will not be burdened with such a detailed analysis in this instance.Suffice it to write that the Hearing Officer did in fact review in detail, analyze, and consider both the Noonan and Dodd appraisals.For the sake of brevity, it is sufficient to report that the Noonan appraisal was most persuasive to the logic and mind of the Hearing Officer for the simple reason that it appears to have properly captured the critical condition element which impacted the value of the subject.The Dodd appraisal presented a sound conclusion of value, but for the weakness of adequately addressing the matter of condition of the subject.The Hearing Officer was not persuaded that Mr. Dodd had sufficient information, absent an interior inspection, or review of the inspection report on the property, to completely and properly adjust his comparable sales for the condition factor.The subject property was in below average condition.
When an appraiser is presented with a sale of the property being appraised at a time relevant to the valuation date, the appraiser should consider and evaluate at least two critical items – the sale price and any inspection report.It is common practice in present day real estate transactions that the buyer has a right of inspection.This right is often exercised by hiring a firm that specialized in home inspections to provide a detailed report on the condition of the property being purchased.A review of any such inspection report provides invaluable information that will assist the appraiser in understanding the actual condition of the subject and adjusting comparable sales on this important factor.The inspection report, as in this instance, will throw clarifying light on a critical element which impacted the purchase price.
The purchase price of the subject only two weeks before the valuation date most clearly established what a willing buyer and seller would have paid for the subject property.The sale price of $87,000, supported by the Noonan appraisal rebutted the Board presumption and established the sale price to be the fair market value of the property.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for Franklin County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2011 and 2012 is set at $16,530.
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, MO 65102-0146, 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 Franklin 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 July 17, 2012.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 17thday of July, 2012, to:Cathy Steele, 225 South Meramec, Suite 511, Clayton, MO 63105, Attorney for Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Tom Copeland, Assessor, 400 E. Locust, Suite 105A, Union, MO 63084; Debbie Door, Clerk, Franklin County Courthouse, 400 E. Locust, Suite 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 400 E. Locust, Suite 103, Union, MO 63084.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[1] Residential property is assessed at 19% of its appraised value (true value in money, fair market value). Section 137.115.5, RSMo.
[7] Se, Exhibits B and C for photographs and detailed listing of condition and deferred maintenance items.
[13] Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958)
[14] United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.
[15] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[17] St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).
[18] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[20] Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
[22] A price agreed to between a willing buyer and seller creates a presumption that the transaction was a market transaction.Phoenix Redevelopment Corporation v. Walker, 812 S.W.2d, 881, 883-4 (Mo. App. W.D. 1991).
[23] Board of Public Bldgs. v. GMT Corp., 580 S.W.2d 519, 523 (Mo.App, 1979); Highway and Transp. Com’n v. Vitt, 785 S.W.2d 708, 713(Mo.App. 1990)
[25] See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
[26] St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).
[29] See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
[32] Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).
[33] Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).