REOs, prop 13, and tax assessment‎

[pemeliza]

BG, the issue is the new assessed value on the supplemental tax bill. I will give an example to illustrate that this is definitely happening but I don’t know how widespread it is. I will not give the address or owner’s name of the example but I will say the following applies to a property in Mission Hills. This information is freely available on the web for all to see.

I will start with a sales history taken from zillow.com

03/27/2009 Sold $665,000 -2.2% Public Record

02/07/2009 Listed for sale* $679,999 -31.7% NRT Califo

03/07/2005 Sold $995,000 53.8% Public Record

06/17/2002 Sold $647,000 68.5% Public Record

02/04/1994 Sold $384,000 — Public Record

Next, I give the first part of the description used for the listing to show that this is indeed a REO.

“BANK OWNED! 3 BR/3 BA contemporary home in wonderful Mission Hills. ”

So far we know that the buyer of this house got a good deal basically paying a 2002 price in a prime area. But notice at the time there wasn’t even that much demand as the buyer didn’t even have to pay full price.

Now we get to the supplemental bill generated by the property transfer which is also available online.

“This is a supplemental tax bill on the above described property per R&T code section 75. This is a notice of value change on 03/27/09. This bill was mailed on 10/9/2009.”

New Assessed Value 600000 200000 800000
Prior Tax Rolls Value 600000 200000 800000
Increase In Assessment 0 0 0

We see that the supplemental bill matches the sale date but the new assessed value was unchanged. It was not lowered to reflect the sales price of $665k. It was lowered to 800k before this sale apparently as some type of automatic reassessment.

I don’t know what the final result will be for this particular house and have no idea if the owner even challenged this assessment. But I can say that there have been no new supplemental bills for this parcel that I can find and the assessed value according to zillow is still set to 800k.

I put up this information to illustrate that this is happening and buyer beware.

[SK in CV]

Pemeliza, it appears to me that the key part of Ca renter’s post above is this:

When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to overcome the presumption.

Assuming that this is the current code that covers this issue, it’s pretty clear that the burden is on the assessors office to prove that the price you paid is NOT the full value of the property. No idea exactly what the process is for you to enforce that. You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.

[SK in CV]

Pemeliza, it appears to me that the key part of Ca renter’s post above is this:

When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to overcome the presumption.

Assuming that this is the current code that covers this issue, it’s pretty clear that the burden is on the assessors office to prove that the price you paid is NOT the full value of the property. No idea exactly what the process is for you to enforce that. You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.

[SK in CV]

Pemeliza, it appears to me that the key part of Ca renter’s post above is this:

When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to overcome the presumption.

Assuming that this is the current code that covers this issue, it’s pretty clear that the burden is on the assessors office to prove that the price you paid is NOT the full value of the property. No idea exactly what the process is for you to enforce that. You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.

[SK in CV]

Pemeliza, it appears to me that the key part of Ca renter’s post above is this:

When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to overcome the presumption.

Assuming that this is the current code that covers this issue, it’s pretty clear that the burden is on the assessors office to prove that the price you paid is NOT the full value of the property. No idea exactly what the process is for you to enforce that. You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.

[SK in CV]

Pemeliza, it appears to me that the key part of Ca renter’s post above is this:

When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to overcome the presumption.

Assuming that this is the current code that covers this issue, it’s pretty clear that the burden is on the assessors office to prove that the price you paid is NOT the full value of the property. No idea exactly what the process is for you to enforce that. You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.

[pemeliza]

“You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.”

I just got off the phone with someone else at the assessors office because I was trying to figure out when my 60 days started.

This guy was very blunt and basically said if you don’t agree you need to file an appeal immediately and go in front of a board that will ultimately decide the value. I asked him if I needed a lawyer and he said it was up to me. He insisted that I needed to come up with the comparable sales that were going to prove my case. I told him that I didn’t think I needed to do that because it was an arm’s length transaction with multiple bidders and that should determine the market value beyond a doubt. He said if I wanted to argue my case that way then it was up to me but reiterated that the board is going to be looking at comparable sales. I have to say the conversation with this guy was refreshing because at least he didn’t beat around the bush.

I am seriously tempted to try and take my story to the media. I think buyers have the right to know that if they buy a REO through the normal real estate process with a buyer’s agent and bidding wars that they are still going to be under a completely different level of scrutiny by the tax assessor. I also think the realtors involved in REOs should have an obligation to disclose this potential problem to buyers. Ironically, this would add further stigma to buying REOs and probably push tax valuations down even further. To be clear we are not talking about chump change here and the additional tax grows exponentially every year.

[pemeliza]

“You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.”

I just got off the phone with someone else at the assessors office because I was trying to figure out when my 60 days started.

This guy was very blunt and basically said if you don’t agree you need to file an appeal immediately and go in front of a board that will ultimately decide the value. I asked him if I needed a lawyer and he said it was up to me. He insisted that I needed to come up with the comparable sales that were going to prove my case. I told him that I didn’t think I needed to do that because it was an arm’s length transaction with multiple bidders and that should determine the market value beyond a doubt. He said if I wanted to argue my case that way then it was up to me but reiterated that the board is going to be looking at comparable sales. I have to say the conversation with this guy was refreshing because at least he didn’t beat around the bush.

I am seriously tempted to try and take my story to the media. I think buyers have the right to know that if they buy a REO through the normal real estate process with a buyer’s agent and bidding wars that they are still going to be under a completely different level of scrutiny by the tax assessor. I also think the realtors involved in REOs should have an obligation to disclose this potential problem to buyers. Ironically, this would add further stigma to buying REOs and probably push tax valuations down even further. To be clear we are not talking about chump change here and the additional tax grows exponentially every year.

[pemeliza]

“You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.”

I just got off the phone with someone else at the assessors office because I was trying to figure out when my 60 days started.

This guy was very blunt and basically said if you don’t agree you need to file an appeal immediately and go in front of a board that will ultimately decide the value. I asked him if I needed a lawyer and he said it was up to me. He insisted that I needed to come up with the comparable sales that were going to prove my case. I told him that I didn’t think I needed to do that because it was an arm’s length transaction with multiple bidders and that should determine the market value beyond a doubt. He said if I wanted to argue my case that way then it was up to me but reiterated that the board is going to be looking at comparable sales. I have to say the conversation with this guy was refreshing because at least he didn’t beat around the bush.

I am seriously tempted to try and take my story to the media. I think buyers have the right to know that if they buy a REO through the normal real estate process with a buyer’s agent and bidding wars that they are still going to be under a completely different level of scrutiny by the tax assessor. I also think the realtors involved in REOs should have an obligation to disclose this potential problem to buyers. Ironically, this would add further stigma to buying REOs and probably push tax valuations down even further. To be clear we are not talking about chump change here and the additional tax grows exponentially every year.

[pemeliza]

“You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.”

I just got off the phone with someone else at the assessors office because I was trying to figure out when my 60 days started.

This guy was very blunt and basically said if you don’t agree you need to file an appeal immediately and go in front of a board that will ultimately decide the value. I asked him if I needed a lawyer and he said it was up to me. He insisted that I needed to come up with the comparable sales that were going to prove my case. I told him that I didn’t think I needed to do that because it was an arm’s length transaction with multiple bidders and that should determine the market value beyond a doubt. He said if I wanted to argue my case that way then it was up to me but reiterated that the board is going to be looking at comparable sales. I have to say the conversation with this guy was refreshing because at least he didn’t beat around the bush.

I am seriously tempted to try and take my story to the media. I think buyers have the right to know that if they buy a REO through the normal real estate process with a buyer’s agent and bidding wars that they are still going to be under a completely different level of scrutiny by the tax assessor. I also think the realtors involved in REOs should have an obligation to disclose this potential problem to buyers. Ironically, this would add further stigma to buying REOs and probably push tax valuations down even further. To be clear we are not talking about chump change here and the additional tax grows exponentially every year.

[pemeliza]

“You shouldn’t have to appeal, they should have to prove before they set the assessment. Good luck.”

I just got off the phone with someone else at the assessors office because I was trying to figure out when my 60 days started.

This guy was very blunt and basically said if you don’t agree you need to file an appeal immediately and go in front of a board that will ultimately decide the value. I asked him if I needed a lawyer and he said it was up to me. He insisted that I needed to come up with the comparable sales that were going to prove my case. I told him that I didn’t think I needed to do that because it was an arm’s length transaction with multiple bidders and that should determine the market value beyond a doubt. He said if I wanted to argue my case that way then it was up to me but reiterated that the board is going to be looking at comparable sales. I have to say the conversation with this guy was refreshing because at least he didn’t beat around the bush.

I am seriously tempted to try and take my story to the media. I think buyers have the right to know that if they buy a REO through the normal real estate process with a buyer’s agent and bidding wars that they are still going to be under a completely different level of scrutiny by the tax assessor. I also think the realtors involved in REOs should have an obligation to disclose this potential problem to buyers. Ironically, this would add further stigma to buying REOs and probably push tax valuations down even further. To be clear we are not talking about chump change here and the additional tax grows exponentially every year.

[bearishgurl]

[quote=CA renter] . . .
http://www.boe.ca.gov/proptaxes/pdf/r2.pdf
———————–

BG,

I know you’re well informed about this topic, but I’ve never heard anything about the previous owner’s assessment having any bearing on the new owner’s assessment. IOW, this should have nothing to do with the DVAP. Am I missing something?

It sounds to me like Pemeliza has a solid argument against this “fake” assessment. The property taxes should be based on the sales price, not on some value the Assessor’s office “wants” it to be.[/quote]

Yes, CAR, your post above is an excerpt from RevTax 110(a). Here is the section in its entirety.

http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=4998751609+5+0+0&WAISaction=retrieve

I went over the entire section three times last night and cannot find any language in it precluding a local government from using a variety of methods (incl. income approach, cost approach or comparable sales approach) to determine a new base value upon chg. of ownership. The burden of proof is on the property owner/appellant if they wish to contest the assessment. The PAST PRACTICE of the government has been to use the last SALES PRICE when assessing a property but in all the cycles I’ve witnessed, there has never been a downturn in values such as the one we are experiencing today.

In my experience, I’ve discovered that most of the CA RevTax and Government Code is written deliberately vague to give the government leeway to act in their best interests which may or may not be in the best interest of the citizens.

See this case from fn. 10 of the “Shrock” paper I posted the link to above.

Dennis v. County of Santa Clara (1989) 215 Cal.App.3d 1019

The subject property in the case is commercial where the tax appellant filed a writ of mandate on the assessor’s adverse decision on assessing his newly purchased property higher than his purchase price. The trial court judge sided with appellant that it his property (from the date of COE) should have been assessed at the price he paid. The 6th DCA overturned the trial court’s decision and found in favor of County on their interpretation of RevTax 110(b)(c). I DID shepardize the case and could not find any reason why it wouldn’t still be good law today. Therefore I believe the law is on the side of the government when it comes to valuation methods used upon change of ownership. I haven’t looked for cases dealing with SFR’s but would presume the same law applies.

The key questions of law here are, Was the sale conducted at “arms-length?” What constitutes an “arms-length” sale? Is the purchase of an REO consumated under conditions “in which neither buyer nor seller could take advantage of the exigencies of the other . . .?” (RevTax 110(a).)

I’m NOT particularly on the side of the county here but am fully cognizant that they will interpret any laws on the books in their favor and fight their interpretation into oblivion (read: passel of lawyers “on staff” 8-5 pm).

[quote=pemeliza]I will start with a sales history taken from zillow.com

03/27/2009 Sold $665,000 -2.2% Public Record

02/07/2009 Listed for sale* $679,999 -31.7% NRT Califo

03/07/2005 Sold $995,000 53.8% Public Record

06/17/2002 Sold $647,000 68.5% Public Record

02/04/1994 Sold $384,000 — Public Record

Next, I give the first part of the description used for the listing to show that this is indeed a REO.

“BANK OWNED! 3 BR/3 BA contemporary home in wonderful Mission Hills. ”

So far we know that the buyer of this house got a good deal basically paying a 2002 price in a prime area. But notice at the time there wasn’t even that much demand as the buyer didn’t even have to pay full price.

Now we get to the supplemental bill generated by the property transfer which is also available online.

“This is a supplemental tax bill on the above described property per R&T code section 75. This is a notice of value change on 03/27/09. This bill was mailed on 10/9/2009.”

New Assessed Value 600000 200000 800000
Prior Tax Rolls Value 600000 200000 800000
Increase In Assessment 0 0 0[/quote]

Pemeliza, your example here on the history of this (now recent REO resale) property confirms my suspicion that the owners who lost the property (or the REO lender) successfully appealed their property taxes for FY 08/09. If “Zillow” is correct on the new assessment (and I would only rely on the assessor’s own computer at Pac Hwy, Westlaw or Realist), then the $200K land value and $600K improvement value (both round numbers) were put there recently by the assessor after appeal, because that is NOT what the property sold for on 3/27/09. Using the common “sales price base value” approach and ignoring the HOEX of $7K, if the assessment on this property had never been successfully appealed, it would have been:

F/Y 04/05: $686,602 ($647K x 1.02 x 1.02 x 1.02)

F/Y 05/06: $995,000

Supp. Assmt. F/Y 04/05: $308,398

F/Y 06/07: $1,014,900

F/Y 07/08: $1,035,198

F/Y 08/09: $1,055,902

Supp. Assmt. F/Y 08/09: <$390,902> (triggered poss. refund to new owners of escrow overpymt)

F/Y 09/10: $665,000

It looks to me like the assessor may have used the “escape tax” loophole on this one to maintain the previously appealed and lowered value of $800K. This is just my .02 based on the info you provided.

pemeliza, it’s worth a try to proffer your other REO comps to the county appraiser but also be ready to address recent market sales in your local area which were NOT distressed as the assessor will want to use those also if they are comps to yours in size, etc. Find out how they came up with the assessment on your supp. bill.

If the county doesn’t satisfy you here, file an appeal within 60 days of the date of the bill and pay whatever of the supplemental bill you still owe by the deadline. I’m rooting for you!

[bearishgurl]

[quote=CA renter] . . .
http://www.boe.ca.gov/proptaxes/pdf/r2.pdf
———————–

BG,

I know you’re well informed about this topic, but I’ve never heard anything about the previous owner’s assessment having any bearing on the new owner’s assessment. IOW, this should have nothing to do with the DVAP. Am I missing something?

It sounds to me like Pemeliza has a solid argument against this “fake” assessment. The property taxes should be based on the sales price, not on some value the Assessor’s office “wants” it to be.[/quote]

Yes, CAR, your post above is an excerpt from RevTax 110(a). Here is the section in its entirety.

http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=4998751609+5+0+0&WAISaction=retrieve

I went over the entire section three times last night and cannot find any language in it precluding a local government from using a variety of methods (incl. income approach, cost approach or comparable sales approach) to determine a new base value upon chg. of ownership. The burden of proof is on the property owner/appellant if they wish to contest the assessment. The PAST PRACTICE of the government has been to use the last SALES PRICE when assessing a property but in all the cycles I’ve witnessed, there has never been a downturn in values such as the one we are experiencing today.

In my experience, I’ve discovered that most of the CA RevTax and Government Code is written deliberately vague to give the government leeway to act in their best interests which may or may not be in the best interest of the citizens.

See this case from fn. 10 of the “Shrock” paper I posted the link to above.

Dennis v. County of Santa Clara (1989) 215 Cal.App.3d 1019

The subject property in the case is commercial where the tax appellant filed a writ of mandate on the assessor’s adverse decision on assessing his newly purchased property higher than his purchase price. The trial court judge sided with appellant that it his property (from the date of COE) should have been assessed at the price he paid. The 6th DCA overturned the trial court’s decision and found in favor of County on their interpretation of RevTax 110(b)(c). I DID shepardize the case and could not find any reason why it wouldn’t still be good law today. Therefore I believe the law is on the side of the government when it comes to valuation methods used upon change of ownership. I haven’t looked for cases dealing with SFR’s but would presume the same law applies.

The key questions of law here are, Was the sale conducted at “arms-length?” What constitutes an “arms-length” sale? Is the purchase of an REO consumated under conditions “in which neither buyer nor seller could take advantage of the exigencies of the other . . .?” (RevTax 110(a).)

I’m NOT particularly on the side of the county here but am fully cognizant that they will interpret any laws on the books in their favor and fight their interpretation into oblivion (read: passel of lawyers “on staff” 8-5 pm).

[quote=pemeliza]I will start with a sales history taken from zillow.com

03/27/2009 Sold $665,000 -2.2% Public Record

02/07/2009 Listed for sale* $679,999 -31.7% NRT Califo

03/07/2005 Sold $995,000 53.8% Public Record

06/17/2002 Sold $647,000 68.5% Public Record

02/04/1994 Sold $384,000 — Public Record

Next, I give the first part of the description used for the listing to show that this is indeed a REO.

“BANK OWNED! 3 BR/3 BA contemporary home in wonderful Mission Hills. ”

So far we know that the buyer of this house got a good deal basically paying a 2002 price in a prime area. But notice at the time there wasn’t even that much demand as the buyer didn’t even have to pay full price.

Now we get to the supplemental bill generated by the property transfer which is also available online.

“This is a supplemental tax bill on the above described property per R&T code section 75. This is a notice of value change on 03/27/09. This bill was mailed on 10/9/2009.”

New Assessed Value 600000 200000 800000
Prior Tax Rolls Value 600000 200000 800000
Increase In Assessment 0 0 0[/quote]

Pemeliza, your example here on the history of this (now recent REO resale) property confirms my suspicion that the owners who lost the property (or the REO lender) successfully appealed their property taxes for FY 08/09. If “Zillow” is correct on the new assessment (and I would only rely on the assessor’s own computer at Pac Hwy, Westlaw or Realist), then the $200K land value and $600K improvement value (both round numbers) were put there recently by the assessor after appeal, because that is NOT what the property sold for on 3/27/09. Using the common “sales price base value” approach and ignoring the HOEX of $7K, if the assessment on this property had never been successfully appealed, it would have been:

F/Y 04/05: $686,602 ($647K x 1.02 x 1.02 x 1.02)

F/Y 05/06: $995,000

Supp. Assmt. F/Y 04/05: $308,398

F/Y 06/07: $1,014,900

F/Y 07/08: $1,035,198

F/Y 08/09: $1,055,902

Supp. Assmt. F/Y 08/09: <$390,902> (triggered poss. refund to new owners of escrow overpymt)

F/Y 09/10: $665,000

It looks to me like the assessor may have used the “escape tax” loophole on this one to maintain the previously appealed and lowered value of $800K. This is just my .02 based on the info you provided.

pemeliza, it’s worth a try to proffer your other REO comps to the county appraiser but also be ready to address recent market sales in your local area which were NOT distressed as the assessor will want to use those also if they are comps to yours in size, etc. Find out how they came up with the assessment on your supp. bill.

If the county doesn’t satisfy you here, file an appeal within 60 days of the date of the bill and pay whatever of the supplemental bill you still owe by the deadline. I’m rooting for you!

[bearishgurl]

[quote=CA renter] . . .
http://www.boe.ca.gov/proptaxes/pdf/r2.pdf
———————–

BG,

I know you’re well informed about this topic, but I’ve never heard anything about the previous owner’s assessment having any bearing on the new owner’s assessment. IOW, this should have nothing to do with the DVAP. Am I missing something?

It sounds to me like Pemeliza has a solid argument against this “fake” assessment. The property taxes should be based on the sales price, not on some value the Assessor’s office “wants” it to be.[/quote]

Yes, CAR, your post above is an excerpt from RevTax 110(a). Here is the section in its entirety.

http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=4998751609+5+0+0&WAISaction=retrieve

I went over the entire section three times last night and cannot find any language in it precluding a local government from using a variety of methods (incl. income approach, cost approach or comparable sales approach) to determine a new base value upon chg. of ownership. The burden of proof is on the property owner/appellant if they wish to contest the assessment. The PAST PRACTICE of the government has been to use the last SALES PRICE when assessing a property but in all the cycles I’ve witnessed, there has never been a downturn in values such as the one we are experiencing today.

In my experience, I’ve discovered that most of the CA RevTax and Government Code is written deliberately vague to give the government leeway to act in their best interests which may or may not be in the best interest of the citizens.

See this case from fn. 10 of the “Shrock” paper I posted the link to above.

Dennis v. County of Santa Clara (1989) 215 Cal.App.3d 1019

The subject property in the case is commercial where the tax appellant filed a writ of mandate on the assessor’s adverse decision on assessing his newly purchased property higher than his purchase price. The trial court judge sided with appellant that it his property (from the date of COE) should have been assessed at the price he paid. The 6th DCA overturned the trial court’s decision and found in favor of County on their interpretation of RevTax 110(b)(c). I DID shepardize the case and could not find any reason why it wouldn’t still be good law today. Therefore I believe the law is on the side of the government when it comes to valuation methods used upon change of ownership. I haven’t looked for cases dealing with SFR’s but would presume the same law applies.

The key questions of law here are, Was the sale conducted at “arms-length?” What constitutes an “arms-length” sale? Is the purchase of an REO consumated under conditions “in which neither buyer nor seller could take advantage of the exigencies of the other . . .?” (RevTax 110(a).)

I’m NOT particularly on the side of the county here but am fully cognizant that they will interpret any laws on the books in their favor and fight their interpretation into oblivion (read: passel of lawyers “on staff” 8-5 pm).

[quote=pemeliza]I will start with a sales history taken from zillow.com

03/27/2009 Sold $665,000 -2.2% Public Record

02/07/2009 Listed for sale* $679,999 -31.7% NRT Califo

03/07/2005 Sold $995,000 53.8% Public Record

06/17/2002 Sold $647,000 68.5% Public Record

02/04/1994 Sold $384,000 — Public Record

Next, I give the first part of the description used for the listing to show that this is indeed a REO.

“BANK OWNED! 3 BR/3 BA contemporary home in wonderful Mission Hills. ”

So far we know that the buyer of this house got a good deal basically paying a 2002 price in a prime area. But notice at the time there wasn’t even that much demand as the buyer didn’t even have to pay full price.

Now we get to the supplemental bill generated by the property transfer which is also available online.

“This is a supplemental tax bill on the above described property per R&T code section 75. This is a notice of value change on 03/27/09. This bill was mailed on 10/9/2009.”

New Assessed Value 600000 200000 800000
Prior Tax Rolls Value 600000 200000 800000
Increase In Assessment 0 0 0[/quote]

Pemeliza, your example here on the history of this (now recent REO resale) property confirms my suspicion that the owners who lost the property (or the REO lender) successfully appealed their property taxes for FY 08/09. If “Zillow” is correct on the new assessment (and I would only rely on the assessor’s own computer at Pac Hwy, Westlaw or Realist), then the $200K land value and $600K improvement value (both round numbers) were put there recently by the assessor after appeal, because that is NOT what the property sold for on 3/27/09. Using the common “sales price base value” approach and ignoring the HOEX of $7K, if the assessment on this property had never been successfully appealed, it would have been:

F/Y 04/05: $686,602 ($647K x 1.02 x 1.02 x 1.02)

F/Y 05/06: $995,000

Supp. Assmt. F/Y 04/05: $308,398

F/Y 06/07: $1,014,900

F/Y 07/08: $1,035,198

F/Y 08/09: $1,055,902

Supp. Assmt. F/Y 08/09: <$390,902> (triggered poss. refund to new owners of escrow overpymt)

F/Y 09/10: $665,000

It looks to me like the assessor may have used the “escape tax” loophole on this one to maintain the previously appealed and lowered value of $800K. This is just my .02 based on the info you provided.

pemeliza, it’s worth a try to proffer your other REO comps to the county appraiser but also be ready to address recent market sales in your local area which were NOT distressed as the assessor will want to use those also if they are comps to yours in size, etc. Find out how they came up with the assessment on your supp. bill.

If the county doesn’t satisfy you here, file an appeal within 60 days of the date of the bill and pay whatever of the supplemental bill you still owe by the deadline. I’m rooting for you!

[bearishgurl]

[quote=CA renter] . . .
http://www.boe.ca.gov/proptaxes/pdf/r2.pdf
———————–

BG,

I know you’re well informed about this topic, but I’ve never heard anything about the previous owner’s assessment having any bearing on the new owner’s assessment. IOW, this should have nothing to do with the DVAP. Am I missing something?

It sounds to me like Pemeliza has a solid argument against this “fake” assessment. The property taxes should be based on the sales price, not on some value the Assessor’s office “wants” it to be.[/quote]

Yes, CAR, your post above is an excerpt from RevTax 110(a). Here is the section in its entirety.

http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=4998751609+5+0+0&WAISaction=retrieve

I went over the entire section three times last night and cannot find any language in it precluding a local government from using a variety of methods (incl. income approach, cost approach or comparable sales approach) to determine a new base value upon chg. of ownership. The burden of proof is on the property owner/appellant if they wish to contest the assessment. The PAST PRACTICE of the government has been to use the last SALES PRICE when assessing a property but in all the cycles I’ve witnessed, there has never been a downturn in values such as the one we are experiencing today.

In my experience, I’ve discovered that most of the CA RevTax and Government Code is written deliberately vague to give the government leeway to act in their best interests which may or may not be in the best interest of the citizens.

See this case from fn. 10 of the “Shrock” paper I posted the link to above.

Dennis v. County of Santa Clara (1989) 215 Cal.App.3d 1019

The subject property in the case is commercial where the tax appellant filed a writ of mandate on the assessor’s adverse decision on assessing his newly purchased property higher than his purchase price. The trial court judge sided with appellant that it his property (from the date of COE) should have been assessed at the price he paid. The 6th DCA overturned the trial court’s decision and found in favor of County on their interpretation of RevTax 110(b)(c). I DID shepardize the case and could not find any reason why it wouldn’t still be good law today. Therefore I believe the law is on the side of the government when it comes to valuation methods used upon change of ownership. I haven’t looked for cases dealing with SFR’s but would presume the same law applies.

The key questions of law here are, Was the sale conducted at “arms-length?” What constitutes an “arms-length” sale? Is the purchase of an REO consumated under conditions “in which neither buyer nor seller could take advantage of the exigencies of the other . . .?” (RevTax 110(a).)

I’m NOT particularly on the side of the county here but am fully cognizant that they will interpret any laws on the books in their favor and fight their interpretation into oblivion (read: passel of lawyers “on staff” 8-5 pm).

[quote=pemeliza]I will start with a sales history taken from zillow.com

03/27/2009 Sold $665,000 -2.2% Public Record

02/07/2009 Listed for sale* $679,999 -31.7% NRT Califo

03/07/2005 Sold $995,000 53.8% Public Record

06/17/2002 Sold $647,000 68.5% Public Record

02/04/1994 Sold $384,000 — Public Record

Next, I give the first part of the description used for the listing to show that this is indeed a REO.

“BANK OWNED! 3 BR/3 BA contemporary home in wonderful Mission Hills. ”

So far we know that the buyer of this house got a good deal basically paying a 2002 price in a prime area. But notice at the time there wasn’t even that much demand as the buyer didn’t even have to pay full price.

Now we get to the supplemental bill generated by the property transfer which is also available online.

“This is a supplemental tax bill on the above described property per R&T code section 75. This is a notice of value change on 03/27/09. This bill was mailed on 10/9/2009.”

New Assessed Value 600000 200000 800000
Prior Tax Rolls Value 600000 200000 800000
Increase In Assessment 0 0 0[/quote]

Pemeliza, your example here on the history of this (now recent REO resale) property confirms my suspicion that the owners who lost the property (or the REO lender) successfully appealed their property taxes for FY 08/09. If “Zillow” is correct on the new assessment (and I would only rely on the assessor’s own computer at Pac Hwy, Westlaw or Realist), then the $200K land value and $600K improvement value (both round numbers) were put there recently by the assessor after appeal, because that is NOT what the property sold for on 3/27/09. Using the common “sales price base value” approach and ignoring the HOEX of $7K, if the assessment on this property had never been successfully appealed, it would have been:

F/Y 04/05: $686,602 ($647K x 1.02 x 1.02 x 1.02)

F/Y 05/06: $995,000

Supp. Assmt. F/Y 04/05: $308,398

F/Y 06/07: $1,014,900

F/Y 07/08: $1,035,198

F/Y 08/09: $1,055,902

Supp. Assmt. F/Y 08/09: <$390,902> (triggered poss. refund to new owners of escrow overpymt)

F/Y 09/10: $665,000

It looks to me like the assessor may have used the “escape tax” loophole on this one to maintain the previously appealed and lowered value of $800K. This is just my .02 based on the info you provided.

pemeliza, it’s worth a try to proffer your other REO comps to the county appraiser but also be ready to address recent market sales in your local area which were NOT distressed as the assessor will want to use those also if they are comps to yours in size, etc. Find out how they came up with the assessment on your supp. bill.

If the county doesn’t satisfy you here, file an appeal within 60 days of the date of the bill and pay whatever of the supplemental bill you still owe by the deadline. I’m rooting for you!

[Author]

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