REOs, prop 13, and tax assessment‎

[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!

[pemeliza]

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[pemeliza]

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[pemeliza]

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[pemeliza]

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[pemeliza]

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[pemeliza]

BG, I don’t understand all of what you said yet but I think that the assessment to 800k was automatic because a similar type of reassessment occurred for most of the houses in my area. I think they were frankly overwhelmed with requests and just did some area wide reductions.

I am relying on the assessor’s own website and the online versions of the supplemental bills for these properties to confirm that in some cases the new assessed price is based on the sales price and others it is not. I think there is a certain degree of luck involved perhaps? I looked at 4 recent REOs and in only one case was the assessed value in the supplemental set to the sales price.

The guy on the phone that I spoke with today said that the value on my supplemental bill is not a result of a some “escape tax” loophole but rather what the assessor deemed the house to be worth based on comparable sales at the time of my purchase. I don’t know what triggers the assessor to ignore the sales price but when I mentioned “bank-owned” to the guy he went off on a diatribe about how banks sell properties for what they can get not what they are worth. I guess that one sentence kinda speaks volumes about what I am dealing with here.

[pemeliza]

BG, I don’t understand all of what you said yet but I think that the assessment to 800k was automatic because a similar type of reassessment occurred for most of the houses in my area. I think they were frankly overwhelmed with requests and just did some area wide reductions.

I am relying on the assessor’s own website and the online versions of the supplemental bills for these properties to confirm that in some cases the new assessed price is based on the sales price and others it is not. I think there is a certain degree of luck involved perhaps? I looked at 4 recent REOs and in only one case was the assessed value in the supplemental set to the sales price.

The guy on the phone that I spoke with today said that the value on my supplemental bill is not a result of a some “escape tax” loophole but rather what the assessor deemed the house to be worth based on comparable sales at the time of my purchase. I don’t know what triggers the assessor to ignore the sales price but when I mentioned “bank-owned” to the guy he went off on a diatribe about how banks sell properties for what they can get not what they are worth. I guess that one sentence kinda speaks volumes about what I am dealing with here.

[pemeliza]

BG, I don’t understand all of what you said yet but I think that the assessment to 800k was automatic because a similar type of reassessment occurred for most of the houses in my area. I think they were frankly overwhelmed with requests and just did some area wide reductions.

I am relying on the assessor’s own website and the online versions of the supplemental bills for these properties to confirm that in some cases the new assessed price is based on the sales price and others it is not. I think there is a certain degree of luck involved perhaps? I looked at 4 recent REOs and in only one case was the assessed value in the supplemental set to the sales price.

The guy on the phone that I spoke with today said that the value on my supplemental bill is not a result of a some “escape tax” loophole but rather what the assessor deemed the house to be worth based on comparable sales at the time of my purchase. I don’t know what triggers the assessor to ignore the sales price but when I mentioned “bank-owned” to the guy he went off on a diatribe about how banks sell properties for what they can get not what they are worth. I guess that one sentence kinda speaks volumes about what I am dealing with here.

[pemeliza]

BG, I don’t understand all of what you said yet but I think that the assessment to 800k was automatic because a similar type of reassessment occurred for most of the houses in my area. I think they were frankly overwhelmed with requests and just did some area wide reductions.

I am relying on the assessor’s own website and the online versions of the supplemental bills for these properties to confirm that in some cases the new assessed price is based on the sales price and others it is not. I think there is a certain degree of luck involved perhaps? I looked at 4 recent REOs and in only one case was the assessed value in the supplemental set to the sales price.

The guy on the phone that I spoke with today said that the value on my supplemental bill is not a result of a some “escape tax” loophole but rather what the assessor deemed the house to be worth based on comparable sales at the time of my purchase. I don’t know what triggers the assessor to ignore the sales price but when I mentioned “bank-owned” to the guy he went off on a diatribe about how banks sell properties for what they can get not what they are worth. I guess that one sentence kinda speaks volumes about what I am dealing with here.

[pemeliza]

BG, I don’t understand all of what you said yet but I think that the assessment to 800k was automatic because a similar type of reassessment occurred for most of the houses in my area. I think they were frankly overwhelmed with requests and just did some area wide reductions.

I am relying on the assessor’s own website and the online versions of the supplemental bills for these properties to confirm that in some cases the new assessed price is based on the sales price and others it is not. I think there is a certain degree of luck involved perhaps? I looked at 4 recent REOs and in only one case was the assessed value in the supplemental set to the sales price.

The guy on the phone that I spoke with today said that the value on my supplemental bill is not a result of a some “escape tax” loophole but rather what the assessor deemed the house to be worth based on comparable sales at the time of my purchase. I don’t know what triggers the assessor to ignore the sales price but when I mentioned “bank-owned” to the guy he went off on a diatribe about how banks sell properties for what they can get not what they are worth. I guess that one sentence kinda speaks volumes about what I am dealing with here.

[bearishgurl]

[quote=pemeliza]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 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.[/quote]

pemeliza, I can identify with you. I don’t believe these realtors who handle REO’s are even aware of this themselves. Perhaps this *new* method of valuation counties are using to assess properties purchased from “distress sales” will invite more (writ of mandates) lawsuits and appeals. It will be interesting to see how the law evolves over the years on this issue. However, I don’t see the any CA justice panels using PAST PRACTICE in their interpretation of the law in this area.

Counties are taking it in the shorts right now in zips where there was a preponderance of foreclosures from “bubble-era” lending. The local government has grown to accomodate the influx of population in these new areas and now has to lay off. The MR bonds only paid for police/fire/schools/libraries/parks in *their own* neighborhoods but does not compensate the overall administration of a city (or county) because it’s population has grown from <80K in 2000 to 250K+ today, such as in Chula Vista. In addition, we only have 2.5 domestic courts down here to accomodate this huge population and it now takes 18 - 24 mos. to go to trial on a domestic case and the trial hours are NOT together but divided up into two consecutive Fridays, or even further apart. It's a mess.

I know the diff. is not "chump change." The assessor has probably been told by county counsel to play "hardball" in cases where a new owner got an "awesome" deal in a coveted area to keep their most *prized* tax base "shored up."

pemeliza, has there ever been any work done on the history of property you bought? Do you think it could qualify for a Mills Act application? I know the City of SD is broke and is probably not entertaining any MA applications right now, but maybe you could start with SOHO and figure out if you have a chance in the future, should the City's coffers become more stable. Are you or any co-buyers 55 years of age or older and sold a previous property in CA they owned to buy your property?? If so, you/they may qualify for their taxes to be lowered to the assessment of the property you/they recently sold, pursuant to Propositions 60 and 90.

Just some ideas while you're playing the waiting game on appeal.

[bearishgurl]

[quote=pemeliza]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 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.[/quote]

pemeliza, I can identify with you. I don’t believe these realtors who handle REO’s are even aware of this themselves. Perhaps this *new* method of valuation counties are using to assess properties purchased from “distress sales” will invite more (writ of mandates) lawsuits and appeals. It will be interesting to see how the law evolves over the years on this issue. However, I don’t see the any CA justice panels using PAST PRACTICE in their interpretation of the law in this area.

Counties are taking it in the shorts right now in zips where there was a preponderance of foreclosures from “bubble-era” lending. The local government has grown to accomodate the influx of population in these new areas and now has to lay off. The MR bonds only paid for police/fire/schools/libraries/parks in *their own* neighborhoods but does not compensate the overall administration of a city (or county) because it’s population has grown from <80K in 2000 to 250K+ today, such as in Chula Vista. In addition, we only have 2.5 domestic courts down here to accomodate this huge population and it now takes 18 - 24 mos. to go to trial on a domestic case and the trial hours are NOT together but divided up into two consecutive Fridays, or even further apart. It's a mess.

I know the diff. is not "chump change." The assessor has probably been told by county counsel to play "hardball" in cases where a new owner got an "awesome" deal in a coveted area to keep their most *prized* tax base "shored up."

pemeliza, has there ever been any work done on the history of property you bought? Do you think it could qualify for a Mills Act application? I know the City of SD is broke and is probably not entertaining any MA applications right now, but maybe you could start with SOHO and figure out if you have a chance in the future, should the City's coffers become more stable. Are you or any co-buyers 55 years of age or older and sold a previous property in CA they owned to buy your property?? If so, you/they may qualify for their taxes to be lowered to the assessment of the property you/they recently sold, pursuant to Propositions 60 and 90.

Just some ideas while you're playing the waiting game on appeal.

[bearishgurl]

[quote=pemeliza]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 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.[/quote]

pemeliza, I can identify with you. I don’t believe these realtors who handle REO’s are even aware of this themselves. Perhaps this *new* method of valuation counties are using to assess properties purchased from “distress sales” will invite more (writ of mandates) lawsuits and appeals. It will be interesting to see how the law evolves over the years on this issue. However, I don’t see the any CA justice panels using PAST PRACTICE in their interpretation of the law in this area.

Counties are taking it in the shorts right now in zips where there was a preponderance of foreclosures from “bubble-era” lending. The local government has grown to accomodate the influx of population in these new areas and now has to lay off. The MR bonds only paid for police/fire/schools/libraries/parks in *their own* neighborhoods but does not compensate the overall administration of a city (or county) because it’s population has grown from <80K in 2000 to 250K+ today, such as in Chula Vista. In addition, we only have 2.5 domestic courts down here to accomodate this huge population and it now takes 18 - 24 mos. to go to trial on a domestic case and the trial hours are NOT together but divided up into two consecutive Fridays, or even further apart. It's a mess.

I know the diff. is not "chump change." The assessor has probably been told by county counsel to play "hardball" in cases where a new owner got an "awesome" deal in a coveted area to keep their most *prized* tax base "shored up."

pemeliza, has there ever been any work done on the history of property you bought? Do you think it could qualify for a Mills Act application? I know the City of SD is broke and is probably not entertaining any MA applications right now, but maybe you could start with SOHO and figure out if you have a chance in the future, should the City's coffers become more stable. Are you or any co-buyers 55 years of age or older and sold a previous property in CA they owned to buy your property?? If so, you/they may qualify for their taxes to be lowered to the assessment of the property you/they recently sold, pursuant to Propositions 60 and 90.

Just some ideas while you're playing the waiting game on appeal.

[bearishgurl]

[quote=pemeliza]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 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.[/quote]

pemeliza, I can identify with you. I don’t believe these realtors who handle REO’s are even aware of this themselves. Perhaps this *new* method of valuation counties are using to assess properties purchased from “distress sales” will invite more (writ of mandates) lawsuits and appeals. It will be interesting to see how the law evolves over the years on this issue. However, I don’t see the any CA justice panels using PAST PRACTICE in their interpretation of the law in this area.

Counties are taking it in the shorts right now in zips where there was a preponderance of foreclosures from “bubble-era” lending. The local government has grown to accomodate the influx of population in these new areas and now has to lay off. The MR bonds only paid for police/fire/schools/libraries/parks in *their own* neighborhoods but does not compensate the overall administration of a city (or county) because it’s population has grown from <80K in 2000 to 250K+ today, such as in Chula Vista. In addition, we only have 2.5 domestic courts down here to accomodate this huge population and it now takes 18 - 24 mos. to go to trial on a domestic case and the trial hours are NOT together but divided up into two consecutive Fridays, or even further apart. It's a mess.

I know the diff. is not "chump change." The assessor has probably been told by county counsel to play "hardball" in cases where a new owner got an "awesome" deal in a coveted area to keep their most *prized* tax base "shored up."

pemeliza, has there ever been any work done on the history of property you bought? Do you think it could qualify for a Mills Act application? I know the City of SD is broke and is probably not entertaining any MA applications right now, but maybe you could start with SOHO and figure out if you have a chance in the future, should the City's coffers become more stable. Are you or any co-buyers 55 years of age or older and sold a previous property in CA they owned to buy your property?? If so, you/they may qualify for their taxes to be lowered to the assessment of the property you/they recently sold, pursuant to Propositions 60 and 90.

Just some ideas while you're playing the waiting game on appeal.

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