Relating to Real Estate
To Determine the Value of Property on the Date of Finality, It is Acceptable to Consider Comparable Sales Thereafter
In Lane v. Supervisor of Assessments of Montgomery County, -- A.3d --, No. 41 Sept. Term 2015, 2016 WL 1742793 (Md. May 3, 2016), the Court of Appeals held that sales of comparable properties made after the “date of finality” may be considered in the determination of the value of real property.
As part of the triennial assessment of all real property in the State of Maryland, each property is assessed with reference to its value as of the applicable “date of finality” under Maryland Code, Tax-Property Article (“T-P”) §8-102(a). T-P §8-104(b)(2) provides that the “date of finality” is the “January 1 immediately before the 1st taxable year to which the assessment based on the new value is applicable.”
On December 28, 2010, the Supervisor of Assessments of Montgomery County advised Ann Lane that the assessed value of her condominium unit in Parc Somerset on Wisconsin Avenue in Bethesda was $2,130,000, effective January 1, 2011. Ms. Lane protested, but the Supervisor and the Property Tax Assessment Appeal Board for Montgomery County (“PTAAB”) ruled against her. She appealed to the Maryland Tax Court where she offered evidence of sales of certain condominium units that occurred prior to January 1, 2010. An expert for the Supervisor claimed a higher value based on sales that were made in the first half of 2010. Since 1992, it has been the policy of the State Department of Assessments and Taxation to consider sales made within six months after a date of finality. The Tax Court reduced the assessment to $2,075,000.
Ms. Lane appealed to the Circuit Court for Montgomery County, which reversed the decision of the Tax Court. The circuit court ruled that the Tax Court committed legal error in considering sales after the date of finality.
The Supervisor appealed to the Court of Special Appeals, and the intermediate appellate court reversed. Supervisor of Assessments of Montgomery Cty. v. Lane, 222 Md. App. 107 (2015).
The Court of Appeals granted Ms. Lane’s petition for certiorari, and it affirmed the judgment of the Court of Special Appeals in a 5-2 decision.
The Court of Appeals considered that the statutory scheme required the assessors to determine the value of the property as of the date of finality. If to do so required that property sales after the date of finality be considered, the Court of Appeals had no objection so long as the sales were within a reasonable time after the date of finality. The Court stated that such sales were relevant to the property’s fair market value on the date of finality, and, therefore, evidence of them was admissible.
The Court of Appeals further held that such a practice does not violate the rule that all property in Maryland must be assessed on a uniform basis.
For questions, please contact Ed Levin (410) 576-1900.