It’s MAY-Have you filed your Ad Valorem Lawsuit Appeal?

So you went to the March Assessment Appeal at your friendly Assessment appeal board and they mailed you the results issuing their decision. What next?

You were prepared with the facts in hand. Maybe the valuation company hired by the local town or city had the wrong square footage or area, maybe they compared your property to the wrong set of similar recent sales, maybe they did not know of a sale down the street which appeared to be arm’s length, and /or maybe they did not take into effect the true income and expenses of your property? For a number of reasons as to their numbers. You have 60 days to file an Ad Valorem Lawsuit. You are running out of time if you have not done so already.


Should you go forward or not? Many questions and many answers have to be weighted and objectively determined. Did the Board hear your legitimate arguments and not rule at all in what you wanted? Or did they hear you and partially reduce the assessment? Did they reduce the land value and not the improvement assessment or opposite? Did you discover something else or forgot to stress a key point when you went for the 15-20 minutes before the Board? In Hartford, for instance, there were about 1100 appeals filed for the March hearings. And how many of those are going forward with a lawsuit to try to vindicate the numbers? You must look at All of the costs to sue the municipality over a 5-year period when the next revaluation occurs. One must objectively weigh the filing fees, the legal fees and the appraisal fees in deciding is it worth it to sue for what you think is the more accurate valuation number?

For instance, if your $200K property was determined to be worth $275K and let’s say a judge splits the differences down the middle there might be a $37,500 savings in value times the 70% assessment or $26,250 in dropped assessment. Now figure out the time value of money, which is also important. Is it worth the time, effort, and costs for the suit? If your town or city’s mill rate is 40 mills for instance then you would be taxed an additional $1050 or $87.50 per month and that will be for a minimum of 5 years and usually tax mill rates don’t go down right? So in 5 years at an average of a 2-3 % annual-say a 2.5% annual increase –conservatively based on the not so good CT economy and deficits in the billions of May 2017 what to do ? By year 5 the annual tax savings would be $1159 or $96.58 monthly with the total amount saved over 5 years at $519 yet if we discount the time of value of $ at 10% then the present value of the successful appeal at splitting this difference used above would be $5231.

So with your court costs, legal fees to go to a mediation –pretrial hearing, and pay your appraiser to perform an appraiser and testify will it save you more than $5231? Most likely, yes!

Remember the appraiser follows USPAP, The Uniform Standards of Professional Appraisal Practice, yet the Assessors are not” schooled “in appraisal practices and the judge in a court of law must follow USPAP. The Assessors do their calculations on a mass scale basis with algorithms which they must be able to explain logically to the judge which typically they can’t because their valuation company has compiled with their own “private” set of circumstances. Assessors do not “appraise” individual properties but “assess” properties on a mass scale using a logarithm formula that they input usually with some form of regression analysis or method they are supposed to share in their analysis by CT state law. And any abnormal property will usually not fit into their model.

In the case of an income property the taxes are typically removed from the calculations and later factored in at a 2% figure before a valuation number and added in as a capitalization rate figure. You will not need a written full summary appraisal until your preliminary court date at New Britain Tax Court in which most likely the Municipality will not pay or hire an outside licensed or certified appraiser to dispute your side of the valuation. Typically the Assessor and an assistant with their corporation counsel will be present and will try argue what capitalization rate this property should be calculated or valued at or make other comparable remarks to diffuse the situation with the judge. The time period is the October of the mass assessment time period of the year of valuation. You will need to have your attorney and appraiser prepared to provide proof of the data, the valuation numbers and show support for what your side’s opinion of value was as of the date in question.

If this is at the beginning of the 5-year cycle it has a 5-year payback for legal, costs, appraisal, and other professional fees- accounting, marshal service and time. It will also put the municipality on notice you do not take this lightly for the future. Be specific what properties you pursue, and make sure you pay your taxes and if you do not pay the required amount you can be taxed at 18% of the portion over you have not paid when you“ win” a reduced judgment. And again the numbers are based on 70% of the 100% fair market value” determined by the court times the 70% of assessment.

You might want to confer with your attorney and appraiser as to the scenarios immediately.

DO IT TODAY!

The opinions of Marc Gottesdiener, Hartford’s Real Estate Counselor, www.marcgottesdiener.com

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