Assessed Value = $0

In what reads like a whirlwind case before the Assessment Review Board (ARB), a residential property in Chatam-Kent has received a value of $0 for the 2006 – 2008 tax years. How does something like this happen? I am sure assessment lawyers everywhere are scratching their heads over this one.

Facts

When the appellants purchased their vacant property, they had no idea that it was once a municipal garbage dump. They later applied for a building permit and it was granted with no restrictions – no one from the town warned them about the site’s history. In 2004 they build a 2,300 square foot home for themselves which MPAC assessed at $319,000.

The full facts of the case can be found here, and the Decision of the ARB can be found Here .


The Interesting Parts

The appellants began as self-representing litigants, meaning they didn't have a lawyer. MPAC was represented by one of their regular senior litigators.

The appellants called their valuation expert who testified that without the contamination issues, it was his opinion that the property ought to be worth $400,000. But when taking into account the fact that the property was a dump site, the value should be lowered to $175,000.

MPAC objected to the appellant’s expert giving opinion about the environmental issues as he was not an expert in that field. However, the Board found that the expert was referring to what the environmental issues would do the value of the property so the testimony was allowed

Then the hearing finished for the day and they went on a break.

When they came back, the appellants brought a lawyer, engineering experts, environmental experts, insurance experts, and real estate experts. The Board allowed all of this, but they needed to take another break to deal with these new developments.

Remember, the property is assessed at $319,000.


The Hearing Resumes

When the hearing resumed, the Board heard about all the contamination. When the appellants began digging to build their house, they began to find garbage left over from the dump. Worst of all, they noticed that methane gas was leaking and it eventually began leaking into their house.

MPAC’s only witness was the assessor. She testified that she conducted the standard valuation exercise one would expect in a case such as this. She reviewed comparable properties, etc. She did admit that she did not consider the environmental issues in her valuation.

MPAC argued that the Board could only drop the assessment to $175,000 dollars, as that is what the appellant’s valuation expert submitted. But the Board did not do that. The Board lowered the value to zero.

The Board accepted the evidence of the real estate expert and the insurance expert. They said, basically, no one will ever buy this house and, if someone does, it will never be insured. That was all the Board needed to hear.

Remember, the Board is tasked with determining what the property would fetch if sold in an arms-length transaction. They accepted that no one would ever buy this place.


Conclusions

This is one of the strangest cases I have seen. What does it teach us? That we should be more open to using experts outside of the norm. We need to remember that market value is king, and there are many ways to prove what market value is.