Property quality ratings must be based on substantial evidence.
In October 2005, Kristin Wagner purchased a home in Shawnee, Kansas, for $510,000. Shortly thereafter she made several improvements, including finishing the basement, installing a pre-plumbed central vacuum system, widening the driveway, replacing the sprinkler system, and adding a swimming pool. In February 2005, an official from the Johnson County Appraiser's Office, who had inspected the property, appraised the property at $521,000 for tax purposes. The property record card showed that the property had a quality rating of "Good" for tax year 2005.
In October 2005, Wagner listed her property for sale at $725,000. The county's February 2006 Notice of Value showed an appraised property value of $721,000 and a quality rating of "Good" Wagner appealed and the Board of Tax Appeals adjusted the value to $561,000. In 2007, using a comparable sales approach, a Notice of Value showed an appraised value of $721,000 for the property and a quality rating of "Good."
In 2008, however, the appraised value of Wagner's property was adjusted to $614,000, and, importantly, the quality rating was changed to "Very Good" In 2011, the appraised value was set at $569,000 and the quality rating at "Very Good." After her initial efforts to contest the valuation were unsuccessful, Wagner appealed to the Court of Tax Appeals, arguing that the appraised value and quality ratings were higher than the adjusted 2006 valuation of $561,000, despite the fact that she had not made any improvements to the property since 2006.
At a hearing before the Court of Tax Appeals, the appraiser appearing for Johnson County stated that the county relied on a sales comparison approach and testified that the appraised value should remain at $569,000. Wagner, representing herself, questioned Johnson County's appraiser as to why the quality rating rose from "Good" to "Very Good," despite the lack of improvements. The appraiser could not produce a reason why the quality rating had increased and stated that it was a subjective determination. The Court of Tax Appeals ordered that the appraised value of Wagner's property be reduced to $553,600 for the tax year 2011, but that the quality rating remain as "Very Good" Wagner appealed, arguing that the burden was on the county to show the correctness of its appraisal, not on her to show why it was incorrect and that the Court of Tax Appeals findings concerning the quality rating were not based on substantial evidence.
The Court of Appeals agreed with Wagner and held that the burden was on the county to show why its valuation for the tax year of 2011 was correct. As to the county's decision to raise the quality rating of Wagner's property from "Good" to "Very Good," the court found that the county did not provide evidence to support the "Very Good" quality rating in the 2011 tax year. Accordingly, the Court of Appeals of Kansas remanded the case and directed the Court of Tax Appeals to establish an appraised value of Wagner's property for the 2011 tax year based on a quality rating of "Good."
<ADD> In re Wagner Court of Appeals of Kansas August 10, 2012 281 P.3d 1147 </ADD>
Alan M. Weinberger, JD, has been a professor at St. Louis University School of Law since 1987. Previously, he practiced for twelve years with law firms in Detroit and Washington, DC, where he specialized in real estate transfer, finance, and development. Weinberger graduated magna cum laude from the University of Michigan Law School. He has published articles and chapters in the fields of real estate finance, partnership, and property law. He is coauthor of Property Law Cases, Materials and Problems, 3rd ed., published by West Group. Contact: firstname.lastname@example.org
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|Title Annotation:||Recent Court Decisions; Kristin Wagner v. Court of Appeals of Kansas|
|Author:||Weinberger, Alan M.|
|Date:||Jan 1, 2013|
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