Chapter 4 - Nat'l Ownership - Units 8-11 Flashcards
Real Estate Planning: Goals of Land Use Control (5)
Over time, public and private control of land use has come to focus on certain core purposes. These are:
Preservation of property values.
Promotion of the highest and best use of property.
Balance between individual property rights and the public good, i.e., its health, safety and welfare.
Control of growth to remain within infrastructure capabilities.
Incorporation of community consensus into regulatory and planning activities.
A community achieves its land usage goals through a three-phase process:
Development of a master plan for the jurisdiction.
Administration of the plan by a municipal, county, or regional planning commission.
Implementation of the plan through public control of zoning, building codes, permits, and other measures.
Municipal, county, and regional authorities develop comprehensive land use plans for a particular community with the input of property owners. A planning commission manages the master plan and enforces it by exercising its power to establish zones, control building permits, and create building codes.
Real Estate Planning: The Master Plan
Public land use planning incorporates long-term usage strategies and growth policies in a land use plan, or master plan, also called a comprehensive plan. In many states, the process of land use planning begins when the state legislature enacts laws requiring all counties and municipalities to adopt a land use plan. The land use plan must not only reflect the needs of the local area, but also conform to state and federal environmental laws and the plans of regional and state planning agencies. The state enforces its planning mandates by giving state agencies the power to approve county and local plans.
The primary objectives of a master plan are generally to control and accommodate social and economic growth
Real Estate Planning: Planning Objectives - Amount of Growth (9)
A growth plan considers:
Nature, location and extent of permitted uses.
Availability of sanitation facilities.
Adequacy of drainage, waste collection, and potable water systems.
Adequacy of utilities companies.
Adequacy and patterns of thoroughfares.
Housing availability.
Conservation of natural resources.
Adequacy of recreational facilities.
Ability and willingness of the community to absorb new taxes, bond issues, and assessments.
Real Estate Planning: Planning Objectives - Growth Patterns (6)
a master plan also defines what type of growth will occur, and where. Major considerations are:
Type of enterprises and developments to allow:
Residential density and commercial intensity.
Effects of industrial and commercial land uses on residential and public sectors, i.e., where to allow such uses.
Effect of new developments on traffic patterns and thoroughfares.
Effects on the environment and environmental quality (air, water, soil, noise, visual aspects).
Effect on natural resources that support the community.
Code specifications for specific construction projects.
Real Estate Planning: Planning Objectives - Accommodating Demand (3)
As the master plan sets forth guidelines for how much growth will be allowed, it must also make plans for accommodating expanding or contracting demand for services and infrastructure. The plan must identify:
Facilities requirements for local government.
New construction requirements for streets, schools, and social services facilities such as libraries, civic centers, etc.
New construction required to provide power, water and sewer services.
Real Estate Planning: Development and Management - Plan Development (5)
In response to land use objectives, community attitudes, and conclusions drawn from research, the planning personnel formulate their plan. In the course of planning, they analyze:
Population and demographic trends. Economic trends. Existing land use. Existing support facilities. Traffic patterns.
Real Estate Planning: Development and Management - Planning Management (3)
Public land use management takes place within county and municipal planning departments. These departments are responsible for:
Long-term implementation of the master plan.
Creating rules and restrictions that support plans and policies.
Enforcing and administering land use regulation on an everyday basis.
Real Estate Planning: Development and Management - The Planning Commission
The commission oversees the operations of the department’s professional planning staff and support personnel. In addition, the commission makes recommendations to elected officials concerning land use policy and policy administration.
The planning commission is responsible for:
Approving site plans and subdivision plans.
Approving building permits.
Ruling on zoning issues.
Public Land Use Control and examples (5)
At the local level, county and city governments control land use through the authority known as police power. The most common expressions of police power are county and municipal zoning.
Other examples of public land use control are:
Subdivision regulations. Building codes. Eminent domain. Environmental restrictions. Development requirements.
Public Land Use Control: Zoning
Primary tool by which cities and counties regulate land use and implement their respective master plans. The Constitution grants the states the legal authority to regulate, and the states delegate the authority to counties and municipalities through legislation called enabling acts.
Public Land Use Control: Zoning Ordinance
The vehicle for zoning a city or county is the zoning ordinance, a regulation enacted by the local government. The intent of zoning ordinances is to specify land usage for every parcel within the jurisdiction. In some areas, state laws permit zoning ordinances to apply to areas immediately beyond the legal boundaries of the city or county.
Zoning ordinances implement the master plan by regulating density, land use intensity, aesthetics, and highest and best use.
Ordinances typically address:
Nature of land use– office, commercial, residential, etc.
Size and configuration of a building site, including setbacks, sidewalk requirements, parking requirements, and access.
Site development procedures.
Construction and design methods and materials, including height restrictions, building-to-site area ratios, and architectural styles.
Use of space within the building.
Signage.
Public Land Use Control: Ordinance Validity
Local planners do not have unlimited authority to do whatever they want. Their zoning ordinances must be clear in import, apply to all parties equally, and promote health, safety, and welfare of the community in a reasonable manner.
Public Land Use Control: Building Permits
Local governments enforce zoning ordinances by issuing building permits to those who want to improve, repair, or refurbish a property. To receive a permit, the project must comply with all relevant ordinances and codes. Further zoning enforcement is achieved through periodic inspections.
Public Land Use Control: Types of Zones (6)
One of the primary applications of zoning power is the separation of residential properties from commercial and industrial uses. Proper design of land use in this manner preserves the aesthetics and value of neighborhoods and promotes the success of commercial enterprises through intelligently located zones.
Six common types of zone are:
Residential. Commercial. Industrial. Agricultural. Public. Planned unit development (PUD).
Public Land Use Control: Residential Zone
Residential zoning restricts land use to private, non-commercial dwellings. Sub-zones in this category further stipulate the types of residences allowed, whether single-family, multi-unit complexes, condominiums, publicly subsidized housing, or other form of housing.
Residential zoning regulates:
Density, by limiting the number and size of dwelling units and lots in an area.
Values and aesthetics, by limiting the type of residences allowed.
Some areas adopt buffer zones to separate residential areas from commercial and industrial zones.
Public Land Use Control: Commercial Zone
Commercial zoning regulates the location of office and retail land usage. Some commercial zones allow combinations of office and retail uses on a single site. Sub-zones in this category may limit the type of retail or office activity permitted, for example, a department store versus a strip center.
Commercial zoning regulates:
Intensity of usage, by limiting the area of store or office per site area. Intensity regulation is further achieved by minimum parking requirements, setbacks, and building height restrictions.
Public Land Use Control: Industrial Zone
Industrial zoning regulates:
Intensity of usage.
Type of industrial activity.
Environmental consequences.
A municipality may not allow some industrial zones, such as heavy industrial, at all. The industrial park is a relatively recent concept in industrial zoning.
Public Land Use Control: Agricultural Zone
Agricultural zoning restricts land use to farming, ranching, and other agricultural enterprises.
Public Land Use Control: Public Zone
Public zoning restricts land use to public services and recreation. Parks, post offices, government buildings, schools, and libraries are examples of uses allowed in a public zone.
Public Land Use Control: Planned Unit Development (PUD)
Planned unit development zoning restricts use to development of whole tracts that are designed to use space efficiently and maximize open space. A PUD zone may be for residential, commercial, or industrial uses, or combinations thereof.
Public Land Use Control: Zoning Administration (Board of Adjustment)
The board rules on interpretations of zoning ordinances as they apply to specific land use cases presented by property owners in the jurisdiction. In effect, the zoning board is a court of appeals for owners and developers who desire to use land in a manner that is not entirely consistent with existing ordinances.
A zoning board generally deals with such issues and appeals as:
Nonconforming use.
Variance.
Special exception conditional use permit.
Zoning amendment.
If the board rejects an appeal, the party may appeal the ruling further in a court of law.
Public Land Use Control: Zoning Administration - Nonconforming Use (Legal and Illegal)
Legal: A nonconforming use is one that clearly differs from current zoning. Usually nonconforming uses result when a zoning change leaves existing properties in violation of the new ordinance.
A board usually treats this kind of situation by allowing it to continue either:
Indefinitely.
Until the structures are torn down.
Only while the same use continues.
Until the property is sold.
Illegal: one that conflicts with ordinances that were in place before the use commenced.
Examples or Legal and Illegal Nonconforming Use
Legal: a motel is situated in a residential area that no longer allows commercial activity. The zoning board rules that the motel may continue to operate until it is sold, destroyed or used for any other commercial purpose.
Illegal: one that conflicts with ordinances that were in place before the use commenced. For instance, if the motel in the previous example is sold, and the new owner continues to operate the property as a motel, the motel is now an illegal, nonconforming use.
Public Land Use Control: Zoning Administration - Variance
A zoning variance allows a use that differs from the applicable ordinance for a variety of justifiable reasons, including that:
Compliance will cause unreasonable hardship.
The use will not change the essential character of the area.
The use does not conflict with the general intent of the ordinance.
For example, an owner mistakenly violates a setback requirement by two feet. His house is already constructed, and complying with the full setback now would be extremely expensive, if not impossible. The zoning board grants a variance on the grounds that compliance would cause an unreasonable hardship.
A grant of a zoning variance may be unconditional, or it may require conditions to be fulfilled, such as removing the violation after a certain time.
Public Land Use Control: Zoning Administration - Special Exception
A special exception grant authorizes a use that is not consistent with the zoning ordinance in a literal sense, yet is clearly beneficial or essential to the public welfare and does not materially impair other uses in the zone.
A possible example is an old house in a residential zone adjacent to a retail zone. The zoning board might grant a special exception to a local group that proposes to renovate the house and convert it to a local museum, which is a retail use, since the community stands to benefit from the museum.
Public Land Use Control: Zoning Administration - Amendment
A current or potential property owner may petition the zoning board for an outright change in the zoning of a particular property.
For example, a property zoned for agricultural use has been idle for years. A major employer desires to develop the property for a local distribution facility, which would create numerous jobs, and petitions for an amendment. The board changes the zoning from agricultural to light industrial to permit the development. Since a change in zoning can have significant economic and social impact, an appeal for an amendment is a difficult process that often involves public hearings.
Public Land Use Control: Subdivision Plat Approval and Requirement (9)
The plat, as a minimum, shows that the plan complies with local zoning and building ordinances. The project can commence only after the relevant authority has approved the plat.
Subdivision requirements typically regulate:
Location, grading, alignment, surfacing, street width, highways. Sewers and water mains. Lot and block dimensions. Building and setback lines. Public use dedications. Utility easements. Ground percolation. Environmental impact report. Zoned density.
Public Land Use Control: Extraterritorial Jurisdiction (ETJ)
In some states, subdivisions of land that are located within a certain distance of an incorporated city or town must be approved by the municipality. In counties that are densely populated, the county must approve subdivisions. This is called extraterritorial jurisdiction, or ETJ. A buyer of property outside city limits must be notified that the city may annex the property into the city at some time in the future. As long as the property remains in the ETJ the municipality has no right to control land use. If the municipality does annex the property, however, the city would have the right to control land use.
Public Land Use Control: Concurrency
Many states have adopted policies that require developers, especially of subdivisions, to take responsibility for the impact of their projects on the local infrastructure by taking corrective action. Concurrency is a policy that requires the developer to make accommodations concurrently with the development of the project itself, not afterwards.
For example, if a project will create a traffic overload in an area, the developer may have to widen the road while constructing the project.
Public Land Use Control: FHA Requirements
In addition to local regulation, subdivisions must meet FHA (Federal Housing Authority) requirements to qualify for FHA financing insurance. The FHA sets standards similar to local ordinances to ensure an adequate level of construction quality, aesthetics, and infrastructure services.
Public Land Use Control: Building Codes
Building codes allow the county and municipality to protect the public against the hazards of unregulated construction. Building codes establish standards for virtually every aspect of a construction project, including offsite improvements such as streets, curbs, gutters, drainage systems, and onsite improvements such as the building itself.
Building codes typically address:
Architectural and engineering standards.
Construction materials standards.
Building support systems such as life safety, electrical, mechanical, and utility systems.
Certificate of Occupancy
Building inspectors inspect a new development or improvement for code compliance. If the work complies, the municipality or county issues a certificate of occupancy, which officially clears the property for occupation and use.
Public Land Use Control: Public Acquisition and Ownership
If efforts to regulate privately owned property are inadequate or impractical in a particular situation, or if there is a compelling public need, a county or local government may acquire property by means of direct purchase.
A government body might acquire land because of the public need for:
Thoroughfares and public rights-of-way. Recreational facilities. Schools. Essential public facilities. Urban renewal or redevelopment.
If the private party is unwilling to sell, the government may purchase the property anyway. The power to do this is called eminent domain.
Public Land Use Control: Eminent Domain
Eminent domain allows a government entity to purchase a fee, leasehold, or easement interest in privately owned real property for the public good and for public use, regardless of the owner’s desire to sell or otherwise transfer any interest (involuntary). In exchange for the interest, the government must pay the owner “just compensation.”
Public entities that have the power of eminent domain include:
All levels of government.
Public districts (schools, etc.).
Public utilities.
Public service corporations (power companies, etc.).
Public housing and redevelopment agencies.
Other government agencies.
To acquire a property, the public entity must first adopt a formal resolution, often called a “resolution of necessity.” Must be adopted at a formal hearing where the owner may voice an opinion.
The property is purchased and the title is transferred in exchange for just compensation. Transfer of title extinguishes all existing leases, liens, and other encumbrances on the property. Tenants affected by the condemnation sale may or may not receive compensation, depending on the terms of their agreement with the landlord.
Private Land Use Control: Deed Restrictions
A restriction expressed in a conveyance (deed or lease) of a residential, commercial, or industrial property places limits on the use of the property. A quitclaim deed can terminate a private deed restriction. Such restrictions are also referred to as “covenants, conditions, and restrictions,” or CCRs. Most covenants have a time limit. At that time, those who own the property may agree to extend or renew existing CCRs.
Typical deed restrictions concern:
Required minimum area of a residence.
Setback.
Prohibition against construction of sheds or secondary buildings.
Prohibition against conducting certain commercial activities.
Private Land Use Control: Deed Conditions
Restrictions that provide for a reversion of title if they are violated.
May restrict certain uses of a property, much like a deed restriction.
If a condition is violated, ownership reverts to the grantor.
These conditions create a defeasible fee estate, as discussed in an earlier chapter.
Private Land Use Control: Declaration Restrictions
Preserve the value and quality of the neighborhood, commercial center, or industrial park.
The declaration of a subdivision, Planned Unit Development, condominium, and commercial or industrial park contains private use restrictions. These have the same legal effect as a deed restriction, as the declaration attaches to the rights in the property. A private party cannot, however, extinguish a declaration restriction by agreement or quitclaim deed.
The kinds of restrictions found in declarations are much the same as those found in deeds: construction restraints, aesthetics standards, etc.
The owners of a property have the responsibility of making sure that the other property owners are complying with the restrictions.
Private Land Use Control: Restrictive Covenants
Promises by those who purchase property in the subdivision to limit the use of their property to comply with the requirements of the restrictive covenants. Therefore, they are negative easements.
Restrictions must be reasonable, and they must benefit all property owners alike.
If the subdivision is in a zoned area, restrictive covenants have priority over the zoning ordinance to the extent that the covenants are more restrictive than the zoning requirements.
Typical restrictions you might see in a subdivision declaration of restrictions are: (9)
Only single-family homes are allowed.
Homes must have a specified minimum number of square feet of living area.
Only one home is allowed per lot.
Lots may not be subdivided.
Homes must be architecturally similar. All site plans and structure specifications must be approved by a committee before construction.
Buildings must be set back a certain number of feet from the front property line and from the interior property lines. (This is referred to as setback requirements.)
No temporary buildings are permitted.
Either one property owner or several owners can initiate a court action to enforce the covenants.
Covenants are in effect for a certain period of time. Some restrictions are automatically renewed, but can be changed by a vote of the property owners.
Restrictive covenants may be terminated in any of these ways: (5)
The specified time period of the covenant expires.
The property owners vote to end the restrictions. This may require a unanimous vote of all owners or a smaller vote of some subset of owners, depending on how the restriction was written.
Over time the character of the subdivision changes making it more suitable for some other kind of use.
The property owners choose not to follow the original plan by violating their own restrictions. In this kind of situation, any attempt to later enforce the restrictions might be disallowed by a court.
The owners do not enforce the restrictions in a timely manner.
For example, if the property owners wait until an inappropriate structure is complete before they petition the court for enforcement, the court may choose not to enforce the restriction and terminate it altogether. When a court terminates a covenant in this way, the court is applying the Doctrine of Laches. This doctrine states that if a property owner is lax in protecting his or her rights, the property owner may lose those rights.
Environmental Controls: Air Quality
With today’s construction methods creating airtight, energy-efficient structures, attention to sources of indoor air pollution is more important than ever. Off-gassing from synthetic materials and lack of ventilation can lead to such consequences as Sick Building Syndrome (SBS) and Building-Related Illness (BRI), as well as other health problems.
Environmental Controls: Air Quality - Asbestos
Powdery mineral once commonly used as a fireproof insulating material around pipes, in floor tiles and linoleum, in siding and roofing, in wallboard, joint compound, and many other applications.
When airborne, it is a health hazard. Its use today is highly restricted, and removal can be expensive and dangerous.
Inspection by a certified asbestos inspector is the best way to determine whether a building needs treatment.
Environmental Controls: Air Quality - Carbon Monoxide
Colorless, odorless, poisonous gas that may result from faulty heating equipment.
Home and commercial detection devices are available.
Environmental Controls: Air Quality - Formaldehyde and Lead
F: Chemical used in building materials and in other items such as fabrics and carpeting. As it ages, formaldehyde gives off a colorless, pungent gas.
L: Heavy metal once widely used in paints and plumbing materials. Occurs in airborne paint particles, paint chips, and soil and groundwater polluted by various external sources of emission.
Environmental Controls: Air Quality - Mold
Fungus that grows in the presence of moisture and oxygen on virtually any kind of organic surface. It often destroys the material it grows on and emits toxic irritants into the air. Tightly sealed structures with inadequate ventilation are most susceptible. Roof leaks, improper venting of appliances, runoff from gutters and downspouts, and flood damage are common contributors.
Environmental Controls: Air Quality - Radon
Colorless, odorless, radioactive gas that occurs naturally in the soil throughout the United States. It enters buildings through foundation and floor cracks, wall seams, sump pits, and windows, among other ways. At accumulations above certain levels, it is suspected of contributing to cancer. Excessive radon can be removed by special ventilation systems.
Environmental Controls: Soil and Water Quality
Soil, groundwater, and drinking water supplies are vulnerable to pollution from leaking landfills; improper waste disposal; agricultural runoff; industrial dumping in waterways; highway and rail spills; industrial emissions; internal combustion emissions; and underground tanks leaking fuels and chemicals, to mention but a few sources.
Common Soil and Water Quality problems (6)
Dioxins - a family of compounds produced as a byproduct of manufacturing and incinerating materials that contain chlorine.
Lead and mercury - common metallic elements used or produced in manufacturing processes.
MTBE, Methyl Tertiary Butyl Ether - a gasoline additive.
PCB, Polychlorinated Biphenyl - a substance formerly widely used as an electrical insulation.
Underground Storage Tanks (USTs) - regulated since 1984.
Wetlands - considered part of the natural water filtering system, as well as special habitats, subject to restrictions on development and use.
Other regulated and controlled environmental conditions include: (3)
Electromagnetic Fields (EMTs) created by power lines . Noise created by airports, air, rail and highway traffic. Earthquake and flood hazards that affect hazard insurance, lending practices, and construction requirements for buildings in designated flood and earthquake zones. Some water authorities control building construction in flood zones to keep from impeding flow of flood water.
Environmental Controls: Responsibilities and Liabilities
Licensees are expected to be aware of environmental issues and to know where to look for professional help.
Be aware of potential hazards.
Disclose known material facts.
Distribute the HUD booklet.
Know where to seek professional help.
They are not expected to have expert knowledge of environmental law nor of physical conditions in a property. Rather, they must treat potential environmental hazards in the same way that they treat other material facts about a property: disclosure.
Sellers or lessors of almost all residential properties built before 1978 to disclose known lead-based paint hazards and provide any relevant records available. The seller is not required to test for lead but must allow the buyer a ten-day period for lead inspection.
Real Estate Taxation
Refers to the taxation of real estate as property. Real estate property taxes are imposed by “taxing entities” or “taxing districts” at county and local levels of government (State and Local/County).
There are no federal taxes on real property. The Constitution of the United States specifically prohibits such taxes. The federal government does, however, tax income derived from real property and gains realized on the sale of real property. The federal government can impose a tax lien against property for failure to pay any tax due the Internal Revenue Service.
Real Estate Taxation: State Gov’t
States may legally levy taxes on real property, but most delegate this power to counties, cities, townships and local taxing districts. Some states place limits on how local governments may levy such taxes. States may impose a tax lien against property for failure to pay any real property taxes which the state has levied or delegated to local taxing bodies.
Real Estate Taxation: Local/County Gov’t
Counties, cities and municipalities, townships and special tax districts levy taxes on real property to raise funds for providing local services. It is common for the county to collect all real property taxes and distribute it among the other taxing bodies.
Purpose of Taxation
To raise funds to pay for municipal services. The collection of taxes provides important revenue for the local government and for area schools. Property taxes are based on the assessed value of the property. These values are also used to calculate the amount of state aid for education.
Local/County Assessment Units
Assessing units such as counties, cities and municipalities, townships and special assessment districts levy taxes on real property. It is common for the county to collect all real property taxes and distribute it among the other taxing bodies.
Why Tax Land? (3)
Property tax revenue is predictable. The fair market value of property is generally very stable.
The taxes are hard to avoid. Because the taxes are tied directly to the property, people tend to pay the taxes rather than suffer the potential consequences of non-payment. More than 95 percent of the levied taxes on real property are paid, especially since most lenders require that the property taxes be paid into an escrow account monthly.
Land is traditionally related to productivity and wealth; government takes its share.
Tax Districts
County and local governments establish tax districts to collect funds for providing specific services. The boundaries of such districts typically do not coincide with municipal boundaries. The major tax district in most areas is the school district.
Other important tax districts are those for fire protection, community colleges, and parks.
Local government authority may establish a special tax district to pay for the cost of a specific improvement or service that benefits that area (ex. funding extension for municipal water services in a new area). Special tax districts cease to exist once the costs of the specific project have been paid for, unlike permanent tax districts.
A property tax bill might include tax levies from such districts as the following: (14)
bridge and highway nursing home storm water management township fire district school district retirement health services historical museum sanatorium forest preserve/land management public library district park district community college district
Ad Valorem Taxation Mechanics: Assessment
As stated earlier, general property taxes are levied on an ad valorem basis, meaning that they are based on the assessed value of the property.
Assessed value is determined according to state law, usually by a county or township assessor or appraiser. The actual tax, though based on assessed value, may be derived as a legislated percentage of the assessed value. The property’s assessment itself may be a percentage of its fair market value, which is the amount the property would sell for in the current market.
Land and improvements may be assessed separately. Ad valorem taxes are paid annually.
Ad Valorem Taxation Mechanics: Valuation
Commercial property may be valued on its potential to produce rental income for its owners.
Agricultural property valuation is not based on market value, but rather on the productivity of the land, provided that the owner makes a certain percentage of income from farming or ranching.
Open space valuation is determined much the same way as agricultural property, but the owner does not have to prove that a percentage of income is acquired through farming. However, if the use of the land changes from agricultural to market value, there may be a liability for back taxes.
The assessor can use whatever approach provides the best estimate of a property’s market value according to its current use.
The role of the assessor in the taxing process is limited to making the valuation and notifying the owner of the assessed value; other tax officials determine the tax rate and the tax levy.
Taxation Mechanics: Level of Assessment
Once the assessor estimates the value of a property, the value may be adjusted by multiplying by a uniform percentage for the municipality. The percentage of full or market value at which properties are assessed is called the level of assessment or LOA. For example, an LOA of 25 percent means that assessments are one-fourth of the market value, so a home with a market value of $100,000 would be assessed at $25,000.
After a property’s total assessment is determined, its taxable assessed value is computed. The taxable assessed value is the total assessment minus any applicable property tax exemptions. Exemptions are typically either whole or partial. We’ll talk more about specific exemptions later in this chapter.
In theory, ad valorem taxation should lead to the result that two owners of real property of equal value pay the same amount in property taxes.
Taxation Mechanics: Equalization
Factors that level out the unevenness of valuations.
For instance, if assessed values of properties in one county are consistently ten percent below the average for other counties, an equalization board may multiply each assessed value in that county by a factor of 110% to raise them to the average level for the state.
Taxation Mechanics: Reassessment
Properties are reassessed for tax purposes on a regular schedule that is established by statute. But reassessments also occur under other circumstances.
If a property in a certain neighborhood increases in value but is not reassessed, over time it will become under-assessed.
Reassessments can be done “off schedule” when a property owner makes improvements to the property. Assessors are not allowed to do what are called “spot” reassessments on an individual parcel of property unless it is obvious or it has been reported that a material change was made to the property.
Examples of Property Reassessment
Mr. Temple and Mr. Green both purchased homes in Smallville five years ago. The purchase price for both homes was $150,000, so the tax bill for both properties was the same. Smallville has not updated its assessments in the past five years. Because of its location, Mr. Temple’s home has increased in value to $200,000. Mr. Green’s home has also appreciated, but not to the same degree. Mr. Green’s home is worth $160,000 now. Even though their property values have increased, both homeowners have been paying the same amount in taxes since they purchased their homes.
If the property in Smallville is reassessed, both Mr. Temple and Mr. Green will see an increase in their tax bill appropriate to the increased value of their homes. This will increase the town’s revenue. Other homeowners in Smallville may see no change in their property values, while others may see a decrease in the value and a decrease in their tax bill.
Taxation Mechanics: Old Vs. New Construction
Some types of construction projects are more likely than others to prompt a reassessment. These types of projects might include:
Finishing a basement into a family room or other living quarters.
Adding a garage.
Installing an in-the-ground swimming pool.
If the assessor sees that these renovations are not in the current tax record, he or she will reassess the property to include those changes.
