SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This is a contested case brought by the Petitioners concerning a property valuation for the 1999 tax year. The Petitioners exhausted their prehearing remedies with the Horry County Assessor (the Assessor) and the Horry County Board of Assessment Appeals (the Board) and sought a contested case hearing before the Administrative Law Judge Division (Division). A hearing was held at the offices of the Division on December 5, 2000.

ISSUE PRESENTED FOR DETERMINATION

What is the appropriate value for tax year 1999 of a parcel of real property located in Horry County, South Carolina, also known as Tax Map. No. 173-07-03-006 or 3741 Rice Hope Court, Myrtle Beach?

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:

1. Notice of the time, date, place and nature of the hearing was timely given to all parties.

2. The Petitioners own Lot 6, Block A of Plantation Point Subdivision in Myrtle Beach, South Carolina. The property consists of a lot which is 27,438 square feet. On the property is a single-family dwelling which was built in 1977.

3. Horry County conducted a countywide reassessment for the tax year 1999. The assessment was based upon a mass appraisal. Pursuant to that reassessment, the Assessor determined that the total assessed market value of the Petitioners' property had increased to $216,400.00. The Petitioners submitted their protest on January 26, 2000, estimating the value of the property to be $160,000.00. On June 20, 2000, the Horry County Board of Assessment Appeals notified the Petitioners that it was accepting the county's assessment value of $216,400.00. It is from that decision that the Petitioners appeal to this Division.

4. In addition to the mass appraisal, the Assessor supported his appraisal with two market sales analyses of the Petitioners' property. The first appraisal was divided into two parts. Part I was a market sales analysis done on vacant lots in the area to determine the value of the Petitioners' land. Three parcels of property were used and they were chosen based upon their similarity in size, location, and views. The sales in the area indicated a range of $3.85 per square foot of land to $4.20 per square foot of land. The appraised value of the Petitioners' property was $3.81 per square foot. The appraised value in Part I was then used in Part II which analyzed three improved lots as a comparison to the Petitioners' property. Comparable One is in the same subdivision as the Petitioners' lot. The home is similar in age and in size. However, it is a smaller lot for which an adjustment was made. ⁽¹⁾ Comparables Two and Three are in a neighboring subdivision, Fairway Point. The adjustments on these two properties were considerably larger because the homes and lots in Fairway Point are smaller. I find that Comparable One is an acceptable comparison, but that Comparables Two and Three are not.

The second appraisal was also divided into two parts: one which appraised the lot based on vacant lot sales and the other based on improved lots. The appraised value in Part I was then used in Part II. In the appraisal of the vacant lots, the subject property was valued at $3.82 per square foot. ⁽³⁾ The similar sales in the area varied from $4.20 per square foot to $5.06 per square foot. In appraising the improved pieces of property, the three pieces of property used by the Petitioners in their version of a sales analysis were used. These properties are all within the Plantation Point Subdivision. Comparable One is the same as in the first appraisal. Comparable Two is much newer than the subject property and is a much larger home; therefore, the adjustments are very large. Comparable Three is a large lot with a home nearly the same age. The two homes vary less than one hundred square feet in size. Minimal adjustments had to be made. Based on the sales analysis of Comparable Three, the appraised value of the Petitioners' property should be $244,200.00. I find that Comparable Three in the second assessment is the most comparable piece of property to the subject property. It is also a better comparable than Comparable One in the first appraisal.

5. The Petitioners argue that the Assessor valued their property much too high. In support of their contention, the Petitioners conducted their own market sales analysis. To derive a comparable price, the Petitioners simply divided the square footage of the homes into the sales price of the homes to derive a price per square foot. ⁽⁴⁾ The Petitioners then multiplied that number by the square footage of their home, to reach a value of $183,073.02. However, the Petitioners' approach is not the proper way to value property. A proper appraisal under the market sales analysis approach requires adjustments to be made to the comparables when necessary in accordance with accepted appraisal practices to reach a correct value of the property. For example, though all of the lots are smaller than the subject lot, the Petitioners made no adjustment for their lot size. I therefore find that Petitioners' valuation is incorrect.

6. The Petitioners also argue that no representative of the Assessor's office ever entered their home or considered repairs needed to the home. The Petitioners estimate that at least $31,000.00 is needed to repair the siding, windows and a bathroom in their home. However, the appraisers took age into account when valuing the Petitioner's property and made adjustments accordingly. Nevertheless, some of the Petitioners' asserted $31,000.00 of needed repairs may not have been reflected merely by taking age into account in a market sales analysis.

CONCLUSIONS OF LAW

Based upon the above Findings of Fact, I conclude the following as a matter of law:

1. S.C. Code Ann. §12-60-2540 (Supp. 2000) authorizes the Division to hear this contested case pursuant to Chapter 23 of Title 1 of the 1976 Code of Laws, as amended. The taxable status of real property for a given year is to be determined as of December 31 of the preceding tax year. S.C. Code Ann. §12-37-900 (1976 and Supp. 1998); Atkinson Dredging Company v. Thomas, 266 S.C. 361, 223 S.E.2d 592 (1976).

2. In S.C. Code Ann. §12-37-930 (Supp. 1998) the legislature set forth how real property must be valued:

All real property shall be valued for taxation at its true value in money which in all cases shall be held to be the price which the property would bring following reasonable exposure to the market, where both the seller and buyer are willing, are not acting under compulsion, and are reasonably well informed as to the uses and purposes of which it is adapted and for which it is capable of being used.

Therefore, fair market value is the measure of true value for taxation purposes. Lindsay v. S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990). There is no valid distinction between market value for sales purposes and market value for taxation purposes under S.C. Code Ann. § 12-37-930. S.C. Tax Comm'n v. S.C. Tax Board of Review, 287 S.C. 415, 339 S.E.2d 131 (Ct. App.1985).

3. An Assessor's valuation is presumed correct and the property owner bears the burden of proving the Assessor's determination is not correct. 84 C.J.S. Taxation § 410 (1954). Ordinarily, this is done by proving the actual value of the property. The taxpayer may, however, show by other evidence that the assessing authority's valuation is incorrect. If he does so, the presumption of correctness is removed and the taxpayer is entitled to appropriate relief. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).

4. While not conclusive, market sales of comparable properties present probative evidence of fair market value of similar property. 84 C.J.S. Taxation § 411 (1954). Furthermore, in estimating the value of property, all of the factors which affect market value or would influence the mind of a purchaser should be considered, such as location, quality, condition and use. See 84 C.J.S. Taxation § 410 at 784; § 411 at 794 (1954).

To determine a fair market price for the Petitioners' property, comparisons of the sale price of other properties of the same character may be utilized. See Appraisal Institute, The Appraisal of Real Estate367 (10^th ed. 1992) ⁽⁵⁾; Cloyd v. Mabry, 295 S.C. 86, 367 S.E. 2d 171 (Ct. App. 1988); 84 C.J.S.Taxation §§ 410-411 at 785, 797 (1954). While it is impossible to predict with certainty what a particular property will sell for, utilizing comparable sales is a good indicator of what a potential purchaser will likely pay and it provides probative evidence of the market value of the subject property, if the comparables are similar in character, location and physical characteristics. See 84 C.J.S. Taxation§ 411 (1954).

5. In the instant case, the Horry County Assessor has met its burden of proof of showing the valuation is correct with the exception of adjusting for the needed repairs. The Assessor's best appraisal value based on the market sales analysis is $244,200.00. However, the Assessor valued the Petitioner's property for taxation purposes at $216,400.00. I find that the assessed value of $216,400.00 is fair and accurate in light of the estimate by the Petitioners of needed repairs.

ORDER

Based upon the above Findings of Fact and Conclusions of Law:

IT IS HEREBY ORDERED that the assessed value of $216,400.00 be affirmed.

AND IT IS SO ORDERED.

____________________________

Ralph King Anderson, III

Administrative Law Judge

April 9, 2001

Columbia, South Carolina

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3. This value is one cent different than the exact figure in the first appraisal. The reason is that the appraised value of the land ($104,800.00) divided by the square footage (27,438) is $3.81952 per square foot. This figure was rounded down to $3.81 in the first appraisal. However, it should have been rounded up. Therefore, the value of $3.82 used in this appraisal is correct and the $3.81 used in the first appraisal is incorrect.

4. One of the properties was figured at the incorrect sales price. Comparable One in the Petitioners' assessment sold for $275,000.00 and not $217,000.00.

5. South Carolina courts, as well as other jurisdictions, have relied on the Appraisal Institute's standards for valuation as published and updated in several editions of The Appraisal of Real Estate. See, e.g., South Carolina Tax Comm'n v. South Carolina Tax Board of Review, 287 S.C. 415, 339 S.E. 2d 131 (Ct. App. 1985); Badische Corporation (BASF) v. Town of Kearny, 288 N.J. Super. 171, 672 A.2d 186, 189 (1996).