SC Administrative Law Court Decisions

I. STATEMENT OF THE CASE

This is a contested case brought by Allen W. Johnson ("Taxpayer") against Aiken County Assessor ("Assessor") concerning a property valuation for the 1995 tax year. The parties exhausted the prehearing remedies with the Assessor and the Aiken County Tax Review Board ("Board"). Jurisdiction is granted to the Administrative Law Judge Division ("ALJD") by S.C. Code Ann. § 12-60-2540(A) (Supp. 1995).

This matter was heard on February 25, 1997. The parties stipulated that the file and the exhibits exchanged between the parties would be made a part of the record and included as evidence.

II. ISSUE

1. Whether the subject property is fairly appraised at a fair market value of $73,420?

III. FINDINGS OF FACT

1. The Taxpayer is the owner of property at 915 Fairwood Avenue, North Augusta, Aiken County, South Carolina, which is the subject of this contested case hearing.

2. The subject property is identified as Tax Map No. 10-022-0-13-015 for tax purposes.

3. On October 15, 1996, the Aiken County Tax Review Board determined the market value of Taxpayer's property, 915 Fairwood Avenue, North Augusta, South Carolina, to be $79,000. However, the Taxpayer contends that the value of the subject property is $60,000.

4. The subject property in its condition at the time of inspection was uninsurable due to needed repairs of items, including garage doors, screen doors, an exterior door, and general lack of maintenance and upkeep.

5. The subject property was built in 1964 and has the original central heat and air conditioning system which needs to be replaced. The Taxpayer estimates that it will cost $2,000 for this replacement.

The Taxpayer contends that the kitchen needs to be remodeled and estimates such costs to be $5,000. Further, he contends that carpeting installed in 1976 needs to be replaced, and estimates such costs to be $3,000.

The garage doors need to be replaced at a cost of $1600 each, which totals $3200. The insulation in the subject property is insufficient and the Taxpayer estimates a $500 cost to render insulation sufficient. The Taxpayer replaced the roof of the property within the last four years.

According to the Taxpayer, the interior needs painting, and estimates a cost of $600. Additionally, the screens on the porch need replacing, estimated to cost $1000. Further, the house is electrically wired on a 100 volt amperage as opposed to a 220 volt amperage. The Taxpayer's estimates the cost of an upgrade at $2,000. The Taxpayer's estimates total $16,300 in improvements. This tribunal accepts the Taxpayer's testimony regarding the needed improvements as credible and the estimates appear to be reasonable for the described repairs.

6. The Assessor appraised the subject property using the market approach. In this regard, the Assessor utilized three comparables to determine the fair market value of the Taxpayer's property. All of these comparables sold in 1994 and are in close proximity and comparable in size, age, and design to the subject property.

Comparable #1 sold for $80,000; Comparable #2 sold for $82,000; and, Comparable #3 sold for $78,740.

In making a valuation of the comparables and the subject property, the Assessor conducted an external inspection. He did not, however, conduct an internal inspection and was therefore not aware of the internal condition of any of these properties. Hence, the internal condition of the subject and comparables did not figure into his valuations.

7. The Assessor's comparables show a reasonable relationship to the market value of the subject property.

8. The Assessor made an adjustment to the subject property because of the condition of the screen porch and valued it as a covered porch rather than a screen porch. The Assessor also made a $6000 adjustment because of the substandard upkeep and maintenance.

However, the Assessor did not make sufficient or specific adjustments for repair or replacement of the following: garage doors, central heating/air, carpeting, interior painting, electrical wiring, insulation, or remodeling kitchen.

IV. CONCLUSIONS OF LAW/ANALYSIS

The issue in dispute is the value of the Taxpayer's property, 915 Fairwood Avenue, North Augusta, South Carolina, for taxation purposes. Land is unique, as no parcel is identical to another. Unlike commodities, it does not have a fixed market price at a given period and its value is determined by the estimate of the person who values it. 84 C.J.S. § Taxation § 411 at 793 (1954). "Generally, the proper valuation of realty for taxation is a question of fact, to be ascertained in each individual case in the manner prescribed by statute." Id. Under S.C. Code Ann. § 12-37-930 (Supp. 1995), the measure of value for taxation purposes is fair market value. Lindsey v. S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990); 84 C.J.S. Taxation § 411 at 791 (1954). This value can be established by determining the price a willing buyer would pay a willing seller for the Taxpayer's property. See S.C. Code Ann. § 12-37-930 (Supp. 1995). In order to determine a fair market price for the Taxpayer's property, comparisons of the sale price of other properties of the same character may be utilized. See 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. That is, utilizing comparables present 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).

In the instant case, the Assessor utilized three comparables as reliable indicators to determine the fair market value of the Taxpayer's property. The Assessor determined the market value of the Taxpayer's property to be $73,420. Assessor's Comparable #1 sold for $80,000 in 1994, for which the Assessor determined $81,230 was the adjusted value. Assessor's Comparable #2, sold for 82,900 in 1994, for which the Assessor determined $79,400 as the adjusted value. Assessor's Comparable #3 sold for $78,740 in 1994, and the adjusted value was determined to be $79,970 by the Assessor.

In valuing property, an Assessor should take into consideration all relevant factors and circumstances bearing on this determination which are within his knowledge or brought to his attention. 84 C.J.S. Taxation § 410 at 784-785. Further, "each case of valuation must be determined according to the conditions existing at the time, and the property to be assessed is to be taken and valued in the actual condition in which the owner holds it. . . ." Id. Hence, in the instant case, the Assessor should have taken the condition of the subject property into consideration in his valuation. The quality and condition of a property has a major influence on the property's comparability with other properties. The Appraisal of Real Estate at 244 (10th ed. 1992). Further, the maintenance of a property affects its condition. Id.

However, the Assessor failed to make sufficient adjustments to the Taxpayer's property to reflect its condition. "In estimating the value of land, an Assessor should take into consideration all elements or incidents such as location, quality, condition . . . which affect market value or would influence the mind of a purchaser." 84 C.J.S. Taxation, § 411 at 794-795.

The Taxpayer described a number of improvements which the subject property needs and their corresponding costs, as outlined below. It is highly likely that a potential purchaser would be influenced by these improvements or the lack thereof. Hence, the Assessor should have made the appropriate adjustments on the Taxpayer's property reflecting the cost of needed improvements. By uncontroverted testimony of the Taxpayer, these improvements are valued as follows:

Based on adjustments for lack of the aforementioned improvements, the market value of the Taxpayer's property is $63,120. This figure is derived by reducing the Assessor's value of the Taxpayer's property of $73,420, by the total of the estimated costs of the improvements, minus the $6,000 adjustment the Assessor already made for overall lack of maintenance [$73,420 - ($16,300 - $6000) = $63,120].

V. ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, the following Order is issued.

IT IS HEREBY ORDERED that the Assessor value the Taxpayer's property, 915 Fairwood Avenue, North Augusta, South Carolina, for the 1995 tax year at $63,120.

____________________________________

JOHN D. GEATHERS

Administrative Law Judge

Post Office Box 11667

Columbia, South Carolina 29211-1667

This 6th day of March, 1997.

Columbia, South Carolina