ORDERS:
ORDER OF REMAND
STATEMENT OF THE CASE
This is a contested case brought by Randall and Sandra Smith against the Spartanburg County
Assessor concerning a property valuation for the 1998 tax year. The Taxpayers exhausted all
prehearing remedies with the Assessor and the Spartanburg County Board of Assessment Appeals
(Board). Jurisdiction is granted to the Administrative Law Judge Division by S.C. Code Ann. § 12-60-2540(A) (Supp. 1998).
After notice to the parties, a hearing was conducted on April 14, 1999. Based on the
evidence presented at the hearing, this matter is remanded to the Spartanburg County Assessor to
determine the correct valuation of the property located at 901 Bennetts Bridge Road in Greer, South
Carolina for the 1998 tax year.
FINDINGS OF FACT
Having carefully considered all testimony, exhibits, and arguments presented at the hearing
of this matter, and taking into account the credibility and accuracy of the evidence, I make the
following Findings of Fact by a preponderance of the evidence.
The Taxpayers own real property located at 901 Bennetts Bridge Road, Greer, South
Carolina, which is the subject of this contested case hearing. The subject property is identified as
Tax Map No. 5-40-00-019.00 for tax purposes. The improvements to the property include a home
which was completed in 1995 and a detached garage which was constructed in 1996. The detached
garage also has a heated living area and bathroom. The Assessor originally valued the property at
$233,740. However, after the Taxpayers appealed, the Assessor's office reviewed its initial
determination and lowered the valuation. Using the cost approach, the Assessor valued the subject
property at $194,602. Using the market approach, the Assessor valued the property at $195,000.
The Taxpayers then appealed the Assessor's decision to the County Board of Assessment Appeals.
The Board determined that the proper valuation of the Taxpayers' property was $145,000.(1) The
Taxpayers appealed the Board's decision to the Administrative Law Judge Division.
The Taxpayers challenge the Assessor's valuation and contend that their property value is
significantly lower because the property is located in a one-hundred-year flood plain, and because
in August of 1995, five months after the Taxpayers moved into the home, it flooded with eight and
one-half feet of water on the lower level. Although the Taxpayers contend that the Assessor's 1998
assessment of their property is incorrect, the Taxpayers admitted at the hearing that they could not
state with certainty what they believed to be the proper valuation of the property.
In determining value under the cost approach, the Assessor used the Marshall and Swift
Residential Cost Handbook to estimate the cost and physical depreciation of the property. In
determining value under the market approach, the Assessor used four comparable properties.
Because there were no recent sales in the neighborhood of the subject property, the Assessor used
comparables from other neighborhoods. The Assessor made adjustments in an attempt to reflect the
differences between the subject property and the comparable properties.
Although portions of the land of comparables one and two are in a flood plain, neither of the
actual homes are located in a flood plain. Neither the land nor the homes of comparables three and
four are located in the flood plain.
DISCUSSION AND CONCLUSIONS OF LAW
The issue in dispute is the value of the Taxpayers' property, 901 Bennetts Bridge Road,
Greer, South Carolina for taxation purposes. Land is unique, as no parcel is identical to another.
Unlike commodities, land 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.
S.C. Code Ann. § 12-37-930 (Supp. 1997) provides:
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.
Fair market value is the measure of true value for taxation purposes under this statute. Lindsey v.
South Carolina Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990). The Taxpayers have the burden
of showing that the Assessor's valuation is incorrect. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171
(Court. App. 1988).
In order to determine a fair market price for the Taxpayers' property, comparisons of the sale
price of other properties of the same character may be utilized. See Appraisal Institute, The
Appraisal of Real Estate at 367 (10th ed. 1992); 84 C.J.S. Taxation §§ 410-411 at 785, 797 (1954).
However, although the assessor should give weight to the price at which similar property, if any, has
sold, evidence of comparable sales is rarely, if ever, conclusive on the question of realty for tax
purposes. 84 C.J.S. Taxation § 411 at 797 (1954).
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 (1954). The assessor "should take into consideration
all of [the land's] elements or incidents, such as location, . . . quality, [and] condition . . . which affect
market value or would influence the mind of a purchaser." 84 C.J.S. Taxation, § 411 at 794-795
(1954). "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 . . . ." 84 C.J.S. Taxation § 410 at 784-785 (1954). The quality and condition of a property
has a major influence on the property's comparability with other properties. Appraisal Institute, The
Appraisal of Real Estate at 244 (10th ed. 1992). Further, excessive location differences may
disqualify property from use as a comparable. Id. at 382.
In the instant case, there are crucial differences between the comparables used by the
Assessor and the subject property. First, all of the comparables are located in subdivisions, whereas
the subject property is located in a less desirable rural area. Second, although part of the land of
comparables one and two are located in a flood plain, neither of the actual homes are located in a
flood plain. Finally, the Taxpayers must disclose the fact that their home has experienced significant
flooding to any potential buyer, thus, reducing the market value of their home. South Carolina
courts have held that the seller of a house has a duty to disclose any latent defect or condition which
is not reasonably discoverable upon inspection and which is known to the seller. See May v.
Hopkinson, 289 S.C. 549, 557, 347 S.E.2d 508, 513 (Ct. App. 1986) (citing Cohen v. Blessing, 259
S.C. 400, 403, 192 S.E.2d 204, 205-206 (1972)). These critical differences make the comparables
chosen by the Assessor less persuasive as indicators of value for the subject property.(2)
Donald Grant, Staff Appraiser with the Spartanburg County Assessor's Office, stated that in
his appraisal of the subject property, he deducted $50,000 from the value of the property because he
determined that it would cost $50,000 to replace the lower level of the home if it were completely
destroyed by a flood. However, this approach fails to take into account the effect on the overall
marketability of the property. It seems logical that a potential buyer would consider not only
replacement costs, but would also consider other factors such as the significant likelihood that the
property will flood in the future, and the inconvenience, increased insurance costs, emotional toll,
and other damages that might result from a devastating flood. The price that a potential buyer would
be willing to pay would certainly be significantly reduced by such considerations. Without prior
sales of the subject property or evidence of the market value of properties more similar to the
Taxpayers', any valuation which purports to measure market value of the subject property is too
speculative.(3)
The other approach to valuation that the Assessor used was the cost approach. Using the
Marshall and Swift Residential Cost Handbook, the Appraiser attempted to determine a replacement
cost (including depreciation) for the home. Under this approach, an appraiser considers a variety of
factors and assigns costs to the individual components that make up a home to determine the total
cost of reproducing or replacing the home. However, Mr. Grant conceded under questioning that
because the house was recently constructed, the actual sale price of the home would have been a
more accurate indicator of cost than the method he used.
Thus, the Assessor failed to make an accurate assessment of the Taxpayers' property under
both the market value approach and the cost approach. While the Taxpayers succeeded in
discrediting the Assessor's valuation, they failed to proffer any evidence to establish the correct
valuation.(4)
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that the this matter is remanded to the Spartanburg County
Assessor for findings consistent with this opinion.
AND IT IS SO ORDERED.
____________________________________
JOHN D. GEATHERS
Administrative Law Judge
Post Office Box 11667
Columbia, South Carolina 29211-1667
June 21, 1999
Columbia, South Carolina
1. The Board provided no analysis or rationale for its decision to value the Taxpayers'
property at $145,000.
2. The weight and credibility assigned to evidence presented at the hearing of a matter is
within the province of the trier of fact. See South Carolina Cable Television Ass'n v. Southern
Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992).
3. Of the four comparables used by the Assessor, two had only a part of the land located in
a flood plain and the other two were not located in a flood plain at all. Thus, the Assessor
provided no evidence of market value for property where substantially all of the land and the
actual home is located in a flood plain. Further, based on the evidence, this tribunal cannot
determine if there have not been any sales of property where the home is located in a flood plain,
or if the Assessor chose not to use such properties as comparables. If, however, there have been
no recent sales of property which is substantially all in a flood plain, this fact would be probative
as to the Smiths' contention that their property has a reduced market value.
4. Although she testified that the value of her property has been drastically reduced by the
1995 flood, Mrs. Smith did not offer testimony as to its proper valuation. |