HOW CAN MY PROPERTY BE ASSESSED AT $200,000 IF I RECENTLY PAID ONLY $100,000?

A call from the real estate editor of The Miami Herald recently posed the following question: why was a condo unit being assessed at $192,000 when it was recently purchased for $112,000?

My short answer was: sales price is not always the equivalent of market value.

The long answer involves a discussion of the relationship between purchase price and market value.

The applicable principles are the following:

1. Market value is the amount a willing buyer will pay to a willing seller at arm's-length, both informed as to all the pertinent facts, and neither under duress to make the transaction.

2. Sales price in an arm's-length transaction is presumptively indicative of market value--but this presumption is rebuttable and may be overcome by evidence to the contrary.

3. Sales price may be driven by non-market considerations, such as whim, caprice or other nonrational considerations.

4. Sales price may be arrived at and agreed to well in advance of the closing date and reflect market conditions as of the date of the agreement for purchase and sale, as distinguished from the date of closing.

As it turned out, #4 was the reason for the nearly-100% difference between the purchase price and the tax assessor's estimate of market value in the situation described to me by the newspaper editor.

The sales price was a pre-construction price on a condo unit agreed upon some two years in advance of the closing. This was precisely the hypothetical situation I had described as being a possible rationale for the tax assessment being nearly twice the purchase price in a recent transaction. I had hit the nail on the head.

For the full text of the article in The Miami Herald discussing this situation and containing my comments, click on the link below.

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Daniel A. Weiss is a former Attorney Special Master for the Miami-Dade County Value Adjustment Board. Mr. Weiss now represents commercial, institutional charitable, commercial, high-end residential, agricultural and municipal taxpayers at VAB proceedings throughout the State of Florida. Mr. Weiss handles both valuation and legal claims.

Mr. Weiss has over 25 years property tax experience. Mr. Weiss represented the Miami-Dade County taxing authorities in litigation and appeals between 1981 and 1995 as a Miami-Dade Assistant County Attorney and has since represented taxpayers in property tax matters.

Mr. Weiss appears as one of Florida's Super Lawyers 2006 in the publication of the same name. He was named by his peers as one of the top 6 local government lawyers in South Florida.

In Florida Trend magazine™'s Legal Elite's issue, July 2004, Mr. Weiss was selected by his peers as one of the top 30 government lawyers in the State of Florida.

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