Read your Change Notice

Every February the tax payer of record to a parcel of real estate receives a so-called “Change Notice”. Most property owners realize the importance of reviewing the Change Notice to determine if the State Equalized Value (SEV) of their property has been increased. However, it is also important to make sure that the assessor has not initiated a classification change.

For instance, recently we met with a sophisticated business client regarding the loss of a personal residence exemption (PRE). The Dept. of Treasury had revoked the PRE for the current year and three previous years, so the increase in his tax bill was quite noticeable. The property in question had historically qualified for the PRE and there was no change in the use or construction of the improvements.

Upon review of the tax records, we determined that the local assessor had visited the property and wrongly concluded that there was a business office housed within the larger improvements. The assessor changed the classification of the improvement from residential to commercial based on his erroneous observations. Our client did not catch the change in classification and therefore did not challenge the reclassification at the March Board of Review.  On appeal to the Dept. of Treasury, we were able to recoup two years of the PRE but were barred from a full recovery because no challenge was timely made at Board of Review.  An expensive lesson for sure.  Please completely read your Change Notice and compare it to the previous year.

For all of your property tax questions call or email William L. Carey.

Changes to foreclosure statute shorten redemption

Amendments to Michigan’s foreclosure statute may allow for recovery of possession of foreclosed property inside the standard 6 month

time frame in circumstances where the condition of the property is being damaged. A lender or vendor may inspect the property after sale

to determine if damage has occurred or may occur in the near future. If the lender or vendor believes damage has occurred or is imminent,

recovery of the property may be had via summary proceedings for possession. MCL 600.3240(13)

Please contact William Carey at Carey and Jaskowski, PLLC for all of your northern Michigan real estate needs. 

Riparian Control of Beachfront Property

On July 2, 2013, P.A. 98 became law. Section 30101a is significant for riparian land owners. In relevant part, a state issued permit is not  required for placement of a private noncommercial dock used for recreational use. A permit is not required for reasonable beach sanding. A permit is not required for the withdrawal of water.

Multiparty docks do not apparently meet exempt status. What constitutes “reasonable” for purposes of beach sanding can be a point of debate. While the statutory amendments do not use the term “reasonable” water withdrawal, common law clearly imposes such a restriction. Further, local regulations and permitting are not impacted by the amendments.

Despite some remaining issues, P.A. 98 is a definite plus for riparians.

Attorney William L. Carey specializes in water and riparian rights issues and has successfully represented waterfront property owners at all levels of the courts in Michigan, including multiple appearances before the Michigan Supreme Court.

Detroit Renews Its War On Blight

Court of Appeals Affirms Restrictive Use Of Private Dedication

The Michigan Court of Appeals has issued its opinion in the matter of Studley v Township of Hill et al, (Case No. 303845; 2013 WL 2278075). The case involves the Plat of Shady Shores Park in Ogemaw County. The land was platted in 1928. When it was platted a long and narrow strip of land was privately dedicated as a Beachway. The strip of land ran from a subdivision road down the waters edge of the lake upon which the plat fronted. The trial court restricted the use of the Beachway to ingress and egress only and not for private dockage, overnight mooring, and other park-like uses. The Court of Appeals affirmed and, significantly, held that the legal principles for determining the allowed uses of a private easement are the same as a public way leading to the waters edge. The Court of Appeals further confirmed that the burden of evidence is upon the user who wishes to argue that the scope of the dedication allows marina and park-like activities. The prevailing party was represented by William Carey at trial as well as the Court of Appeals.

Please contact Attorney Carey for your real estate needs.

A long road ahead?

Taxable Value, Assessed Value and the PRE

Because real property taxation issues make up a substantial portion of my practice, I am frequently asked questions about the relationship between the PRE (personal residence exemption)  and taxable value. Simply put, there is no relationship. Taxable value dictates the value against which the millage rate applies. The PRE eliminates that portion of the  millage rate that applies to the local school operations.

The tax base of a parcel is 50% of the taxable value. The assessed value of a parcel is 50% of the true cash value. True cash value should equate to the current market value of the parcel. The assessed valuation is adjusted yearly. The assessed value may be adjusted upward or downward year over year, as dictated by market conditions. There is no ceiling or floor to the year over year adjustment to the assessed value.

Taxable value, the tax base against which the millage rate is applied to generate the tax bill, may never exceed the assessed value of a property. However, in an appreciating market, taxable value will often be less than the assessed value. This is due to the enactment of Proposal A. (PA 1994 415). Prop A caps the increase of taxable value, year over year, to the lesser of the inflation rate or 1.05%. Again, in a rising market, this will necessarily create a difference in the taxable value and the assessed value. The net effect is that the tax bill is lower because the millage rate is applied to the taxable value and not the assessed value. The advantage is lost when the property is transferred. This lost tax advantaged is referred to as uncapping. At the time of a qualifying transfer, the taxable value is automatically adjusted to match the assessed value, irrespective of the percentage of the increase.

The PRE is a different creature altogether and has nothing to do with Prop A or taxable value.  The PRE applies only to residential property that serves as the primary home of the tax payer. A taxpayer must apply for the PRE.  If the PRE is granted, the applicable millage rate is reduced by the tax levied by a local school district for school operating purposes. In northern Michigan this often amounts to a millage rate reduction of 9.00 mills. For example a taxpayer who qualifies for a PRE on a  home that has a taxable value of $500,000. will save $4,500. annually under this scenario.

William Carey

 

Land Contracts: A Creature of Michigan Real Estate Financing

Land contracts seem to be somewhat unique to Michigan. In some states land contracts are actually illegal. That said, a land contract is a pretty simple way to sell a property.  The land contract can be at once both the sales agreement and the mortgage. The parties to the contract need to agree on the basic terms. Purchase price, down payment, interest rate on the balance due, monthly payment, and maturity (balloon) date, are the salient terms.  Once those terms are agreed to, the land contract is signed and the deal is done. Typically, it is the seller who is responsible for providing title insurance to the buyer. The cost of title insurance is based upon the purchase price. The cost to record the land contract is a buyer cost. The attorney fees for document prep and closing are usually a split cost between buyer and seller. The buyer does not receive a deed to the property until the land contract is paid in full.

Many buyers prefer land contracts because it is a low cost way to obtain financing. Buyers with a questionable credit record require a land contract because they cannot obtain conventional third-party financing ( e.g. the bank) Sellers like them because it makes the sale of hard to sell property a bit easier.  To protect yourself you should make sure the down payment is at least 10% of the purchase price, preferably 15% to 20%.

While there are so-called standard form land contracts out there (you can find them on the internet), I do not use them. Every deal is different and the terms of the contract should reflect that uniqueness.  The down side of a land contract is that a buyer takes possession and then may default. It can take as long as a year to foreclose a land contract. During the foreclosure period, the buyer retains possession and use. The seller receives no payments during default. Additionally, the foreclosure process can cost as much as a $1,000 in attorney fees to complete. Hence the need for a solid down payment.

William Carey is highly experienced in representing lenders and land contract vendors in real estate financing issues.

The Relationship Between Zoning and Riparian Rights

R-1 Zoning and Riparian Rights

The enactment of a zoning ordinance is the primary method by which private land use is regulated.  Townships have long been authorized, through zoning and police power, to restrict the manner in which a private citizen may use his land.  Typically a township creates land use classifications such as residential, commercial and industrial.  Within each classification there are defined allowable uses to which certain land can be put to.

At Higgins Lake, both Lyon Township and Gerrish Township have sophisticated land use regulations.  As to the lakeshore of Higgins Lake, the vast majority of the parcels are designated as single family residential (“R-1”).  In general terms, an R-1 classification means that the use of the land is limited to a single family unit.  In contrast, for instance, an R-2 designation allows multiple family uses.

The courts of Michigan have ruled that local units of government may regulate riparian bottomlands through zoning (and police power) ordinances.  Because riparian ownership may not be severed from adjoining uplands, whatever zoning classification is placed on the upland is also applied to the adjacent riparian.  Accordingly, the vast majority of Higgins Lake bottomlands are restricted to R-1 usage.

What does the R-1 classification mean in terms of the use of your riparian property?  Two cases decided by the Michigan appellate courts are instructive.  In Soupal v Shadyview (Gerrish Township) the court ruled that 8 families using an R-1 parcel on Higgins Lake was a nuisance per se and violated R-1 restrictions.  In Kallman v Sunseekers, the court ruled that a limited liability company could not allow its multiple family members to all use an R-1 parcel.  Both of these cases can be read in their entirety by visiting http://www.careyjaskowski.com

Notwithstanding R-1 restrictions a riparian owner has an absolute right to seasonally moor a boat and erect a dock.  Furthermore, zoning has not been historically used to prevent immediate family members from enjoying mooring privileges as well.

Beyond owners and immediate relatives, the practice of allowing nonriparians to seasonally moor boats on  R-1 riparian land violates township zoning rules and state statute. In most situations it is a violation of either the Lyon Township zoning ordinance or the Gerrish Township zoning ordinance to allow your nonriparian neighbors and friends to seasonally moor a boat on your riparian.  In most circumstances it is a violation of state law to do so as well.  This because the State of Michigan regulates the practice of allowing nonriparians to seasonally moor boats on private bottomlands by requiring the riparian owner to first obtain a marina operating permit from the Michigan Department of Environmental Quality.

Long recognized as an expert in the field, William Carey stands ready to represent you on all property issues.

52nd Annual Fracking Conference