January 7, 2016.
Circuit Court for Montgomery County. Case No. 369661-V.
PETITIONER: Rand L. Gelber (Jeffrey A. Gelber of Rockville,
MD) on brief.
RESPONDENT: Jeffrey G. Comen, Assistant Attorney General
(Brian E. Frosh, Attorney General of Maryland of Baltimore,
MD) on brief.
C.J., Battaglia[*], Greene, Adkins, McDonald, Watts,
Raker, Irma S. (Retired, Specially Assigned), JJ. Opinion by
Barbera, C.J., Battaglia and Watts, JJ., dissent.
Md. 457] Barbera, C.J.
Maryland law requires that, unless exempted, all real
property in the State be assessed for property tax purposes.
The assessment is calculated by reference to the value on the
" date of finality," which is defined as "
January 1, immediately before the 1st taxable year to which
the assessment based on the new value is applicable."
Md. Code Ann., Tax-Prop. (" TP" ) §
8-104(b)(1) (2009, 2012 Repl. Vol.). This case presents the
question [447 Md. 458] of whether the Tax Property Article
prohibits the Maryland Tax Court from taking into account
sales of comparable properties that occur after the
date of finality in determining the value of a property
on the date of finality.
Court did not believe itself so constrained and, as we shall
see, valued the property by relying on sales of comparable
properties that occurred several months after the date of
finality. The Court of Special Appeals found no error with
the Tax Court's reliance on that evidence and neither do
Property Taxation in Maryland
Unless otherwise exempted by statute, all property located in
the State is subject to assessment and property tax and is
taxable to the owner of the property." State
Dep't of Assessments & Taxation v. Andrecs, 444 Md.
585, 590, 120 A.3d 734 (2015). " Calculation of a
property assessment begins with a determination of the
property's value[,]" and, in accordance with the
dictates of Article 15 of the Maryland Declaration of Rights,
the rules for such calculation must be " uniform."
Id. at 591; see also 589-90 (discussing
Md. 459] The value of real property is determined by the
State Department of Taxation and Assessment or its local
Supervisor of Assessments " once in every 3-year cycle
based on an exterior physical inspection of the real
property." TP § 8-104(b)(1). " [T]he value of
the real property shall be its value on the date of
finality," TP § 8-102(a), and, for purposes of real
property assessed under TP § 8-104(b)(1), the "
date of finality" is the " January 1 immediately
before the 1st taxable year to which the assessment based on
the new value is applicable," TP § 8-104(b)(2).
See also TP § 1-101(oo) (explaining that the
taxable year begins on July 1).
Tax Property Article does not prescribe a specific
methodology for valuation. Respondent Supervisor of
Assessments of Montgomery County (" Supervisor" )
advises us that, since 1992, the State Department of
Assessments and Taxation and its local assessors have
followed the practice of considering sales after the date of
finality to value property as of the date of finality when
those sales are reasonably close in time and otherwise
comparable to the subject property.
case before us has its genesis in Petitioner Ann Lane's
appeal of her 2011 tax assessment of the condominium she owns
and occupies in Parc Somerset, a seventeen-story building
located on Wisconsin Avenue in Chevy Chase, Maryland. Parc
Somerset is the newest of three condominium buildings, all of
which were built over a twenty-year period and together
comprise the Somerset House development. Condominiums in Parc
Somerset are the most desirable in the development. Certain
condominiums in Parc Somerset that are located directly above
and below one another form a " stack," meaning that
the units are exactly the same in design, layout, and size.
Petitioner's unit is located on the tenth floor in the
" 03" stack. The " 03" stack runs from
floors three to twelve and each of [447 Md. 460] the "
03" units measures 2,498 square feet.
December 28, 2010, the Supervisor notified Petitioner that
her condominium (" unit 1003" ), would be assessed
at a value of $2,130,000, representing " the new market
value effective January 1, 2011." The Notice stated that
the " new market value is based upon market data
available prior to this date." The assessment, which was
determined by using a computer-assisted mass appraisal
technique, was approximately 11 percent higher than the
previous assessment of Petitioner's property.
believing the assessment to be incorrect, availed herself of
her administrative rights of appeal. She appealed first to
the Supervisor, who issued a Final Notice of Assessment in
August 2011, making no change to the assessment. Petitioner
appealed that decision to the Property Tax Assessment Appeal
Board for Montgomery County (" PTAAB" ). At that
juncture, Petitioner's appeal was consolidated with those
of nine other Parc Somerset condominium owners, including the
owners of units 803 and 703. The PTAAB reduced the assessment
for unit 803 to $1,840,000 and the assessment for unit 703 to
$1,830,000 but left standing the assessment of
appealed the decision of the PTAAB to the Maryland Tax Court.
She presented two arguments in support of a reduction in the
assessed value of her condominium. [447 Md. 461] She argued
first that the correct value of her condominium was
$1,649,000 plus a $20,000 floor premium for a total value of
$1,669,000. In support of that value, Petitioner relied on
two items of evidence: the affidavit of a real estate broker
attesting to a $10,000 floor premium for units in Parc
Somerset; and an appraisal of unit 803, which valued that
condominium at $1,649,000 as of January 3, 2011, and was
conducted on behalf of a mortgage company to assist the
owners of unit 803 in refinancing their mortgage. Petitioner
alternatively argued that, because the PTAAB had valued unit
703 at $1,830,000 and unit 803 at $1,840,000, her property
should be valued, at the most, at $1,860,000, accounting for
a $10,000 premium that the PTAAB appeared to have accorded to
each additional floor.
Nichols, a real estate appraiser and hearing specialist, was
present at the hearing on behalf of the Supervisor and was
accepted by the Tax Court as an expert witness. Mr. Nichols
informed the Tax Court that, in his view, the value of
Petitioner's property was $2,130,000. Mr. Nichols
testified that he arrived at that valuation by reliance on
the sales of three comparable condominium units in Parc
Somerset. All of those units measured 2,441 square feet and
were sold in May 2011. When comparing these sales to unit
1003, Mr. Nichols made adjustments for variations between the
subject property and comparable properties.
first comparable sale was of unit 207, which sold for
$2,200,000; to that amount Mr. Nichols added $35,000 for the
difference in square footage, $80,000 as a floor
premium, and [447 Md. 462] $15,000 for land
adjustments. Based on that information, Mr. Nichols concluded
that the market value for unit 1003 was $2,330,000.
second comparable sale upon which Mr. Nichols relied was of
unit 507, which sold for $2,075,000; to that amount he added
$35,000 for the difference in square footage, $50,000 as a
floor premium, and $15,000 for land adjustments. Based on
that information, Mr. Nichols concluded that the market value
for unit 1003 was $2,175,000.
third comparable sale was of unit 707 which sold for
$1,995,000; Mr. Nichols added $35,000 for the difference in
square footage, $30,000 as a floor premium, and $15,000 for
land adjustments. Based on this third comparable unit, Mr.
Nichols valued unit 1003 at $2,075,000.
Nichols further testified that no sales of units in Parc
Somerset occurred during 2010. He added that he had chosen
not to rely upon sales from the other two buildings in the
Somerset House development because those units were in older,
less desirable buildings and therefore were not comparable to
units in Parc Somerset.
objected to Mr. Nichols's testimony, arguing that the
sales were not of comparable units and, even so, occurred
more than four months after January 1, 2011, the " date
of finality." In the discussion that followed, Mr.
Nichols noted that the common practice at the Tax Court is to
submit sales occurring within the first half
of the year after the date of finality and that he excluded
comparable properties sold in September and December of 2011
as " too far beyond the date of finality." The
court overruled Petitioner's objection, stating that it
is the " policy" of the Tax Court to accept
evidence of sales occurring shortly after the date of
finality, " [e]specially when there's nothing else,
when there are no other sales."
Court considered both parties' evidence concerning
comparable units. The Tax Court decided that the
Supervisor's evidence offered through Mr. Nichols
provided a more accurate measure than that offered by
Petitioner in determining the value of Petitioner's
condominium as of January 1, [447 Md. 463] 2011. The Tax
Court found that unit 707 was the " best indicator of
[the] value" of Petitioner's property and agreed
with Mr. Nichols's adjustments in comparing unit 707 to
unit 1003. The Tax Court reasoned that Petitioner's
evidence concerning the January 3, 2011, refinancing
appraisal of unit 803 was a less accurate indicator of the
value of Petitioner's unit, given a lending bank's
interest in seeking a low appraisal. The Tax Court further
noted that the appraisal of unit 803 was based upon sales
from the two older buildings in the Somerset House
development and had not included appropriate adjustments for
unit 803, based on its location in the newer, more desirable
Parc Somerset building. Evidently relying most heavily upon
the Supervisor's third comparable sale, the Tax Court
reduced the assessment of Petitioner's property from
$2,130,000 to $2,075,000.
filed a petition for judicial review in the Circuit Court for
Montgomery County. After hearing from the parties, the
Circuit Court ruled that the Tax Court had committed legal
error in considering the Supervisor's evidence of the
post-" date of finality" sales of units in Parc
Somerset and, consequently, the decision of the Tax Court was
arbitrary and capricious. The Circuit Court ordered a remand
to the Tax Court for the assessment to be reconsidered and
Supervisor appealed to the Court of Special Appeals, which
reversed the judgment of the Circuit Court and affirmed the
Tax Court's decision. Supervisor of Assessments of
Montgomery Cty. v. Lane, 222 Md.App. 107, 112 A.3d 952
(2015). We granted ...