Arizona Court of Appeals Issues Decision: Highest and Best Use Will Be Part of Proper Analysis

Arizona Court of Appeals Decision Regarding Whether a Trial Court May Properly Admit Evidence of a Tax Protest to Establish Fair Market Value in a Deficiency Action

Division 1 of the Arizona Court of Appeals recently issued a decision in Roofing Wholesale Co., Inc. v. Neil, 2012 WL 1207349 (Ariz.App.Div.1) (2012). The decision was not approved for citing as a legal precedent except under limited conditions. Regardless, the opinion gives insight into how the Court of Appeals views the issue of tax appeal information being offered as evidence in a fair market valuation hearing.

The Court was presented with the issue of whether a trial court may properly admit evidence of a property owner’s “admissions” made in a tax protest in order to establish fair market value under A.R.S. §33-814, Arizona’s deficiency statute. The Court of Appeals declined to follow the decision of the Arizona Supreme Court in Salt River Project Agricultural Improvement and Power District v. Miller Park, L.L.C., 213 Ariz. 246 (2008) because Arizona deed of trust law (A.R.S. §33-814), according to the court, “does not demonstrate a legislative intent to adopt the highest and best use standard in a fair market valuation proceeding under the deficiency statutes.”

This opened the door for use of evidence from the property tax appeal in a fair market value proceeding under the deficiency statute. The Court’s reliance on the lack of an express adoption of the valuation principle, highest and best use, is puzzling. A property’s available uses or reasonably probable uses, at the time, drive its value in the market.

What the Court was possibly trying to reach was a standard that a trial court, which is tasked with determining value as of the date of the trustee’s sale, is not bound by a particular method to determine value. For example, the court explained that a judge may properly consider “various factors appearing in the testimony in any combination which is reasonable.” Whether it realized it or not, highest and best use will inevitably be a part of a proper analysis.

The use of valuation methods in eminent domain proceedings or deficiency actions requires experience with valuation theories and evidence laws. If you or anyone you know may be facing eminent domain or a valuation of real property, I urge you to meet with an experienced Arizona eminent domain attorney that can help you understand your options. Protect your property rights by calling (480)-428-3572 to set up a consultation.

Arizona Property Tax Appeal

Do you know the current fair market value of your home? Unless you have had a professional assessment of your property’s value within the past year, I highly suggest that you schedule one.

It’s common knowledge that real estate values in the United States have dropped dramatically during our country’s recent economic struggles. Ironically, as property values have dropped, property taxes have actually increased. This is a concerning statistic, considering that property taxes are equated using property value.

If you own property, you should receive a Notice of Value card in the mail by March 1. The card will list your property’s assessed Full Cash Value and its Legal Classification (a property’s Legal Classification refers to how the land is being used. Classifications include commercial, residential, agricultural, etc.). If you believe the Full Cash Value or the Legal Classification to be incorrect, you can file an appeal either with the County Assessor’s Office or with the Tax Court.

According to the Official Blog of the National Taxpayers Union, GovernmentBytes, “up to 60 percent of the nation’s taxable property may be over-assessed, leaving property owners to pay thousands of dollars more than they need to.” Prepare yourself to file an appeal if necessary by hiring a professional to correctly appraise your property’s current value. In order to insure that your appeal is successful, it must be filed as quickly as possible upon receiving your Notice of Value.

If you have any interest in preparing yourself to file a property tax appeal, come and see me, an experienced Arizona eminent domain attorney that can give you the expert advice you deserve. Call (480)-428-3572 today to schedule your consultation.