The Michigan Court of Appeals recently held that leaseholders of commercial property could appeal tax assessments under MCL 205.735a on the property they lease.
In Spartan Stores v. City of Grand Rapids, Family Fare, LLC and its owner, Spartan Stores, Inc., appealed the tax assessment of the property leased by Family Fare. The tax tribunal, however, dismissed the appeal of the parties, stating that they had failed to demonstrate that they were “a party of interest” for the purposes of MCL 205.735a. The Michigan Court of Appeals reversed this decision, finding that Family Fare was a “party of interest” and could appeal the tax assessment under MCL 205.735a.
MCL 205.735a was adopted in 2006 to provide a streamlined process for appealing tax assessments on commercial property. Prior to 2006, a property owner was required to first appeal the tax assessment to the board of review. After appealing the tax assessment to the board of review, the property owner could then appeal the assessment to the tax tribunal. Because only property owners and their agents were able to appeal the tax assessment to the board of review, and appealing the tax assessment to the board of review was a prerequisite to appealing to the tax tribunal prior to 2006, the appeal process to the tax tribunal prior to 2006 was also necessarily limited to property owners and their agents.
However, the Court of Appeals noted in its opinion that “[t]he Legislature upended this arrangement in 2006, when it enacted MCL 205.735a, which allows specified parties to bypass the board of review and appeal property-tax assessments directly to the tax tribunal.” Therefore, under MCL 205.735a, a “party in interest” is no longer limited to property owners and their agents. Instead, the Court of Appeals looked to the broader meaning of “party in interest” and stated that a “’party in interest under MCL 205.735a includes persons or entities with a property interest in the property being assessed.”
Noting that Family Fare leases the property and pays almost 80% of the taxes on that property, the Court found that Family Fare has a “property interest in the property being assessed” and is therefore a “party in interest” for the purposes of MCL 205.735a. The Court, however, found that Spartan Stores was not a “party in interest” because it only had a “financial interest” in the property as the owner of Family Fare and did not have a “property interest.”
The Court of Appeals full opinion can be accessed at the link below:
http://www.michbar.org/opinions/appeals/2014/103014/58491.pdf
If you have any questions, please contact the attorneys at Demorest Law Firm.
