In Rico Zenti v. City of Marquette, authored opinion of the Court of Appeals, issued July 25, 2019 (Docket No. 344615), the Michigan Court of Appeals held that a conveyance by five siblings, as joint tenants with rights of survivorship, to themselves, as tenants in common, was not a “transfer of property” under the General Property Tax Act (GPTA).
On April 25, 1996, Rose Mary Zenti executed a quitclaim deed, which conveyed title to herself and her children as joint tenants with full rights of survivorship. Rose Mary passed away on December 7, 2015, and on January 13, 2016, the children executed a quitclaim deed that conveyed the property to themselves, as tenants in common.
On February 23, 2017, the children received a notice of assessment from Defendant, identifying the new assessment for the taxable value, assessed value, and state equalized value for the property. On May 22, 2017, Plaintiff filed a petition with the Michigan Tax Tribunal Small Claims Division, arguing that the property had been inappropriately uncapped by the city Assessor.
The Tax Tribunal initially ruled that the 2016 transfer was not exempted and thus the property’s assessments were properly uncapped. The tribunal further held that the January 2016 transfer of ownership was not exempted under MCL 211.27a(7)(i) or MCL 211.27a(7)(u) because when the joint tenancy was terminated, none of the children were an original owner of the property before the joint tenancy was created. Petitioner filed a motion for reconsideration, which the Tax Tribunal granted. The tribunal ruled that it had erred when it found that the January 2016 transfer was not exempt under MCL 211.27a(7)(u).
On appeal, the Court of Appeals first noted that the sole issue is whether the Tax Tribunal erred in finding that the January 2016 quitclaim deed effected a “transfer of ownership” under the GPTA. Under MCL 211.27(a)(3), in order to invoke the uncapped computation of taxable value, there must have been a “transfer of ownership.” MCL 211.27a(6) defines “transfer of ownership” as “the conveyance of title to or a present interest in property, including the beneficial use of the property, the value of which is substantially equal to the value of the fee interest.”
Under this definition, the Court of Appeals held that the conveyance of title to or a present interest in property was required to have been from one person or group to another person or group. In this case, however, the grantors and grantees of the January 2016 deed were identical, so there was no transfer to another. Additionally, each grantor held an undivided one-fifth interest in the property both before and after the execution of the deed, so not only were no new parties involved, but the extent of each party’s interest remained the same. Because the threshold of MCL 211.27a(6) was not met, there was no basis for uncapping the valuation. Therefore, the Court of Appeals held that the Tax Tribunal properly concluded that the deed did not effect a conveyance that met the statutory definition of “transfer of ownership.”
A link to the opinion can be found here: https://law.justia.com/cases/michigan/court-of-appeals-published/2019/344615.html
This article was written by Emily Honet, Law Clerk
