Assessment Review Board

Commission de révision de l'évaluation foncière

ISSUE DATE: April 27, 2016

FILE NO.: WR 139346

Assessed Person(s): Luke Puran Dokht

Appellant(s): Joe Saraceni

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 14

Respondent(s): City of Vaughan

Property Location(s): 10626 Islington Avenue

Municipality(ies): City of Vaughan

Roll Number(s): 1928-000-350-60500-0000

Appeal Number(s): 3121739 and 3150840 (deemed 2016 appeal)

Taxation Year(s): 2015 and 2016 (deemed appeal)

Hearing Event No.: 618439

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: March 15, 2016 in Vaughan, Ontario

APPEARANCES:

Parties	Representative
Luke Puran Dokht	No one appeared
Joe Saraceni	Self-represented
MPAC	Robert Zamozniak and Christian Bennett
City of Vaughan	No one appeared

DECISION OF THE BOARD DELIVERED BY FAUSTO SAPONARA

INTRODUCTION

1Joe Saraceni ("Appellant") is a real estate broker. On September 4, 2014, he entered into a listing agreement with Luke Puran Dokht to sell the property located at 10626 Islington Avenue in the City of Vaughan. The property was listed for sale at $1,170,000. In December 2014 after the property had been on the market for three months and it had not been sold, the Appellant purchased the property himself from Mr. Dokht and paid $910,000.

2The property is located in the main core of the Village of Kleinburg. It consists of a detached four bedroom bangalow, having a separate two bedroom basement apartment and a two-car garage. The home was built in 1951 and is situated on a 1.04 acres lot.

3Based on the valuation date of January 1, 2012, for the 2015 taxation year, the property is assessed at $1,242,000.

ISSUES

4Robert Zamozniak, the Assessor, representing MPAC, submits that the purchase price paid by the Appellant is not reflective of the property's current value. It is MPAC's position that the correct current value of the property is provided by the sales of two comparable properties located in the vicinity of the subject property. Based on the prices realized on these comparable properties, it is MPAC's position that the returned assessment is incorrect and that the correct current value of the subject property, as of January 1, 2012 is $1,073,000.

5In rejecting the sale of the subject property as a valid indicator of current value, the Assessor submits that it is not a valid sale because as the real estate broker marketing the property, the buyer had undue influence on the seller. Mr. Zamozniak further argues that the sale cannot be relied upon because it took place two years after the valuation date and the Appellant has failed to produce a copy of the purchase and sale agreement.

6The Appellant, takes the position that the best indicator of current value for the subject property is the time adjusted purchase price he paid. The Appellant submits that the home is old and was in poor conditions at the time he purchased it. He further argues that only half of the lot area is usable as the rest is valley land with a steep embarkment. A valuation higher than the price paid was not achievable as evidenced by the lack of a sale over the January to December 2014 period in which the property had been listed for sale through four different realtors.

7It is the Appellant's position that the purchase price of $910,000 was negotiated by the seller and buyer in an arm's length transaction. He further submits that since prices in the area had been increasing at an annual rate of 6% to 8%, the current value of the property as of January 1, 2012 is in the range of $708,000 to $750,000.

8The main issues for the Assessment Review Board (the "Board") are to determine the current value of the subject property as of January 1, 2012 and whether a reduction to the assessment of the subject property is required in order to make it equitable with the assessment of similar lands.

DECISION

9The Board finds that the current value of the subject property as of January 1, 2012 is $961,000.

10Further, the Board finds that no adjustment to the subject property's current value is required to make it equitable with the assessment of similar lands in the vicinity.

11The Board therefore, reduces the assessment for the 2015 taxation year from $1,242,000 to $961,000.

REASONS FOR DECISION

Determination of Current Value

12The initial task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31, as amended ("Act"), which in part states that "...the Board shall...determine the current value of the land."

13Section 19.(1) of the Act states that "...the assessment of land shall be based on its current value..." and s. 1 of the Act defines current value as "...in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm's length by a willing seller to a willing buyer..."

14Section 40.(17) of the Act stipulates that "...the burden of proof as to the correctness of the current value of the land rests with the assessment corporation."

15The issue for the Board's determination is the current value of the subject property as of January 1, 2012.

Board's Findings

16By concluding that the correct current value of the property is $1,073,000, Mr. Zamozniak's starting position is to acknowledge that the returned assessment is incorrect. However, he disagrees with the Appellant's position that the amount at which the property sold, is the best indicator of current value. MPAC submits that since the purchase price cannot be relied on, the correct current value should be determined by utilizing the Sales Comparison valuation methodology. This commonly accepted valuation approach is a method of estimating value by comparing the subject property with similar properties that have sold on or about the valuation date.

17MPAC has submitted two proposed comparable properties as detailed in Appendix A of Exhibit 1. The first property is located at 130 Hedgerow Lane and was sold on the open market in December 2011 for $1,575,000. The second property is located at 194 Old Humber Crescent and was sold on the open market in January 2011 for $1,040,000. Both of the proposed comparable properties consist of newer single detached bangalows situated on slightly smaller lots than the subject property.

18MPAC's witness, Christian Bennett, testified that the proposed comparable properties were identified using lot size, location and character as the main search criteria. He further indicated that property prices had increased by 14.7% from January 2011 to December 2012. Accordingly, the time adjusted sale prices of the proposed comparable properties are $1,579,689 and $1,116,197. From this evidence, Mr. Bennett has reached the conclusion that since the assessed value is in the range of the comparable properties values, it is therefore reasonable and correct in the context of s. 40.(17) of the Act. He further submits that as a result of his inspection of the subject property, the value of the subject property should be reduced to $1,073,000, "due to the quality of the finishes".

19During the cross-examination of Mr. Bennett's evidence, the Appellant made the Board aware that MPAC's proposed comparable properties were located in better locations than the subject property. Properties in the area of the comparable properties, are newer, superior in quality and are not subject to any traffic nuisance and these properties demand prices in the range of $1.1 to 2.1 million.

20Mr. Bennett was unable to substantiate to the Board's satisfaction his determination of the $1,073,000 value. Neither in his verbal testimony nor in his written submission, was an explanation provided as to how his estimate of the current value had actually been determined. Although it is quite clear from the decriptions of the proposed comparable properties that they differed from the subject property, no adjustments to their respective sale prices had been made to account for the impact on value.

21The Appellant also provided the Board with a number of comparable properties, as detailed in Exhibit 4. The properties are located at 11300 Huntington Road, 10 Howland Mill Road, 10151 Highway 27 and 10 Richard Court. These properties had been sold on the open market over the period of August 2011 to April 2012, at prices ranging from $750,000 to $888,000. The properties are all detached homes but vary from one storey and two-storey, with lot sizes ranging from 0.79 acres to 3 acres.

22The Board accepts the premise that no two properties are identical, however for the purpose of estimating values, adjustments are needed to account for material differences between the properties being compared. Both the Assessor and Appellant have failed to show how the sale prices of their respective comparable properties ought to be adjusted to provide a valid indicator of the subject property current value.

23The sales comparison evidence as submitted by the parties essentially demonstrate that single detached homes in the proximity of the subject property, of varying sizes and quality, have values ranging from $750,000 to $1,575,000. Without the Board engaging in its own search for a common denominator, which the Board declines to do, the sales comparison evidence of the parties is flawed to such an extent that the Board is unable to rely on this evidence to determine the subject property current value.

24The only evidence available to the Board upon which to determine the current value is the sale of the subject property in December 2014. The parties agree that the subject property was purchased by the Appellant in December 2014. MPAC's objection to the sale evidence is that the buyer was also acting as the realtor for the seller. The concern of the Assessor is that as the realtor in the transaction, the buyer had undue influence on the seller. After considering that the property had been exposed on the market for almost two years and that two offers for $950,000 and $1,000,000 were made in September and November 2014 respectively, the Board finds that the Assessor's concern is unwarranted. The actual purchase price paid, when adjusted for the brokerage commission payable, is not significantly different than what other buyers who had no relationship to the seller were willing to pay. The Appellant has testified that he waived a 5% commission which was due on the transaction. The Board finds that the sale price ought to be adjusted by the commission and the applicable HST to reflect the price which the seller in fact realized. The commission payable plus HST amounts to $51,415, resulting in an adjusted purchase price of $961,415.

25The Board agrees with the parties that the sale prices should be adjusted to take into account changes in overall market price level changes. In this case the realized sale price for the subject property in December 2014 should be time adjusted to the January 1, 2012 valuation date. MPAC has provided sufficient evidence on price level changes from 2011 to 2012, but not beyond 2012. The only evidence as to changes in price level from 2012 to 2014 is from the Appellant. As stated in Exhibit 5, the Appellant submits that he was advised by local realtors that market values in the area had increased by approximately 6% to 8% per year for "the past several years". The Board finds that this evidence is inadequate to make a proper determination of an appropriate price level adjustment factor.

26The Board finds that the sale of the subject property for an adjusted sale price of $961,415 is the best indicator of the subject property current value. The Board is of the view, a view which is well established in appraisal practice and jurisprudence, that if there is a sale of the subject property, this evidence is of primary importance and provided certain criteria are met, it is the most reliable evidence of the property's current value.

Determination of Equity

27Having established the current value of the property, the next task is for the Board to determine whether a reduction should be made to lower the assessment below current value in order to make it equitable with the assessments of similar lands in the vicinity.

28Section 44.(3)(b) of the Act states that:

Same, 2009 and subsequent years

(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

29The Board was provided with assessment and sales evidence of 30 properties in the vicinity of the subject property, to make a determination on account of s. 44.(3)(b), as detailed in Exhibit 1. According to the MPAC's analysis, the median assessment to sales ratio of these sales is 1.02. This result infers that overall there is no indication that properties in the vicinity are being under assessed. Relying on this evidence, the Board finds that equity has been achieved and no further adjustment to the current value of the subject property as determined above is necessary.

30Accordingly, the assessment for the subject property for the taxation year 2015 is reduced from $1,242,000 to $961,000.

2016 DEEMED APPEAL

31An appeal for the 2015 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2015 appeal before March 31, 2016. For that reason, this decision also applies to the 2016 taxation year.

32Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.