James Devine and Marisa Devine v. Municipal Property Assessment Corporation, Region 02, 2019 CanLII 120218

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 13, 2019

FILE NO.: WR 162792

Assessed Person(s): 1504153 Ontario LTD

Appellant(s): James Devine, Marisa Devine

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 02

Respondent(s): Township of Rideau Lakes

Property Location(s): 18 R14

Municipality(ies): Township of Rideau Lakes

Roll Number(s): 0831-828-033-94300-0000

Appeal Number(s): 3339706 and 3392865 (deemed 2019 appeal)

Taxation Year(s): 2018 and 2019 (deemed appeal)

Hearing Event No.: 724692

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

Heard: October 29, 2019 by telephone conference call

APPEARANCES:

Parties

Representative

James Devine, Marisa Devine

Self-represented

MPAC

James Van Winckle

Township of Rideau Lakes

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1James Devine and Marisa Devine (the “Appellants”) are the owners of 18 R14 (the “Subject Property”), which is in the Township of Rideau Lakes.

2MPAC has assessed the current value of the Subject Property at $349,000 for the 2018 and assessed at $332,000 for the 2019 taxation years.

3The Appellants have filed appeals for the 2018 and 2019 taxation years with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). It is their position that MPAC’s assessment of current value is too high. The Appellants take the position that the correct value should be in the range of $350,000 to $360,000. At this hearing, MPAC takes the position that the correct current value is $390,000, which is the time-adjusted sale price of the Subject Property in October 2016, however, MPAC has not filed a notice seeking a higher value. Therefore, MPAC is asking that the returned assessment of $349,000 be confirmed for the 2018 taxation year and the returned assessment of $332,000 be confirmed for the deemed 2019 taxation year.

4Section 44.(3)(b) of the Act directs the Board to reduce the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value of the property possessed by each ratepayer. MPAC takes the position that an equitable reduction is not required. The Appellants assert no position. Therefore, this issue is not in dispute.

5At the completion of the hearing, the Board reserved its decision. Based on the evidence the Board finds the current value to be $390,000 for the Subject Property for the 2018 and 2019 taxation years. However, MPAC has not served a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules of Practice and Procedure (“Rules”). Given that MPAC has clearly recommended that it is not seeking an increase for the 2018 and 2019 taxation years, the Board will not increase the assessment.

6The assessment is therefore confirmed at $349,000 for the 2018 taxation year and the returned assessment of $332,000 is confirmed for the deemed 2019 taxation year.

RELEVANT LEGISLATION

7Section 1 of the Act states:

“current value” means, 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.

8Section 19.(1) of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

9Section 19.2(1) of the Act states:

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

3. For the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

10Section 40.(17) of the Act states:

40.(17) Burden of Proof - For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

11Section 44.(3) of the Act states:

44.(3) Same, 2009 and subsequent years. – 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.

12Rule of 40 states:

Special Notices

1. A party to a summary proceeding must give notice to the Board, and all other parties to a summary proceeding, within 30 days of the day set in Rule 33 as the start of a proceeding, that the party intends to raise with the Board:

(a) a change in property classification that would result in higher taxation;

(b) a higher assessment than that returned by the MPAC;

(c) an application to invoke section 40(18) of the Assessment Act; or

(d) the doctrine of issue estoppel.

ISSUES

13The issue to be determined in these appeals is:

The correct current value of the Subject Property for the 2018 and 2019 taxation years.

Description of the Subject Property

14The Subject Property is a 391 seasonal one storey dwelling (on water), located at 18 R14 in the Township of Rideau Lakes. The Subject Property was built in 1960, with a total building area of 1,350 square feet (“sq. ft.”), and a total lot size of 0.32 acre.

DISCUSSION, ANALYSIS AND FINDINGS

The Correct Current Value of the Subject Property for the 2018 and 2019 Taxation Years

MPAC’s Evidence

15James Van Winckle presents a Valuation Report, dated May 31, 2019 (“Valuation Report”) which he prepared and testifies to the information contained therein.

16Mr. Van Winckle states that he inspected the exterior of the Subject Property together with the Appellants on May 22, 2019 and confirmed the building measurements, verified that the data and classification are correct. He states that he reviewed the conditions of the sale of the Subject Property and reviewed the sales and data of the suggested comparable properties used in his analysis.

17Mr. Van Winckle testifies that the Subject Property was sold on the open market on November 15, 2013 for $359,000 and again on October 4, 2016 for $395,000.

18Mr. Van Winckle testifies that the Subject Property was renovated in 1990 and 471 sq. ft. were added to the structure, which is included in the current total building area. He also testifies that he believes that the interior of the Subject Property was renovated, because of the increase of $36,000 in the sale prices from 2013 to 2016; and because of his opinion after reviewing website videos and photographs of the Subject Property. Because of his opinion, Mr. Van Winckle testifies that the quality rating was changed from a 4.5 to a 5.5 rating and the effective year changed from 1975 to 1983.

19Mr. Van Winckle testifies that the registered sale price of the Subject Property is $395,000 and he presents a copy of the official Land Transfer document (Registered as LE85302 on October 4, 2016) to show that the sale price does not include any chattels.

20In support of current value, Mr. Van Winckle relies on the Direct Comparison Approach to value and presents an analysis of the sales of four suggested comparable properties which occurred over the period 2013 to 2016 (including the sales of the Subject Property in 2013 and 2016).

21Mr. Van Winckle testifies that these four sales occurred at 18 R14 sold in 2013 at a time-adjusted sale price of $358,496; 18 R14 sold in 2016 at a time-adjusted sale price of $389,057; 20 R14 sold in 2016 at a time-adjusted sale price of $387,078; and 167 Songbird Lane sold in 2016 at a time-adjusted sale price of 375,963. Mr. Van Winckle testifies that these suggested properties have lot sizes ranging from 0.29 to 0.82 acres; frontages from 50 -100 feet; year built 1960 to 1965, building area ranging from 1,033 to 1,329 sq. ft. and quality rating of 5.5 to 6. Mr. Van Winkle testifies that he presents the two sales at 20 R14 in the same homogenous neighbourhood; and 167 Songbird Lane, located 1.84 kilometers away in a different neighbourhood to show that they sold at a sale price relatively close to the sale price of the Subject Property.

22Based on the above sales Mr. Van Winckle is of the view that the time-adjusted sale of $390,000 (rounded) for the Subject Property in 2016 is the best evidence of current value.

MPAC’s Submissions

23Based on the above evidence, MPAC argues that the current value is $390,000.

24MPAC argues that the sale price of the Subject Property does not include chattels and Realtor fees as demonstrated on the copy of the official registered Land Transfer document.

25MPAC also argues that the quality rating of 5.5 and the effective year built of 1983 is warranted for reasons stated above. However, MPAC states that these changes are not applicable to the current appeals and are going to be effective in 2020.

26Regarding the Deeded Right of Way, MPAC argues that no adjustment is necessary because the Subject Property sold on the open-market in its current state and condition (e.g. with Deeded Right of Way) in 2016 for $395,000.

Appellants’ Evidence

27In support of correct current value, the Appellants believe that the sale of the Subject Property in 2016 for $395,000 is the best evidence. However, the Appellants believe that this value should be reduced because the Subject Property has a deeded right-of-way; the sale price includes chattels in the estimated amount of $30,000; and that the sale price is inflated to include Realtor fees. The Appellants argue that when these reductions are made to the sale price of the Subject Property a reasonable current value should be in the range of $350,000 and $360,000.

28The Appellants testify that in response to their Request for Reconsideration (“RFR”) MPAC reduced the returned assessment to $332,000 and it was rejected, because MPAC failed to explain the reason for the reduction from $349,000 to $332,000.

29The Appellants testify that the change in quality rating from 4.5 to 5.5; and the change in effective year from 1975 to 1983 are unjustified, because MPAC believes that an interior renovation was done in 2013. The Appellants argue that there was no renovation done in 2013, and that MPAC’s decision to change the Subject Property’s quality rating and effective year built is based the difference in the Subject Property’s sale prices in 2013 and 2016; and observation of videos and photographs of the Subject Property.

30The Appellants agree that there was a renovation in 1990, and they present evidence of an email dated August 8, 2019 from Lisa Murphy, daughter of the previous owner who confirmed that renovation was done in 1990 by her father. This renovation was not in dispute by the parties.

31The Appellants argue that the lot size should be 0.27 acre as opposed to 0.32 acre, because approximately 15% of the site is used for a Deeded Right of Way on the Subject Property which is used by the owners of neighbouring property to access their property. The Appellants believe that an appropriate reduction to the sale price of the Subject Property should be applied.

32The Appellants testify that the Sale Price of the Subject Property includes $30,000 of chattels and that this value should be deducted from the sale price of the Subject Property. In support of their argument, the Appellants present a signed letter dated October 6, 2016 from Low Murchison Radnoff LLP (LMR) and signed by Michael L. Wong, regarding their purchase from 1504153 Ontario Inc. for the property at 18 R14, Lombardy, Part of Lot 29, Concession 5 being Part 5, 13 and 19 on Plan 28R-5320 (File No: MAT15315. Attached to the letter amongst other things is a copy of the Vendor’s Closing Certificate and Undertaking which states in paragraph 2, “Bill of Sale: The Vendor owns the chattels set forth in the agreement and conveys title on them to the Purchasers free and clear of liens and encumbrances.” The Appellants present an estimate of the chattels in the amount of $30,082.

33The Appellants argue that there should be an adjustment for Realtor fees, because they are of the view that Realtor fees are artificially inflated in all real estate transactions. The Appellants are of the view that the sale price of the Subject Property in 2016 includes a 5% ($19,750) Realtor service fee. In support of this argument, the Appellants cite a Real Estate Commission Article dated July 4, 2016 which states “as all buyers’ agents are paid by the seller through listing agent upon a sale. This means that once the deal closes and the seller gets their money, both agents get paid … Remember: the buyer is really paying the cost of the fees, which are built into your asking price.”

Appellants’ Submissions

34Based on the above evidence, the Appellants submit that the correct current value should be in the range of $350,000 and $360,000.

35In support of their argument, the Appellants cited the following cases:

I. Reininghaus v Municipal Property Assessment Corporation Region 15, 2016 CanLII 2583 (ON ARB) (“Reininghaus”) in support of an increase in quality class;

II. Carefoote v Municipal Property Assessment Corporation Region 16, 2019 CanLII 9702 (ON ARB) (“Carefoote”) in support of a Deeded Right of Way; and

III. Siegel v Municipal Property Assessment Corporation Region 02, 2016 CanLII 53154 (ON ARB) (“Siegel”) in support of a Deeded Right of Way

Findings on Current Value for 2018 and 2019 taxation years

36Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it.

37For the reasons discussed below, the Board accepts that the time adjusted sale price of $390,000 of the Subject Property is the best evidence of current value.

38In regards to current value, MPAC presents four sales in support of current value at 18 R14 sold in 2013 at a time-adjusted sale price of $358,496; 18 R14 sold in 2016 at a time-adjusted sale price of $389,057; 20 R14 sold in 2016 at a time-adjusted sale price of $387,078; and 167 Songbird Lane sold in 2016 at a time-adjusted sale price of $375,963, and concludes that the sale price $390,000 (rounded) for the Subject Property is the best evidence. On the other hand, the Appellants present the sale of the Subject Property at a time-adjusted sale price of $390,000 and believes that the sale of the Subject Property is the best evidence. However, the Appellants believe that the current value should be between $350,000 and $360,000 for the Subject Property, after reductions are made for the Deeded Right-of-Way on the Subject Property, chattels and for Realtor fees associated with the sale price. In reviewing the evidence, the Board find the best evidence is the sale of the Subject Property at $390,000. The Board will address all other issues in its findings.

39Regarding the issue of the Deeded Right of Way, MPAC argues that an adjustment to the Subject Property’s sale price is not required, because the price paid in the open market transaction is for the Subject Property in its current state (with Deeded Right of Way etc.) at the time of the sale. On the contrary, the Appellants argue that a reduction of 5% is warranted because approximately 2,080 sq. ft. of the Subject’s lot is utilized for the Deeded Right of Way which services the neighbouring property. The Board accepts MPAC’s argument and finds that the sale price of $395,000 is an open market sale which occurred in the valuation year 2016. The Board finds that no reduction for the Deeded Right of Way is necessary, because the sale price is “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.” In reviewing the Carefoote and Siegel cases, the Board did not rely on the findings that an adjustment is warranted, because the reduction for the Deeded Right of Way was applied to the findings of the comparable properties used in the determination of current value. In the case at hand, the Subject Property was sold in 2016 and found to be the best evidence of current value, which is the “fee simple” as stated above.

40Regarding the issue of the change in quality rating from a 4.5 to 5.5; and the change in effective year from 1975 to 1983 are unjustified for the Subject Property. The Appellants argue that the Subject Property was not renovated in 2013. On the contrary MPAC believes that the Subject Property was renovated in 2013, because of the change in the sale price of the Subject Property in 2013 and 2016, and opinion after viewing videos and photographs on the website. The Board rejects MPAC’s argument and finds that MPAC presents no factual evidence (permit and/or internal inspection report etc.) to show that the Subject Property was renovated in 2013. Therefore, the Board finds that the quality rating should remain at 4.5 and the effective year built should remain at 1975 for the appeals at hand. In reviewing the Reininghaus case, the Board finds that Reininghaus supports this finding in which the Member found that “the recommended change in quality class is based on subjective readings and interpretation of the assessor…the assessor has failed to adequately explain why the change is warranted.”

41Regarding the issue of chattels, MPAC argues that there are no chattels included in the sale price of the Subject Property and presents a copy of the official Land Transfer document (Registered as LE85302 on October 4, 2016) to show that the sale price does not include any chattels. On the contrary, the Appellants argue that $30,000 of chattels are included in the sale price of the Subject Property. The Appellants present a signed letter dated October 6, 2016 from Low Murchison Radnoff LLP (LMR) and signed by Michael L. Wong, regarding their purchase from 1504153 Ontario Inc. for the property at 18 R14, Lombardy, Part of Lot 29, Concession 5 being Part 5, 13 and 19 on Plan 28R-5320 (File No: MAT15315. Attached to the letter amongst other things is a copy of the Vendor’s Closing Certificate and Undertaking which states in paragraph 2, “Bill of Sale: The Vendor owns the chattels set forth in the agreement and conveys title on them to the Purchasers free and clear of liens and encumbrances.” In reviewing the documents, the Board finds that no chattels are included in the sale price of $395,000 for the Subject Property and rejects the Appellants argument that a reduction of $30,000 is warranted.

42Regarding the Appellants argument that a reduction of 5% ($19,750) for Realtor fees is warranted, because they are of the view that Realtor fees are artificially inflated in all real estate transactions. MPAC on the contrary argues that a reduction for Realtor fees is not warranted, because the copy of the official Land Transfer document (Registered as LE85302 on October 4, 2016) shows no evidence that Realtor fee is included in the sale price of the Subject Property. The Board finds that the copy of the official Land Transfer document presented by MPAC and the copy of the signed letter in 2016 from Low Murchison Radnoff LLP (LMR) and signed by Michael L. Wong, regarding the Vendor’s Closing Certificate and Undertaking show no evidence that Realtor fee is included in the sale price of $395,000 for the Subject Property.

43Based on the evidence, the Board finds the current value is $390,000.

DECISION

44The Board finds the current value to be $390,000 for the Subject Property for the 2018 and 2019 taxation years. However, MPAC has not served a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules. Given that MPAC has clearly recommended that it is not seeking an increase for the 2018 and deemed 2019 taxation years, the Board will not increase the assessment.

45The assessment is therefore confirmed at $349,000 for the 2018 taxation year and the returned assessment of $332,000 is confirmed for the 2019 taxation year.