Phillip Walter Brown and Angela Fiona Brown v. Municipal Property Assessment Corporation Region 27 and Town of Leamington, 2021 CanLII 101891

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 15, 2021

FILE NO.:

WR 173392

Assessed Person(s):

Phillip Walter Brown and Angela Fiona Brown

Appellant(s):

Phillip Brown and Angela Brown

Respondent(s):

Municipal Property Assessment Corporation Region 27

Respondent(s):

Town of Leamington

Property Location(s):

454 Talbot Road East

Municipality(ies):

Town of Leamington

Roll Number(s):

3706-580-000-00104-0000

Appeal Number(s):

3434655 and 3448738

Taxation Year(s):

2020 and 2021

Hearing Event No.:

751065

Legislative Authority:

Section 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties

Representative

Phillip Walter Brown and Angela Fiona Brown

Phillip Brown

Municipal Property Assessment Corporation

Jason Holmes

Township of Leamington

Laura Rauch

HEARD:

August 23, 2021 by video conference

ADJUDICATOR:

Anthony LaRegina, Member

DECISION

OVERVIEW

1The property owners Phillip and Angela Brown (the “Appellants”), represented by Phillip Brown, filed a property assessment appeal for the 2020 and 2021 taxation years with the Assessment Review Board (the “Board”) regarding his property located at 454 Talbot Road East (“Subject Property ”) in the Township of Leamington (“Town”).

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), the Municipal Property Assessment Corporation (“MPAC”) conducted a general reassessment of the Subject Property and determined that its current value assessment was $484,000 for the 2020 and 2021 taxation years. It is the Appellants’ position that MPAC’s current value assessment is too high and that the correct current value assessment should be reduced to $384,000 for both years. At this hearing, MPAC has taken the position that the current value assessment should be confirmed at $484,000 for the 2020 and 2021 taxation years.

3Pursuant to s. 40(11) of the of the Act, the Town is a party to this proceeding. Laura Rauch, the Director of Finance, attended the hearing on behalf of the Town as an observer.

Issues for the Hearing

4The issues in this proceeding are:

a determination of the current value of the Subject Property; and
whether an equity reduction in the current value should be made to compensate for the assessment of similar lands in the vicinity.

Result

5The Board finds that the correct current value of the Subject Property for the 2020 and 2021 taxation years is $484,000. Pursuant to s. 44(3)(b) of the Act, no equitable reduction is required to compensate for the assessment of similar lands in the vicinity. The Board therefore confirms the returned assessment value of $484,000 for the 2020 and 2021 taxation years.

Description of Subject Property

6The Subject Property is a residential single-family detached home, located at 454 Talbot Road East in the Township of Leamington. The Subject Property has an effective lot area of 1.61 acres with an effective frontage of 167.28 feet and an effective depth of 418.41 feet and located in a rural area backing onto a field. The custom-built bungalow was built in 2015 with a total building area of 2,798 square feet on the main level with no finished space in the basement and a 785 square foot attached garage. The Subject Property was inspected by Mr. Holmes, the valuations officer representing MPAC, on March 2, 2017 in the presence of the Appellants. During the inspection MPAC did a quality of construction audit which resulted in a 7.5 rating for quality of construction. Mr. Holmes reduced the rating to 7.0 to ensure there was no increase to the assessed value of the subject property. At the inspection it was also observed that some of the trim and a built-in shower were still incomplete and the kitchen hood was yet to be installed. Mr. Holmes therefore made an additional allowance for the unfinished items bringing the assessed value down from the original returned assessment of $495,000 to $484,000.

ANALYSIS AND FINDINGS

Issue 1 – A determination of the current value of the Subject Property

7The first issue to be determined on this appeal is the correct current value of the Subject Property for the 2020 and 2021 taxation years. Pursuant to s. 19(1) of the Act, the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2021 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”). As defined in the Act, “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.”

MPAC’s Evidence

8MPAC submitted two exhibits as part of its evidence package: a Valuation Report and an Equity Report.

9To determine market value, MPAC has utilized the direct sales comparison approach and submitted into evidence the sale of six comparable properties located in the vicinity of the Subject Property which sold between April 2015 and September 2017. Comparable properties are rarely sold on the valuation day of January 1, 2016, so their sale values are normally time-adjusted to greater or reduced values depending on whether the date of the sale occurred before or after the valuation day. According to the time-adjusted evidence submitted by MPAC, there was a 32% increase in market value over a 41-month period starting February 2015 and ending June 2018. MPAC created a time-adjustment factor table and graph by month covering the same period and applied these values to time-adjust the six comparable property sales provided in evidence that were sold during 2015, 2016 and 2017 to a value based on a January 1, 2016 valuation date.

MPAC’s Comparable Property Sales

Subject Property

Property 1

Property 2

Roll Number

370558000000104

370658000002450

370658000001310

Address

454 TALBOT RD E

1028 MERSEA RD 2

1306 DEER RUN RD

Neighbourhood

D82 - 382

D82 – 382

Property Code & Desc.

(301) Single-Family Detached (Not On Water)

Distance in km

2.9471

2.1601

Valuation

Current Value Assessment

$484,000

$602,000

$406,000

Sale

Sale Date

20170922

20170802

Sale Amount

$780,000

$490,000

Time Adjusted Sale Amount

$642,422

$407,075

Time Adjusted Sale Ratio

0.9371

0.9974

Site

Effective Frontage (F)

167.28

100

89.48

Effective Depth (F)

418.41

300

222.49

Effective Site Area (Acres)

1.61

0.69

0.44

Actual Site Area (Acres)

1.61

0.84

0.44

Residential Structure

Year build

2015

2005

2010

Effective Year Built

2015

2008

2010

Quality of Construction

7.5

Full Storeys

1 Storey

Building Total Area (SF)

2,798

2,691

2,044

Secondary Structure(s)

Structure Description

(116) Attached Garage

(101) Detached Garage

(116) Attached Garage

Year Built

2015

2005

2010

Building Total Area (SF)

785

1975

657

Quality of Construction

Structure Description

(116) Attached Garage

Year Built

2005

Building Total Area (SF)

670

Quality of Construction

Farm Structure(s)

Structure Description

Year Built

Building Total Area (SF)

Quality of Construction

Height

Structure Description

Year Built

Building Total Area (SF)

Quality of Construction

Height

Subject Property

Property 3

Property 4

Roll Number

370558000000104

370658000003090

370667000000406

Address

454 TALBOT RD E

384 TALBOT RD E

1637 MERSEA RD 5

Neighbourhood

D82 - 382

Property Code & Desc.

(301) Single-Family Detached (Not On Water)

Distance in km

1.0005

3.458

Valuation

Current Value Assessment

$484,000

$341,000

$418,000

Sale

Sale Date

20150430

20160812

Sale Amount

$385,000

$405,000

Time Adjusted Sale Amount

$422,517

$375,574

Time Adjusted Sale Ratio

0.8071

1.113

Site

Effective Frontage (F)

167.28

131

478.15

Effective Depth (F)

418.41

225

280.49

Effective Site Area (Acres)

1.61

0.98

3.08

Actual Site Area (Acres)

1.61

0.75

3.08

Residential Structure

Year build

2015

2001

2007

Effective Year Built

2015

2001

2007

Quality of Construction

Full Storeys

1 Storey

1 storey

Building Total Area (SF)

2,798

1,956

1,768

Secondary Structure(s)

Structure Description

(116) Attached Garage

Year Built

2015

2001

2007

Building Total Area (SF)

785

685

1236

Quality of Construction

Structure Description

Year Built

Building Total Area (SF)

Quality of Construction

Farm Structure(s)

Structure Description

(203) Type Iii

Uninsulated Barn

(201) Type I Barn

Year Built

1976

1920

Building Total Area (SF)

2210

1700

Quality of Construction

Height

Structure Description

(203) Type Iii

Uninsulated Barn

Year Built

1959

Building Total Area (SF)

1190

Quality of Construction

Height

Subject Property

Property 5

Property 6

Roll Number

370558000000104

370658000001320

370662000004000

Address

454 TALBOT RD E

1305 2 MERSEA RD E

459 COUNTY RD 37

Neighbourhood

D82 - 382

Property Code & Desc.

(301) Single-Family Detached (Not On Water)

Distance in km

2.2246

3.1071

Valuation

Current Value Assessment

$484,000

$434,000

$285,000

Sale

Sale Date

20161101

20170113

Sale Amount

$515,000

$345,000

Time Adjusted Sale Amount

$464,093

$305,152

Time Adjusted Sale Ratio

0.9352

0.934

Site

Effective Frontage (F)

167.28

173

270

Effective Depth (F)

418.41

164

308

Effective Site Area (Acres)

1.61

0.65

1.91

Actual Site Area (Acres)

1.61

0.66

5.79

Residential Structure

Year build

2015

2005

2004

Effective Year Built

2015

2005

2004

Quality of Construction

Full Storeys

1 Storey

Building Total Area (SF)

2,798

2,469

1,232

Secondary Structure(s)

Structure Description

(116) Attached Garage

Year Built

2015

2005

2004

Building Total Area (SF)

785

655

594

Quality of Construction

Structure Description

(108) Outdoor Pool

Year Built

2006

Building Total Area (SF)

512

Quality of Construction

Farm Structure(s)

Structure Description

Year Built

Building Total Area (SF)

Quality of Construction

Height

Structure Description

Year Built

Building Total Area (SF)

Quality of Construction

Height

10MPAC has taken the following positions with respect to the comparable properties it has submitted which are all located within 3.1 kilometres of the Subject Property.

11Property 1, 1028 Mersea Road 2, is superior to the Subject Property as it has a higher quality of 7.5 and a large 1,975 square foot detached garage. The building area of the home is only 107 square feet smaller than the home on the Subject Property and the lot is less than half the size of the Subject Property at 0.69 acres versus 1.61 acres for the Subject Property. This property was sold in September 2017 for $780,000 resulting in a time adjusted sale value of $642,422.

12Property 2, 1306 Deer Run Road, also has a 7.5 quality but in this case MPAC has determined that this property is inferior because the building area is smaller by 754 square feet. The lot is also substantially smaller at 0.44 acres as compared to the Subject Property which is 1.61 acres. This property was sold in August 2017 for $490,000 resulting in a time adjusted sale value of $407,075.

13Property 3, 384 Talbot Road East is the closest to the Subject Property located on the same street within 1 kilometre. MPAC has also classified this property as inferior to the Subject Property even-though it has the same quality of construction of 7.0. MPAC submits that this property is 14 years older than the Subject Property is almost 1 acre smaller and has a building area which is 842 square feet less than the Subject Property. This property was sold in April 2015 for $385,000 resulting in a time adjusted sale value of $422,517.

14Property 4, 1637 Mersea Road 5, was also classified by MPAC as inferior to the Subject Property even though the lot is almost twice the size of the Subject Property. MPAC submits that this house is over 1,000 square feet smaller in building area than the Subject Property and is therefore deemed to be inferior. This property was sold in August 2016 for $405,000 resulting in a time adjusted sale value of $375,574.

15Property 5 located within 2.2 kilometers is considered by MPAC to be the best comparable to the Subject Property even though the lot is 1 acre smaller than the Subject Property. The quality of construction is 7.0 and therefore similar to the Subject Property and the building area is only 329 square feet smaller than the Subject Property. This home sold for $515,000 in November 2016 resulting in a time adjusted sale value of $464,093.

16Property 6 is considered by MPAC to be inferior to the Subject Property as it only has 1,232 square feet of building area and is listed as a Quality 6 construction as compared to the Subject Property which has 2,798 square feet of building area and is listed one full point higher at a quality of construction of 7.0. This property was sold in January 2017 for $345,000 resulting in a time adjusted sale value of $305,152.

17MPAC submits that the time adjusted sale range of the six comparable properties is between $305,152 and $642,422 and that the returned value of $484,000 is within the range and therefore very reasonable and fair valuation for the Subject Property. Furthermore, MPAC also submits that this valuation is just slightly higher than the time adjusted sale value of $464,000 for the best comparable Property 5 which further supports that the valuation of the Subject Property to be quite reasonable.

18Based on the adjusted sale range of the six comparable properties, MPAC submits that the correct current value for the Subject Property should be $484,000 for the 2020 and 2021 taxation years.

The Appellants’ Evidence

19The Appellants entered Exhibit 3 which consists of the detailed assessments of 15 comparable properties in the vicinity, choosing to focus on four in support of their equity arguments, as well as commentary of each of the six comparable property sales submitted by MPAC. The Appellants also submits 384 Talbot Road East and 1637 Mersea Road 5, MPAC’s Properties 3 and 4, in support of current value. The Appellants provided no additional sales in support of current value.

20The Appellants submit that the two best comparable properties to subject property are MPAC’s Properties 3 and 4, 384 Talbot Road East and 1637 Mersea Road 5.

21The Appellants consider Property 3, 384 Talbot Road East, to be the most similar to the Subject Property. The Appellants submits that while this property is 842 square feet smaller in terms of building area and 0.86 acres smaller in lot size, it has the same number of bedrooms and bathrooms as well as the same quality level as the Subject Property. The Appellants further submits that, in their opinion, the quality of construction of both the Subject Property and 384 Talbot Road East should be 6.5 and not 7.0. 384 Talbot Road East was sold in April 2015 for $385,000 resulting in a time adjusted sale value of $422,517. The Appellants request that the current value of the subject property be $384,000 similar to the $385,000 actual sale value of 384 Talbot Road East.

22The Appellants considers Property 4, 1637 Mersea Road 5, to also be very similar to the Subject Property even though it has 1,030 square feet less building area. It has a lot which is almost twice the size of the Subject Property and two outbuildings in addition to the attached garage. This property has the same quality level of 7.0 as the Subject Property and once again the Appellants feels both properties should be a Quality 6.5. 1637 Mersea Road 5 sold in August 2016 for $405,000 resulting in a time adjusted sale value of $375,574.

23The Appellants submit that based on the similarities of these two properties to the Subject Property, they request a current value of $384,000 which is $100,000 less than what MPAC is suggesting.

Findings on Issue 1 - Current Value of the Subject Property

24In order to establish a current value for the Subject Property, the Board has analysed all the evidence submitted by both parties and concludes that the best evidence in support of current value of the Subject Property are the six comparable property sales submitted by MPAC, two of which were also relied upon by the Appellants. These properties are all located within a 3.1 kilometre distance from the Subject Property, they are all bungalows with similar quality levels of 7.0 or 7.5 and are all built between 2001 and 2010 compared to the Subject Property which has a quality level of 7.0 and a year built of 2015.

25The Board is in agreement with MPAC that the current value of the Subject Property should fall within the time adjusted sale range of these six properties between $305,152 and $642,422 for sales which occurred between April 2015 and September 2017 and will therefore rely on these six property sales to establish the current value of the Subject Property.

26The Board agrees with both parties that 1028 Mersea Road 2 is definitely at the top of the range and therefore superior to the Subject Property. Even though this property has similar building area, it has superior exterior landscaping finishes including a large 1,975 square foot exterior structure. The Subject Property would likely sell for considerably less than the time adjusted sale value of $642,622 of 1028 Mersea Road 2 as it has no exterior landscaping and no outbuildings.

27The Board has reviewed Property 3 and Property 4 entered by both MPAC and the Appellants. Both 384 Talbot Road East and 1637 Mersea Road 5 have less than 2,000 square feet of building area as compared to the Subject Property which has 2,798 square feet. They are also built in 2001 and 2007 as compared to the Subject Property which is built in 2015 and therefore has a completely new structure as of the January 1, 2016 valuation day. Even-though property 4 has a larger building area, the Board concludes that these two properties are in fact inferior to the Subject Property and the Subject Property would likely sell for considerably higher value than the time adjusted sale values of $422,517 and $375,574.

28The Board is in agreement with MPAC that the best comparable property to the Subject Property is Property 5, 1305 2 Mersea Road East which was sold in November 2016 for a time adjusted sale value of $464,093. The Board still considers this property to be slightly inferior to the Subject Property from the standpoint of age as this property is 10 years older than the Subject Property which is brand new. The Board notes that 1305 2 Mersea Road East has completed landscaping and a pool as compared to the Subject Property which has no pool or finished landscaping; however, this is more than counter balanced by the fact that the Subject Property is brand new, has a lot which is almost 1 acre larger and building area which is 329 square feet larger than 1305 2 Mersea Road East. Based on reviewing all the evidence in support of current value, the Board concludes that the Subject Property would likely have sold for at least $484,000 as of January 1, 2016 and considerably more if it had the same exterior landscape finishes as Property 5.

29With regards to the difference in quality level of the Subject Property between MPAC’s 7.0 and the Appellants’ assertion of 6.5, the Board notes that MPAC inspected the Subject Property with the Appellants and completed the quality work-up audit resulting in a quality level of 7.5 not 7.0 and at the time, there was no objection by Mr. Brown who was present at the inspection. MPAC arbitrarily reduced the quality level to 7.0 so that the assessment value would not increase above the $484,000 value. The Board therefore finds that the quality level of the subject property is more likely 7.5 and not 6.5 as asserted by the Appellants.

30Based on the best available evidence, the Board finds the correct current value of the Subject Property to be $484,000 based on a January 1, 2016 valuation day.

Issue 2 – Whether an adjustment to the assessment of the land should be made to compensate for the assessment of similar lands in the vicinity

31 Section 44(3)(b) of the Act directs that, after determining current value, the Board shall 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.”

32The Assessment to Sales Ratio (“ASR”) of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If other properties are assessed below their current value, a reduction in the assessment below current value is required to make the assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by comparing the assessment as returned to the time-adjusted sale price, expressed as a mathematical ratio.

33MPAC presented an equity analysis of 30 property sales of single-family detached homes (Not On Water) with a property code of 301 that occurred from January 1, 2015 to June 30, 2018, located within 5 kilometres of the Subject Property. This equity analysis of the 30 properties results in a median ASR of 0.987 with a Coefficient of Dispersion (“COD”) of 12.5. MPAC submits that its standards indicate that for single -detached properties, the median ASR should fall between 0.95 and 1.05, and the COD should be less than 15. In this case, the median ratio of 0.987 is within the acceptable range, and therefore MPAC has recommended no downward adjustment to the current value assessment of the Subject Property in order to compensate for the assessments of similar properties in the vicinity.

34The Appellants introduced the assessed values and information on 15 properties but presented and focused their case on the following four properties:

a) 416 Talbot Road East—is assessed at $372,000, has a similar site area of 1.63 acres compared to the Subject Property’s 1.61 acres and a building area of 2,254 square feet verses 2,798 square feet for the Subject Property. The quality level is 6.5 and the home was built in 2004 as compared to the Subject Property which was built in 2015 and has a quality level of 7.0. The Appellants submit that this home was built with the same building materials as the Subject Property.

b) 2010 Mersea Road 8—is assessed at $366,000, has a site area of 1.19 acres therefore is 0.42 acres less than the Subject Property, a building area of 2,572 square feet which is 226 square feet smaller than the 2,798 square feet for the Subject Property and Quality 6.5 construction which is also less than 7.0 for the Subject Property. This home was built in 2006.

c) 1039 Mersea Road 7—is assessed at $392,000, has 1.52 acres which is similar to the Subject Property’s 1.61 acres and has a building area of 2,685 square feet which is only 113 square feet smaller than the Subject Property at 2,798 square feet. This home was built in 2006 and has a quality of 6.5 which is less than the Subject Property’s 7.0.

d) 1033 Mersea Road 9—is assessed at $348,000, has a 1.5 acres lot as compared to the Subject Property at 1.61 acres and a building area of 2,465 square feet as compared to the Subject Property’s building area of 2,798 square feet. This property is also a 6.5 quality of construction. This property has a paved driveway, with cement walkways, hardwood floors, granite countertops and has an insulated outbuilding. This home belongs to the Appellants uncle and the Appellants claims that it is nicer than their home and yet is rated at 6.5 quality. The year built of this home was not in evidence.

The Appellants submit that they consider these four properties to be similar to the Subject Property and that their range of assessments is between $348,000 and $392,000. The Appellants requests that his assessment be reduced by $100,000 to $384,000 to be in line with the range of assessments of these four comparable properties.

Findings on Issue 2 - Equitable Reduction in Assessed Value

35The Board is satisfied that equity has been achieved at a current value of $484,000.

36First, the Board finds that the best evidence in support of an equitable reduction in the assessment value is MPAC’s equity study of 30 property sales located within the vicinity of the Subject Property. This study resulted in the ASR of 0.987 and a COD of 12.5 which are both within the acceptable parameters. Based on the ASR of 0.987, the Board agrees with MPAC that no additional downward adjustment is warranted to the current value of the Subject Property to ensure that the assessment is equitable with the assessment of similar properties in the vicinity.

37The Board has analysed the four comparable properties submitted by the Appellants and concludes that three of the four properties for which the Appellants provided the year built are 9 to 11 years older than the Subject Property. All four have smaller building areas as well as a lower quality of construction as compared to the Subject Property. When using a small sample of comparable properties for equity purposes, the properties must be very similar in order to compare assessments. It is very difficult for the Board to conclude that these properties are very similar to the subject property for the purposes of establishing an equity relationship. The Subject Property is a new construction as of January 1, 2016 and is therefore not similar enough to these properties which are 10 years older and have a lower quality of construction. The Board prefers the larger sample of 30 properties submitted by MPAC which establishes the relationship of assessment to time adjusted sale values for similar properties in the vicinity of the Subject Property.

38The Board will therefore make no further downward adjustment to the correct current value of $484,000 to compensate for the assessments of similar properties in the vicinity.

CONCLUSION

39The Board finds that the correct current value of the Subject Property to be $484,000 for the 2020 and 2021 taxation years. Furthermore, the Board finds that no equity reduction is required under s. 44(3)(b) of the Act.

ORDER

40The Board orders that the assessment of the Subject Property be confirmed at $484,000 for the 2020 and 2021 taxation years.

“Anthony LaRegina”

ANTHONY LaREGINA

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb

Telephone: 416-212-6349 Toll Free: 1-866-448-2248