USE IT OR LOSE IT. OR TAKE YOUR PROPERTY INTEREST SERIOUSLY. VERSION 2

Benson v. Marin County Assessment Appeals Board (No. A134340, First Dist. Sept. 27, 2013)

 
In Benson v. Marin County Assessment Appeals Board, the County Assessor ultimately prevailed in a property tax case that hinged on whether a change of ownership under Prop 13 had occurred.  Where change of ownership occurs, counties can reassess and raise property tax. 

A property in Homestead Valley in Mill Valley was recorded as a "family joint tenancy" between Peter Mikkelsen and his mother Dagmar.  When Mrs. Mikkelsen died in 1997, Peter created a family joint tenancy with his brother James Mikkelsen. The two brothers owned the property until 2007, when James filed papers granting himself "an interest as a tenant in common."

Noting the change of title, the Marin County Assessor opined that a transfer of ownership had occurred and reassessed the property’s value, increasing its tax basis.  Mikkelsen contended that a tenancy in common was simply an “ephemeral” change from joint tenancy and he should still be able to use the previous basis he enjoyed in joint tenancy.  Mikkelsen cited a general section of the Revenue and Taxation Code, Section 60(a), which had a broad definition of what could constitute a change in ownership and the Marin County Assessment Appeals Board  and Marin County Superior Court Judge Faye D’Opal agreed with Mikkelsen. 

However, this last September, the 1st District Court of Appeals disagreed, citing the complex regulatory scheme and specific reference to Family Joint Tenancies in Sections 61, 62 and 65 - and the extensive legislative history behind SB 1260’s interpretation of Prop 13.  The court concluded that James’ termination of his family joint-tenancy interest and creation of a tenancy in common was not an ephemeral transfer and thus the reassessment was properly triggered.  The opinion concludes that, “[t]he price for that property tax break, so to speak, was a change in ownership when the family joint tenancy was terminated."  This month, the California Supreme Court refused to hear the case, thus finalizing the court of appeal’s decision.