Why am I paying property tax on land when I own a condo?
November 24, 2009 9:15 AM Subscribe
So confused! My county thinks we have a condo but we thought we have a single-family home (i.e. a free-standing house on land we own). Then why does my property tax bill show that we've been taxed for the land?
Here's a confusing and somewhat obscure situation. Please bear with me; I'll try to explain all the details and what I know as clearly as I can.
We're trying to refinance our (free-standing) house and as part of the process we had an appraisal. According to the appraisal report, we have a condo, not a single-family home. Zillow also thinks we have a condo. The appraiser told me that the definition of a condo is that the owner only owns the immediate space they live in, but not the land or other common areas. So our house was assessed as a free-standing building that is part of a complex, with the land being labeled "common area", even though we don't belong to an HOA or condo association, don't pay any fees, and do the maintenance ourselves.
The county's assessor's map shows that we live on a single lot with our neighbor. Our house is on an L-shaped chunk of the lot, and our neighbor's house is on the chunk inside the L. We're separated by a fence. Our respective parcel numbers are subsections of the lot and are designated for use as "Condominium - single residential living unit". The land itself has its own parcel number, with the use is designated as "condominium common area". The map also says "common area".
However, the property tax records for both us and our neighbor show that our taxable value comprises both land and improvements! If we look up the "common area" parcel, it shows that no one has paid any taxes on it at all.
I was not involved with the original purchase of the property, as my wife bought the house before we got married. Her understanding was that she owned the L-shaped chunk of land as well as the house, but we don't have any documentation to support this.
So, I have a few questions. I'd really appreciate insight into any of them.
1. Did someone pull a fast one on my wife? That is, did she pay a single-family home price for land + house but only get the house?
2. If we actually own a condo, then why are we paying property taxes on the land *and* the improvements? (I understand that we should be paying property tax on the house itself.)
3. How can I find out who actually owns the "common area", and should that person be the one who pays property tax on the land?
4. Are we entitled to any of the back taxes we've paid based on the value of the land?
5. Lastly, if it does turn out that we own a single-family home, would this increase our appraised value? How would we go about making the legal change?
Thanks for any help you can provide.
Here's a confusing and somewhat obscure situation. Please bear with me; I'll try to explain all the details and what I know as clearly as I can.
We're trying to refinance our (free-standing) house and as part of the process we had an appraisal. According to the appraisal report, we have a condo, not a single-family home. Zillow also thinks we have a condo. The appraiser told me that the definition of a condo is that the owner only owns the immediate space they live in, but not the land or other common areas. So our house was assessed as a free-standing building that is part of a complex, with the land being labeled "common area", even though we don't belong to an HOA or condo association, don't pay any fees, and do the maintenance ourselves.
The county's assessor's map shows that we live on a single lot with our neighbor. Our house is on an L-shaped chunk of the lot, and our neighbor's house is on the chunk inside the L. We're separated by a fence. Our respective parcel numbers are subsections of the lot and are designated for use as "Condominium - single residential living unit". The land itself has its own parcel number, with the use is designated as "condominium common area". The map also says "common area".
However, the property tax records for both us and our neighbor show that our taxable value comprises both land and improvements! If we look up the "common area" parcel, it shows that no one has paid any taxes on it at all.
I was not involved with the original purchase of the property, as my wife bought the house before we got married. Her understanding was that she owned the L-shaped chunk of land as well as the house, but we don't have any documentation to support this.
So, I have a few questions. I'd really appreciate insight into any of them.
1. Did someone pull a fast one on my wife? That is, did she pay a single-family home price for land + house but only get the house?
2. If we actually own a condo, then why are we paying property taxes on the land *and* the improvements? (I understand that we should be paying property tax on the house itself.)
3. How can I find out who actually owns the "common area", and should that person be the one who pays property tax on the land?
4. Are we entitled to any of the back taxes we've paid based on the value of the land?
5. Lastly, if it does turn out that we own a single-family home, would this increase our appraised value? How would we go about making the legal change?
Thanks for any help you can provide.
Best answer: The warranty deed that should have been given to your wife when she bought the property should describe exactly what she was buying. It sounds like taking the deed to a real estate lawyer should clear things up (or at least start the process). Also, where did the appraiser get the information that you own a condo? It is possible that someone entered the information incorrectly in county's records. Once again, a real estate lawyer can get that cleared up quicker than you probably can on your own. Who is listed on the county record books as owning the common area? I would guess this needs to be cleared up before you can refinance.
posted by TedW at 9:28 AM on November 24, 2009 [1 favorite]
posted by TedW at 9:28 AM on November 24, 2009 [1 favorite]
might have happened when the property was subdivided. look back to when your house was built.
posted by lester's sock puppet at 9:31 AM on November 24, 2009
posted by lester's sock puppet at 9:31 AM on November 24, 2009
It would be smart to talk to an attorney before you talk to the city.
Could there be an adverse possession claim? I don't know, but your real estate attorney could tell you.
If there is, what you say to the city could have a bearing on the outcome of that.
posted by SantosLHalper at 9:52 AM on November 24, 2009
Could there be an adverse possession claim? I don't know, but your real estate attorney could tell you.
If there is, what you say to the city could have a bearing on the outcome of that.
posted by SantosLHalper at 9:52 AM on November 24, 2009
Best answer: I am not a Real Estate Attorney.
What you need is a "title report", which is a document that traces the ownership of your property back through time and notes every encumbrance on the land, including easements and condominium regime declarations. Title reports are not generally prepared by lawyers, but by companies who specialize in doing such reports. If you look in the yellow pages for "title insurance" companies you can find some, or ask an attorney for a reference. A title report will cost a couple hundred dollars but you won't get anywhere without one, and you almost certainly won't be able to lookup the information yourself. You might need a lawyer to help you read the thing, but generally you'd be looking for something like a "Declaration of Condominium" or "Declaration of Horizontal Property Regime" in the title chain.
If your wife bought the property with a mortgage, then a title report was done when the bank took out the mortgage and you might be able to find a copy of that report in your files.
As far as the "condominium" thing goes, if you (or your wife) really had no idea you were buying condo property then yes, that would be a big deal and something you'd want to look into. But "condominium" does not mean "big apartment building with an owners' association." What exactly it does mean depends on the state you live in, but generally it means two things: (1) you own some property in fee simple, and some other property in common with others; and (2) you (or a predecessor in interest) agreed to be bound by the condominium documents. These documents are often, but not always, long complex things that setup an association to pay expenses, and requirements for members to pay dues to the association. They may be just about anything though, and they don't necessarily involve paying dues.
As far as #1 above goes, in the prototypical apartment/condominium the property you own in fee simple is a box 200 feet in the air (or whatever). In your case it might be an L shaped plot of land. In either case, you'd own some property in fee simple and have to pay property tax on that.
What I'm saying is that you may very well own condo property. But this doesn't mean you own only the house or that you don't have to pay property tax on the land.
posted by lex mercatoria at 10:34 AM on November 24, 2009
What you need is a "title report", which is a document that traces the ownership of your property back through time and notes every encumbrance on the land, including easements and condominium regime declarations. Title reports are not generally prepared by lawyers, but by companies who specialize in doing such reports. If you look in the yellow pages for "title insurance" companies you can find some, or ask an attorney for a reference. A title report will cost a couple hundred dollars but you won't get anywhere without one, and you almost certainly won't be able to lookup the information yourself. You might need a lawyer to help you read the thing, but generally you'd be looking for something like a "Declaration of Condominium" or "Declaration of Horizontal Property Regime" in the title chain.
If your wife bought the property with a mortgage, then a title report was done when the bank took out the mortgage and you might be able to find a copy of that report in your files.
As far as the "condominium" thing goes, if you (or your wife) really had no idea you were buying condo property then yes, that would be a big deal and something you'd want to look into. But "condominium" does not mean "big apartment building with an owners' association." What exactly it does mean depends on the state you live in, but generally it means two things: (1) you own some property in fee simple, and some other property in common with others; and (2) you (or a predecessor in interest) agreed to be bound by the condominium documents. These documents are often, but not always, long complex things that setup an association to pay expenses, and requirements for members to pay dues to the association. They may be just about anything though, and they don't necessarily involve paying dues.
As far as #1 above goes, in the prototypical apartment/condominium the property you own in fee simple is a box 200 feet in the air (or whatever). In your case it might be an L shaped plot of land. In either case, you'd own some property in fee simple and have to pay property tax on that.
What I'm saying is that you may very well own condo property. But this doesn't mean you own only the house or that you don't have to pay property tax on the land.
posted by lex mercatoria at 10:34 AM on November 24, 2009
You need to speak to a lawyer about this.
Note that one of the responders above uses the legal term "fee simple" incorrectly. "Fee simple" means you own property outright; that is, there is no mortgage balance associated with it.
Again, speak with a competent real estate attorney.
posted by dfriedman at 12:25 PM on November 24, 2009
Note that one of the responders above uses the legal term "fee simple" incorrectly. "Fee simple" means you own property outright; that is, there is no mortgage balance associated with it.
Again, speak with a competent real estate attorney.
posted by dfriedman at 12:25 PM on November 24, 2009
"Fee simple" means you own property outright; that is, there is no mortgage balance associated with it.
No, this is wrong -- or at least misleading. It's also totally beside the point.
Look, I think the safest answer to any question even arguably touching on a legal question is "go see a lawyer." That's fine, but non-lawyers sometimes wish to learn a little something about their situation w/o having to pay an attorney. Or so I'm told. This is a reasonable desire and people should be able to at least learn the general contours of the law as it concerns them without having to consult the priesthood. That said, asking (and answering) legal questions online is certainly "fraught with peril", as they say, and both asker and answerer need to be careful.
Anyhow, in my experience people often use the term "fee simple" in a loose way to mean "not leasehold". Strictly speaking, the definition of "fee simple", which is totally irrelevant to the question asked, could depend on what state you live in. In some states ("lien theory" states) the purchaser holds title outright in fee simple, with the lender holding a lien on the property. In others ("title theory" states) a mortgage is more like a conveyance of title to the lender, so that the purchaser holds something less than fee simple.
posted by lex mercatoria at 1:10 PM on November 24, 2009 [1 favorite]
No, this is wrong -- or at least misleading. It's also totally beside the point.
Look, I think the safest answer to any question even arguably touching on a legal question is "go see a lawyer." That's fine, but non-lawyers sometimes wish to learn a little something about their situation w/o having to pay an attorney. Or so I'm told. This is a reasonable desire and people should be able to at least learn the general contours of the law as it concerns them without having to consult the priesthood. That said, asking (and answering) legal questions online is certainly "fraught with peril", as they say, and both asker and answerer need to be careful.
Anyhow, in my experience people often use the term "fee simple" in a loose way to mean "not leasehold". Strictly speaking, the definition of "fee simple", which is totally irrelevant to the question asked, could depend on what state you live in. In some states ("lien theory" states) the purchaser holds title outright in fee simple, with the lender holding a lien on the property. In others ("title theory" states) a mortgage is more like a conveyance of title to the lender, so that the purchaser holds something less than fee simple.
posted by lex mercatoria at 1:10 PM on November 24, 2009 [1 favorite]
Response by poster: Thanks, everyone, for your help!
It's pretty clear I need to see a lawyer or at least have a title company do a new search (if our current documents don't shed any light on the matter).
posted by ObeyScient at 1:50 PM on November 24, 2009
It's pretty clear I need to see a lawyer or at least have a title company do a new search (if our current documents don't shed any light on the matter).
posted by ObeyScient at 1:50 PM on November 24, 2009
I assume condominiums are pretty much the same across the land, in general.
And in general, when you buy a condo, you buy the space within your walls, and a percentage share in the common areas (the building itself and the land). So you own the land in that you own a share in the corporation that owns the land. And so you are responsible for that percentage of the property taxes. It's not that you don't own the land, but that you don't hold title to the land or have exclusive control over it.
(For example, I live in a condominium building that sits on about an acre. My neighbors live in an identical building, on much less land. They pay less in property taxes.)
(In other words, someone owns the land and you DO pay your fair share for it, it just depends on whether you pay it directly or indirectly through your condo dues.)
In your case, if it really is a condominium (which it can be), your association owns the land (and possibly the house), and you own the inside of it. This kind of setup is done to keep control over a neighborhood (because the condo board can usually evict you for breaking their rules), or to appease the municipality, who might not want to deal with the upkeep of a new neighborhood full of streets.
To answer your question differently- do you pay someone a monthly assessment? Do you have to maintain your own building and yard? Etc.
posted by gjc at 4:53 PM on November 24, 2009
And in general, when you buy a condo, you buy the space within your walls, and a percentage share in the common areas (the building itself and the land). So you own the land in that you own a share in the corporation that owns the land. And so you are responsible for that percentage of the property taxes. It's not that you don't own the land, but that you don't hold title to the land or have exclusive control over it.
(For example, I live in a condominium building that sits on about an acre. My neighbors live in an identical building, on much less land. They pay less in property taxes.)
(In other words, someone owns the land and you DO pay your fair share for it, it just depends on whether you pay it directly or indirectly through your condo dues.)
In your case, if it really is a condominium (which it can be), your association owns the land (and possibly the house), and you own the inside of it. This kind of setup is done to keep control over a neighborhood (because the condo board can usually evict you for breaking their rules), or to appease the municipality, who might not want to deal with the upkeep of a new neighborhood full of streets.
To answer your question differently- do you pay someone a monthly assessment? Do you have to maintain your own building and yard? Etc.
posted by gjc at 4:53 PM on November 24, 2009
Response by poster: Hi gjc,
We've never had any contact with any condo association and don't pay dues. We maintain our own building and yard (and actually just had trees removed, a new fence and plants put in).
I looked over our documents and we have a 50% *interest* in the common area--so I guess that means we don't hold title to it. But our property taxes appear to be based on our recently assessed value, whereas the owner of the other condo is taxed on a much lower assessment. (We live in California, so Prop 13 limitations on property tax increases applies.)
Is it weird that the 50% interest is assessed separately for each owner and not on the entire parcel?
posted by ObeyScient at 9:37 AM on November 25, 2009
We've never had any contact with any condo association and don't pay dues. We maintain our own building and yard (and actually just had trees removed, a new fence and plants put in).
I looked over our documents and we have a 50% *interest* in the common area--so I guess that means we don't hold title to it. But our property taxes appear to be based on our recently assessed value, whereas the owner of the other condo is taxed on a much lower assessment. (We live in California, so Prop 13 limitations on property tax increases applies.)
Is it weird that the 50% interest is assessed separately for each owner and not on the entire parcel?
posted by ObeyScient at 9:37 AM on November 25, 2009
This thread is closed to new comments.
Also, around here we call your kind of property a "flag lot."
posted by amanda at 9:22 AM on November 24, 2009