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Who Is the "Party In Interest" When Appealing Property Tax Assessments?

It's not always as straight forward as you might think!

JMC v. City of Grand Rapids, 2015 Mich. App. LEXIS 953 (May 12, 2015), highlights the importance of knowing the "party in interest" with the right to appeal a Michigan property tax assessment. The salient facts of the case are as follows.

JMC LLC (JMC) owned an industrial property in Grand Rapids. In May of 2012, Property Tax Consultants (PTC) filed a property tax appeal petition on behalf of JMC in the Michigan Tax Tribunal (MTT), challenging the City's 2012 assessment and valuation of the property. In December of 2012, JMC sold the property to 1642 Broadway, LLC (Broadway).

A few months later, on April 24, 2013, PTC, on behalf of solely JMC as the petitioner, filed a motion to amend the 2012 petition to add the 2013 tax year. The MTT initially granted the motion. However, on June 14, 2013, two weeks after the deadline by which an interested party could have appealed the 2013 assessed and taxable values on the subject property, PTC filed another motion with the MTT, this one advising the MTT that JMC had sold the subject property in December of 2012, and requesting that JMC be allowed to add Broadway (the buyer) as a co-petitioner for purposes of the 2013 tax year.

The MTT responded by issuing an order requiring JMC to submit information showing that it was an interested party with standing to challenge the 2013 tax year assessment. When JMC failed to provide this information, the MTT vacated its original order granting JMC's April 24, 2013 motion to add the 2013 year to the petition. It also denied JMC's June 14, 2013 motion to add Broadway as a party to the petition challenging the 2013 assessment. JMC and Broadway appealed these rulings to the Michigan Court of Appeals (COA).

On appeal, JMC and Broadway argued that they properly invoked the MTT's jurisdiction over the 2013 tax year when JMC filed its April 24, 2013 motion to amend the 2012 petition to add the 2013 year. The COA disagreed. It explained that the jurisdiction of the MTT in an assessment dispute involving property classified as commercial real property or industrial real property "is invoked by a party in interest, as petitioner, filing a written petition on or before May 31 of the tax year involved." MCL 205.735a(6).

Parties in interest are persons or entities with a property interest in the property being assessed. MCL 205.735a(6). A property interest is "a legal or equitable claim to or right in property." Having sold the subject property in 2012, JMC did not have a property interest in the property in 2013, and therefore was not a party in interest eligible to invoke the MTT's jurisdiction over the 2013 tax year. Once the MTT discovered that JMC did not own the property in 2013 and was not otherwise an interested party (and therefore could not invoke the MTT's jurisdiction for the 2013 tax year), it correctly vacated its order adding the 2013 tax year to JMC's petition.

The COA also explained that Broadway first appeared before the MTT in June of 2013, six months after it purchased the subject property, and two weeks after the deadline for challenging the 2013 assessment and valuation. Although the error was made by JMC's and Broadway's representative, PTC, the COA concluded that the MTT lacked jurisdiction to expand the statutory deadline and, therefore, affirmed the MTT's rulings, which effectively dismissed any appeal of the 2013 assessed and taxable values.

Bottom line: When appealing a property tax assessment on Michigan commercial or industrial property, the appeal must be (i) brought on behalf of the proper "party in interest," and (ii) filed by May 31 of the year at issue. Otherwise, the MTT lacks jurisdiction to hear the dispute and will dismiss the appeal, and the proper party in interest will need to wait until the following year to appeal the assessment (and only that year's assessment, not the prior year's assessment).

Blog posted by Eva T. Cantarella, a commercial property tax appeal attorney at the law firm Hertz Schram PC, 1760 S. Telegraph Rd., Ste 300, Bloomfield Hills, MI 48302, 248-335-5000, [email protected] Ms. Cantarella is also a continuing education instructor for the Commercial Board of Realtors and the International Council of Shopping Centers, and she formerly owned her own real estate appraisal business-experience that has proven invaluable in helping her successfully resolve hundreds of property tax appeals in the Michigan Tax Tribunal. All appeals are handled on a contingency basis, meaning you pay only if the appeal results in tax savings. Call now if you have any questions concerning your commercial or industrial property tax assessment. Please note that Ms. Cantarella handles only commercial and industrial property tax appeals; she does not handle single family homes.

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