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By Jerome P. Pesick of Steinhardt Pesick & Cohen PC, Chair
Membership statements were recently mailed out by the State Bar of Michigan. This is a reminder to all current members to confirm that the Real Property Law Section is checked off on your dues statement, so that you can maintain your current membership. I encourage all of you to help us grow our Section by recommending membership to your friends and colleagues. Introduce new and younger attorneys to the benefits of belonging to the Section - excellent educational programming, our quarterly journal the Michigan Real Property Review, and networking opportunities. These are just a few of the benefits of belonging to the Section. Please feel free to contact me or any other section leader with ideas you may have regarding membership activities or programming.
The Danger of the Unintended Uncapping
Despite the depressed economic environment, the SEVs of many parcels still exceed their taxable values. My upcoming article in the Real Property Review discusses structuring transactions to insure the cap on taxable value is not lifted.
Recent decisions confirm that using a pre-dated deed to convey property to heirs may unexpectedly uncap the taxable value. In Nelson v Village of Leroy (MTT Docket No. 311866, Feb 28, 2006), the Michigan Tax Tribunal determined that a deed signed and dated prior to death was a valid transfer of the property as of the date of the deed, even though the deed was not recorded until after death.
Uncapping can occur even if a deed has not been executed. In Reid v Williamstown Township (Michigan Court of Appeals Docket No. 271284, Nov 27, 2007), the Court of Appeals affirmed a Tax Tribunal ruling that a recorded Memorandum of Land Contract was sufficient to demonstrate a transfer of property and lift the property tax cap.
Issues also arise in financing transactions. In Lakewood Cottages, LLC v Township of Sanilac (MTT Docket No. 302715, Jan 6, 2005), the Tax Tribunal found that conveyances of property into and out of an entity for purposes of refinancing a loan were non-exempt transfers. This result should surprise those who believe a contribution of property into a limited liability company is exempt from uncapping.
For these and other reasons, particular attention must be paid to structuring even seemingly simple transactions to avoid an unintended uncapping of the taxable value.
Sea Change in Residential Finance
“We live in interesting times.” (Ancient Chinese curse)
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March 11-13, 2009