Misclassified homes may be paying higher taxes in error - WMC Action News 5 - Memphis, Tennessee

CBS 5 Advocate

Misclassified homes may be paying higher taxes in error


A Gilbert man says he has paid hundreds of dollars more in property taxes over the past decade due to a title company error, but he could have easily spotted the problem early and not been harmed.

Mike Martin says he has never rented his Gilbert home. He has lived in it for ten years. In March 2012, Martin says he just happened to be online checking property values in his neighborhood when he found something startling.

"What I discovered was my property taxes were significantly higher than my neighbors," Martin said.

Martin says he had been paying hundreds of dollars more each year for a decade because Maricopa County had his home classified as a "4", a rental property, not a "3", a primary residence. After he appealed, the Maricopa County Assessor changed Martin's classification and reimbursed his overpayments for the prior three years. That left about $1300 in overpayments from earlier years. For that he turned to Security Title.

"They didn't attempt to show any goodwill on their part," Martin said.

Martin provided CBS 5 News with a signed/notarized document that he says proves Security Title, the company that handled his closing, indicated to Maricopa County, in error, that the property was to be rented to someone, not to be occupied by the owner. Martin says Security Title denied his request for a refund, claiming the statute of limitations had expired and the company couldn't investigate because his documents had been destroyed.

"It was my problem, I should have looked at the yearly notice that comes from the county," Martin said.

Martin could have easily found out this information on his own at any time. It's on the Property Notice of Valuation card Maricopa County sends all homeowners every year. Under the title "valuation" and the sub-title "legal class", homeowners will find the number three, which means primary residence, and the number four which means rental.

"Nobody looks at that, they look at the value of the tax being raised or lowered, nobody looks at the classification," Martin said.

But every homeowner should look, if there is a mistake, this little number can cost you lots of dollars.

"If it isn't class three, and you live-in and own the property, then you need to contact the county assessor's office to get it changed," Martin said.

There are many homeowners in Maricopa County that could have a misclassified home, but for a different reason. Twice a year for the past couple of years, Maricopa County has been mailing notices to approximately 42,000 Maricopa County homeowners telling them to take action or their property classification may be automatically switched from primary residence to rental. Such a change would result in higher taxes for the homeowner as rental properties are assessed at a higher rate. It is part of a Maricopa County program to identify homes that are rentals and not paying the higher rate. Homeowners may have received one of these Maricopa County notices if they have a different mailing address for the property, they own multiple properties in the county, and/or they previously submitted a rental application on the property. So, if you see a "4" on your Property Notice of Valuation card and you live in the house, you should contact the assessor right away.

If you don't want to wait to receive the card, homeowners can find the information right now at mcassessor.maricopa.gov. Put your property address in the search bar and you will see your home's legal class, a "3" or a "4", under valuation data.

Security Title was under no legal obligation to act in this case due to the statute of limitations expiring, but when CBS 5 News contacted the company, Security Title acknowledged it may have played a role in the problem.

As a gesture of goodwill, Security Title issued Martin a check for $750. CBS 5 News thanks Security Title for their efforts in bringing this case to a fair and satisfactory conclusion.

Copyright 2013 CBS 5 (KPHO Broadcasting Corporation). All rights reserved.

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