Charlevoix to appeal COA decision that prevented reassessment of property taxes after joint owner died

Earlier this month, we posted a story about Charlevoix trying to raise the property taxes on a jointly owned tract of land after one of the joint owners died. The Court of Appeals held that there was no conveyance of the land after James Klooster’s death because of the joint ownership.

Charlevoix now wants to appeal to the decision to the Michigan Supreme Court. From the AP:

CHARLEVOIX, Mich. (AP) — A northern Michigan city is asking the state Supreme Court to take a property tax case that is getting the attention of many other communities.

In December, the Michigan Court of Appeals said it was illegal for Charlevoix to raise the taxable value of a house after the death of a co-owner.

The court said the value could not be uncapped because there was no new transfer of ownership. Charlevoix’s lawyer, Bryan Graham, claims a loophole has been created. Assessors elsewhere are upset, too.

Charlevoix is appealing to the Michigan Supreme Court, and the State Tax Commission will help by paying $10,000 in legal fees.

Nathan Klooster’s (KLOW’-ster’s) mother and disabled sister live in the modest home. He was a joint tenant on the deed when his father died in 2005.


MI COA: Adding a joint owner to home maintains taxable value when original owner dies

ED WHITE, Associated Press Writer

DETROIT (AP) — A dispute over a modest three-bedroom home in northern Michigan could have consequences statewide after an appeals court said the city of Charlevoix illegally raised the property’s taxable value when a co-owner died.

Taxes more than tripled after James Klooster’s death in 2005. Charlevoix had lifted the lid on the value, even though a son was a co-owner and the property didn’t change hands.

"James’ death was not a conveyance. … There was no transfer of ownership, and the taxable value of the property should not have been uncapped," the Michigan Court of Appeals said.

Assessors and local governments up and down Michigan are talking about the Dec. 15 decision. Any court-ordered restriction on raising a property’s taxable value prevents them from collecting more revenue.

Since Michigan voters approved Proposal A in 1994, the taxable value of a home can’t go up much unless there’s a new owner, typically through a sale.

Nathan Klooster, 50, said his father added him to the deed as a joint tenant, or co-owner, in August 2004, five months before his death.

Klooster said his mother, who has health problems, and a disabled sister still live in the house.

"My dad’s goal was he didn’t want to see them put in a home or go anywhere else. We talked about it at great length," said Klooster, who lives nearby in Marion Township.

But Charlevoix claimed the elder Klooster’s death triggered a transfer of ownership, raising the home’s taxable value to $72,300 from $37,802.

"We uncapped it because he was the sole owner of the property," Charlevoix County equalization director Betsy Mason said, referring to Klooster’s son.

Nathan Klooster said taxes have jumped to about $4,000 a year from $1,168. (Part of the increase is due to the lack of a homestead exemption because this is not his principal residence.)

Klooster’s lawyer, Steven Stapleton, said the court ruling "potentially has a bigger ripple" elsewhere in Michigan. Mason disagreed with the result.

"I don’t believe it was the intent of the Legislature to have a loophole for the uncapping process," she said. The consequences "go far beyond this one parcel."

[Ed. note – I don’t believe it was the intent of the Legislature either, because Proposal A was passed by referendum, and not passed by the legislature.]

Charlevoix hasn’t decided whether to appeal to the Michigan Supreme Court.

Grand Rapids lawyer Jeffrey Ammon, who specializes in property-tax law, said the Klooster case "should give comfort to taxpayers."

"Assessors are looking at any transfers, any deeds, any deaths to increase taxes," he said. "I don’t blame them for that. If they’re missing that sort of thing they’re not doing their job."

Law Judge Agrees with Cox, Demands $106 Million Refund for Consumers Energy Customers

From the Michigan News:

Attorney General Mike Cox today announced that barring appeals, Consumers Energy customers across Michigan can expect $106 million in refunds following a recommendation by an Administrative Law Judge with the Michigan Public Service Commission (MPSC).

Law Judge James Rigas agreed with the Attorney General’s office and other parties that surcharges billed to customers during 2001 through 2003 were collected by Consumers Energy for the specific purpose of tearing down the former Big Rock Point nuclear power plant near Charlevoix. He further recommended that the excess money be refunded to customers.