Friday, July 25, 2014

Property tax. Town can tax property with subdivision permit differently from property that does not need a permit to be subdivided.

Lathrop v. Monkton, 2014 VT 9 (24-Jan-2014)

CRAWFORD, J. The Town of Monkton brings this consolidated appeal from decisions of the state appraiser in three property tax cases challenging the Town’s 2011 assessment. The state appraiser ruled that the Town had treated taxpayers inequitably by adding additional “home-site values” to undeveloped parcels that have a subdivision permit, but not to other undeveloped parcels that are eligible for subdivision without a permit.  We reverse.

Taxpayers’ position, accepted by the state appraiser, is that the Town’s taxation scheme violates the Proportional Contribution Clause of the Vermont Constitution and the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution because similarly situated taxpayers—i.e., those who own parcels divided by roads or containing contiguous lots created by deed prior to 1978, and those whose land is subject to a subdivision permit—are treated differently. The Town argues that it acted fairly in applying different valuation methods to properties with different characteristics, and that land that could be subdivided witout a permit is not similarly situated for purposes of tax appraisal.

Fair market value is based on the highest and best use of the property. The Town is not required to treat an undivided parcel as one economic unit for appraisal purposes if the highest and best use of the property is as subdivided lots. The development potential of property is an appropriate factor to consider in fixing appraised values.

The practice of adding the additional home-site value to permitted lots is only the starting point for the determination of appraised values. A taxpayer who has obtained a permit remains free to present evidence that the property lacks development potential despite the issuance of the permit. Conversely, the Town may increase the value of an undeveloped parcel to reflect development value even in the absence of a permit.

A permit operates as prima facie evidence that the highest and best use for the permitted parcel is to subdivide it into multiple home sites. The fact that other owners have the right to subdivide without a permit does not necessarily demonstrate that the highest and best use of their property is as multiple house sites.

The state and federal guarantees of equal treatment do not require identical treatment. We conclude that the Town’s practice of assigning additional home-site values to permitted subdivisions has a rational basis and is constitutionally valid. There is a sufficient difference between lots with actual permits in place and lots which are potentially subject to division without a permit to justify the different treatment by the Town. The state appraiser therefore erred in reducing the assessed value of taxpayers’ land.

Reversed and remanded for the amendment of the assessed values of taxpayers’ land consistent with this opinion.

Property tax: Town cannot tax property as if legally subdivided, merely because of line on survey.


Hoiska v. Town of East Montpelier, 2014 VT 80 (18-Jul-2014)

ROBINSON, J. Taxpayer appeals from the Vermont State Appraiser’s valuation of her property in the Town of East Montpelier. She argues that the appraisal incorrectly treats her property as comprising two contiguous lots under common ownership, and accordingly assigns a higher value to the property than if it were a single developable lot. In particular, taxpayer takes issue with the state appraiser’s legal conclusion that she legally subdivided the land in 1978 by procuring a survey that includes a line dividing the lot into two parcels. We agree that the state appraiser’s findings do not support the legal conclusion that taxpayer effectively subdivided her property in 1978, and reverse.

In the absence of a transcript, we accept the court’s findings See V.R.A.P. 10(b)(1); see also In re S.B.L., 150 Vt. 294, 297-98, 553 A.2d 1078, 1081 (1988) (failure to order transcript waives any challenge to sufficiency of court’s findings).

From 1974 to 1982, the Town’s zoning and subdivision regulations both provided that subdivision approval was required only for subdivisions with three or more lots. In 1982, the Town adopted new zoning regulations that required subdivision approval for two or more lots. In 1986, taxpayer recorded a survey of her property with a 1977 certification date and a 1978 revision date. The map included a line subdividing the property into two lots. Taxpayer never applied for or obtained subdivision approval.

In determining the highest and best use of property, a town may assess a parcel as including multiple house sites where the owner has subdivided the property into separate lots. See Lathrop v. Town of Monkton, 2014 VT 9, ¶ 10, ___ Vt. ___, 91 A.3d 378. In Lathrop we held that a town’s valuation of a parcel as if it included two house sites was reasonable where the parcel had been subdivided by permit because the permit provided evidence that subdivision was financially feasible and would result in the highest and best use of the land. Id. ¶ 14. Here, the Town is casting a wider net than Monkton did in the Lathrop case, as Monkton limited its assessment for multiple house sites to properties for which the owner had obtained a subdivision permit.

We accept the state appraiser’s finding that 1977 neither the Town’s zoning regulations nor the subdivision regulations required any approval for the subdivision of property into less than three lots. The legal question, then, is whether under those circumstances the completion of a survey that includes a subdivision line, without more, automatically effects a subdivision. We conclude that it does not.

The intention to subdivide can be manifested in many ways, including by recording the survey reflecting the subdivision, building on one or both subdivided lots, conveying one or both subdivided lots, offering to sell one or more subdivided lots, or otherwise expressing an intention to prospectively treat the lots as separate. However, the mere preparation of a survey reflecting two lots, by itself, is not enough. Even in the absence of specific town requirements for subdivisions of property, a survey alone, unaccompanied by any evidence manifesting an intent by the owner to actually subdivide along the lines reflected in the survey, does not effectuate a subdivision.

We conclude that the state appraiser erred as a matter of law in concluding that taxpayer had effectively subdivided her property in 1978 solely on the basis of the existence of an unrecorded survey reflecting two lots as of that time.

Reversed and remanded for a determination of taxpayer’s 2011 assessment viewing taxpayer’s property as a single property rather than two contiguous lots.



ARKNote:  Is development value taxable only if the owner has obtained necessary permits?

A town may increase assessed value when the owner has a subdivision permit, or when the property is already legally subdivided.  But is taxation of development value prohibited whenever a necessary permit has not been obtained?

Hoiska frames the issue as whether the property was already subdivided before 1982. If so, no permit was required, and it could be valued as two lots. If not, the Court seems to assume it could not be valued at its development value because it now needs a permit.

But is this so? Lots of property has value because of available uses that will require future permits. Residences in business zone are torn down and converted to business use. Is the tax delayed until the actual permits are obtained?

Lathop held it is reasonable to assign a higher market value to property with a necessary permit than to a property that does not need a permit to be subdivided. This was because the existence of a permit is strong evidence of the feasibility of the project and the highest and best use. The Court noted, however, that a town may increase the value of an undeveloped parcel to reflect development value even in the absence of a permit. Lathrop v. Town of Monkton, 2014 VT 9, ¶ 16. 


It is only a short step from this to say that a town can value an undeveloped parcel at its development value in the absence of a necessary permits, if the project is feasible and permits are obtainable. 

There is no discussion of the point in Hoiska, but it suggests a town may not assess a parcel as including multiple house sites unless the owner has legally subdivided the property into separate lots.

Saturday, July 19, 2014

SCOVT abolishes distinction between licensees and invitees in premises liability cases. Duty of reasonable care owed to all lawful visitors, not just business visitors. Trespasser rule not addressed “at this time.”


Demag v. Better Power Equipment, Inc., 2014 VT 78 (18-Jul-2014)

The history of the law on the subject of landowners and licensees shows a tendency to whittle away a rule which no longer conforms to public opinion. ~ Cameron v. Abatiell, 127 Vt. 111, 114, 241 A.2d 310, 312 (1968)
DOOLEY, J.  Plaintiff appeals a summary judgment against him in this case to recover damages for the injuries he suffered as a result of a fall into an uncovered storm drain in defendant BPE’s parking lot. Consistent with our current negligence law, the trial court found that plaintiff was a licensee of BPE, rather than an invitee. It then concluded that plaintiff was entitled to a lesser standard of care from BPE, which allowed for summary judgment against him. We determine that the time has come to abolish Vermont’s common-law negligence distinction between licensees and invitees and reverse and remand.

Plaintiff worked for a car dealership. As a convenience for BPE’s general manager and his wife Plainitff would pick up their car from BPE’s parking lot when it needed service. In January 2009, plaintiff drove to the lot to pick up the car and fell into an uncovered storm drain. Recent snowfall had obscured the drain so that its opening was not obvious. BPE and its employees were not aware that the storm drain was uncovered until plaintiff fell into it.

The trial court correctly noted that under our traditional common-law approach to landowner liability, the landowner’s duty to an entrant on his or her land depends on whether the entrant is an invitee, a licensee, or a trespasser. The trial court found that plaintiff was a licensee at the time of his injury. Citing to the Restatement (Second) of Torts § 342 cmt. c (1965), the court determined that the landowner had no duty to “inspect the land to discover possible or even probable dangers.”

Plaintiff argues that this Court should hold that all lawful visitors to business premises should be entitled to a duty of reasonable care.

We have long maintained the traditional, common-law approach to landowner liability, holding landowners to different duties of care depending on whether a land entrant is an invitee, licensee, or trespasser. Cameron v. Abatiell, 127 Vt. 111, 114, 241 A.2d 310, 312 (1968). In this decision, we do not address the duty owed by a landowner to a trespasser; we focus only on the distinctions we have drawn between licensees and invitees.

An invitee is one who “enters the land for the purpose of business dealings with the landowner.” The landowner owes a duty of reasonable care to an invitee, such that the invitee “is not unnecessarily or unreasonably exposed to danger.” A licensee is one who merely “enters or remains on land with the consent of the landowner.”

We will modify settled aspects of the common law only when plainly justified by evolving common standards.

Common standards have evolved. A slight majority of state courts have now abolished the distinction between licensees and invitees. See Restatement (Third) of Torts: Liability for Physical and Emotional Harm § 51, Reporter’s Note, cmt. a, tbl. (2012). For the last thirty-five years, reform states have included all of Vermont’s closest neighbors.

The arbitrariness, rigidity and complexity of the distinctions that have developed to separate licensees from invitees is one of the reasons many courts have abandoned the classifications. The common law arose when “the presumption [was] that landowners generally were free to act as they pleased within the confines of their own property.” We are now in a different legal context, where control of land use for the protection the public is pervasive. The value we place on human health and safety has increased. The lower standard of care for landowners in relation to licensees is an anomaly in modern tort law.We conclude that this is an issue on which the need for modernization is so strong that we must act.

We hold that a landowner owes the same duty of care to a licensee as to an invitee. The standard of “reasonable care in all the circumstances” will better reflect our common expectation of the duty of care owed by landowners and occupiers to all lawful entrants. An entrant’s status, no longer controlling, is simply “one element, among many, to be considered in determining the landowner’s liability under ordinary standards of negligence.”

In making this change applicable to all lawful land entrants, we reiterate that we make no determination as to the duty owed to trespassers at this time. The rule as to trespassers that we recently stated in Farnham—that “a landowner owes no duty to protect a trespasser from injury caused by unsafe or dangerous conditions”—remains good law in Vermont.  Farnham v. Inland Sea Resort Properties, .2003 VT 23, ¶ 8.

The evidence creates a question of fact sufficient to reach the jury under our new standard of care, whether the uncovered storm drain was reasonably foreseeable to BPE. 

Reversed and remanded for further proceedings not inconsistent with this opinion.