August 25, 2019

Colorado Court of Appeals: BAA Did Not Err in Determining Contiguous Parcel was “Vacant Land”

The Colorado Court of Appeals issued its opinion in Martin Trust v. Board of County Commissioners on Thursday, February 7, 2019.

Taxation—Property Tax—Residential Property—Vacant Land.

The Martins bought two adjacent parcels of land in La Plata County. The east parcel (the residential parcel) contains the Martins’ home on a .62-acre lot, and the west parcel (the adjacent lot) is an unimproved .72-acre lot that adjoins the residential parcel’s western boundary. For tax year 2014, the Martin Family Partnership, LLLP (the partnership) held the title to the adjacent lot and the Martins held the title to the residential parcel as joint tenants. The partnership and the Martins thereafter transferred title to both parcels to the Martin Trust (the Trust), which held the titles for tax years 2015 to 2016.

The County Assessor classified the adjacent lot as vacant land for tax years 2014 to 2016, and the Trust sought to have it reclassified as residential. It appealed the Assessor’s decision to the Board of Equalization of La Plata County and the Board of County Commissioners of La Plata County (collectively, the Boards). The Boards denied both appeals. The Trust appealed those decisions to the Board of Assessment Appeals (BAA). The BAA upheld the County Assessor’s 2014 classification of the adjacent lot as vacant land, finding that the parcels were not under common ownership because they were separately titled and the owners were “separate and distinct legal entities.” For the 2015 to 2016 classifications, the BAA partially granted the Trust’s appeal, stating it was persuaded by the Trust’s claim that there would be a loss of views if a residence was constructed on the adjacent lot. But the BAA determined that only two-thirds of the adjacent lot was used as a unit in conjunction with the residential parcel for maintaining views from that parcel, and on that basis, it ordered that only the two-thirds portion of the adjacent lot be reclassified as residential.

On appeal, the Trust contended that the BAA erred when it concluded that the adjacent lot was vacant land for tax year 2014 and partly vacant land for tax years 2015 to 2016. Conversely, the Boards contended that the BAA erred when it reclassified the adjacent lot as residential land for tax years 2015 to 2016. The majority concluded that for two contiguous parcels of land to both qualify as “residential land” (1) one parcel must have a residence on it, (2) the other must have a man-made structure or water rights that are an integral part of the use of the residence on the neighboring parcel, and (3) the land must be used as a unit in conjunction with the residential improvements on the parcels. Further, the requirement that contiguous parcels be used as a unit does not include the “use” of vacant land by looking across it at objects beyond the land. Here, there is no evidence that there are any structures on the adjacent lot that are an integral part of the residence on the residential parcel. Therefore, the adjacent lot does not qualify as residential land.

The BAA’s order for tax year 2014 denying residential land designation regarding the adjacent lot was affirmed, and the order for tax years 2015 to 2016 granting such designation for the adjacent lot was reversed. The case was remanded for issuance of an order consistent with the majority’s opinion.

Summary provided courtesy of Colorado Lawyer.

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