A Sales Price is Not Always the Best Indicator of Value.

A well-established principle of tax certiorari case law is that a property’s sales price is usually the best indicator of a property’s value. A recent case explores the many caveats to this general rule and illustrates the pitfalls when a party indiscriminately relies on a property’s sale price. The property involved was country club and golf course that was sold for $12 million in 2010. The property owner challenged the assessments for 2010, 2011, and 2012. At trial, as required by court rules, the owner produced as evidence of over-valuation an appraisal and the expert testimony of the appraiser, who reached value opinions ranging from $4.7 million to $4.8 million. The assessor did not provide an appraisal, instead relying exclusively on the sales prices of the property as its sole evidence of value. The trial court agreed with the assessor and adopted the sales price. On appeal, the Appellate Division recognized that while a sales price is often the best indicator of value, but must be considered in the context of Real Property Ta Law §302(1). Section 302(1) requires that properties must be valued according to their current condition and use. In reviewing the trial record, the Appellate Division found that the sale price included future redevelopment potential that had not yet occurred. With the Court declining to adopt the sales price, and without other acceptable evidence of value, the Appellate Division relied upon the much lower values of the owner’s appraisal and reduced the assessments accordingly. Matter of Hampshire Recreation, LLC v Board of Assessors, 137 A.D.3rd 1029 (2nd Dept. 2016).