NATHAN KLOOSTER V CITY OF CHARLEVOIX
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STATE OF MICHIGAN
COURT OF APPEALS
NATHAN KLOOSTER,
FOR PUBLICATION
December 15, 2009
9:10 a.m.
Petitioner-Appellant,
v
No. 286013
Tax Tribunal
LC No. 00-323883
CITY OF CHARLEVOIX,
Respondent-Appellee.
Advance Sheets Version
Before: BORRELLO, P.J., and WHITBECK and K. F. KELLY, JJ.
PER CURIAM.
In this tax dispute, we must decide, under the circumstances of this case, whether the
death of a joint tenant constitutes a transfer of ownership within the meaning of § 27a, MCL
211.27a, of the General Property Tax Act (GPTA), MCL 211.1 et seq. We hold it does not.
Accordingly, the Michigan Tax Tribunal erred when it found that a transfer of ownership
occurred that allowed the taxable value of the real property to be reassessed at a higher value.
We reverse.
I. BASIC FACTS
In 1959, James and Dona Klooster, petitioner’s parents, acquired title by warranty deed to
certain real property located in Charlevoix, Michigan. They held the property as tenants by the
entirety. On August 11, 2004, Dona quitclaimed her interest to James. On the same day, James,
now as the sole owner, quitclaimed the property to himself and petitioner as joint tenants with
rights of survivorship. In January 2005, James died and, by operation of law, petitioner became
the sole owner of the property. Subsequently, on September 10, 2005, petitioner executed a
quitclaim deed creating a joint tenancy with rights of survivorship with his brother, Charles
Klooster.
In 2006, petitioner received a notice of assessment from the city of Charlevoix. It stated
that there had been a transfer of ownership in 20051 and, thus, it had reassessed the taxable value
of the property using its true cash value, or market value, to determine the state equalized value.
This process, commonly referred to as “uncapping,” increased the taxable value of the property
from $37,802 to $72,300.
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The assessment notice did not identify the event that caused the “transfer of ownership.”
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Petitioner appealed this decision to the board of review, which adopted the tax assessor’s
decision without any explanation of its own. Petitioner appealed the board of review’s decision
to the Tax Tribunal. The Tax Tribunal affirmed the assessor’s determination that there had been
a transfer of ownership in 2005. In its view, James’s death had caused the transfer of ownership
and, thus, the taxable value of the property was properly uncapped. This appeal followed.
II. APPLICABLE LAW
Historically, real property in Michigan was reassessed according to its true cash value on
a yearly basis. However, in 1994, Michigan adopted the “Proposal A” amendment to Const
1963, art 9, § 3. Proposal A limited increases in property taxes absent a transfer in ownership,
“(by capping the amount that the “taxable value” of the property may increase each year, even if
the “true cash value,” that is, the actual market value, of the property rises at a greater rate.)”
Moshier v Whitewater Twp, 277 Mich App 403, 405; 745 NW2d 523 (2007), quoting WPW
Acquisition Co v City of Troy, 466 Mich 117, 122; 643 NW2d 564 (2002).
Consequently, the GPTA was amended in order carry out the mandate of Proposal A, and
it now governs the processes by which property is taxed consistent with Proposal A’s mandate.
Thus, under the GPTA, when a transfer of ownership of a parcel of property does not occur, the
taxable value of a parcel of property will be the lesser of (1) the property’s current state
equalized value or (2) the prior year’s taxable value less any losses, “multiplied by the lesser of
1.05 or the inflation rate, plus all additions.” MCL 211.27a(2). This provision functions to limit,
or “cap,” property tax increases when there has been no transfer of ownership. However, when
there is a transfer of ownership, the taxable value is “uncapped” and a reassessed taxable value is
set on the basis of the state equalized value in the year following the transfer of ownership.
MCL 211.27a(3); Signature Villas, LLC v City of Ann Arbor, 269 Mich App 694, 697; 714
NW2d 392 (2006). “Uncapping” typically results in a higher tax assessment, as is the case here.
Given the foregoing, whether a property’s taxable value remains capped is intrinsically
linked to whether there has been a “transfer of ownership.” The GPTA defines “transfer of
ownership” to mean “the conveyance of title to or a present interest in property, including the
beneficial use of the property, the value of which is substantially equal to the value of the fee
interest.” MCL 211.27a(6). The GPTA provides a nonexhaustive list of events that will
constitute a transfer of ownership, MCL 211.27a(6), and events that do not constitute such a
transfer, MCL 211.27a(7).
Significantly, for purposes of this case, the GPTA includes the creation and termination
of joint tenancies amongst those transfers that do not constitute a transfer of ownership, provided
certain conditions are met. Specifically, § 27a(7)(h) of the GPTA states that a “transfer of
ownership” does not include
[a] transfer creating or terminating a joint tenancy between 2 or more persons if at
least 1 of the persons was an original owner of the property before the joint
tenancy was initially created and, if the property is held as a joint tenancy at the
time of conveyance, at least 1 of the persons was a joint tenant when the joint
tenancy was initially created and that person has remained a joint tenant since the
joint tenancy was initially created. A joint owner at the time of the last transfer of
ownership of the property is an original owner of the property. For purposes of
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this subdivision, a person is an original owner of property owned by that person’s
spouse. [MCL 211.27a(7)(h).]
Accordingly, when there is a transfer between two or more persons that creates or terminates a
joint tenancy, it will not constitute a transfer of ownership within the meaning of MCL
211.27a(3) if (1) at least one of the persons was an original owner of the property before the joint
tenancy was initially created and, (2) if the property is held as a joint tenancy at the time of
conveyance, at least one of the persons was a joint tenant when the joint tenancy was initially
created and that person has remained a joint tenant since that time. See Moshier, supra at 409410. The second requirement is a conditional requirement: it need only be met in instances
where the property was held as a joint tenancy at the time of the conveyance; if the property was
not so held, this requirement is inapplicable.
III. ANALYSIS
Petitioner argues that the Tax Tribunal erred by determining that James’s death
constituted a transfer of ownership under § 27a(7)(h), MCL 211.27a(7)(h), of the GPTA.2 We
agree. Our review of the Tax Tribunal decision is limited to determining “whether the tribunal
erred in applying the law or adopted a wrong principle . . . .” Moshier, supra at 407. Further, to
the extent that we must construe the meaning of the statute, our review is de novo. Signature
Villas, LLC, supra at 699. Our goal in interpreting a statutory provision is to ascertain the
Legislature’s intent. Cain v Waste Mgt, Inc (After Remand), 472 Mich 236, 245; 697 NW2d 130
(2005). This is accomplished by first examining to the language used. TMW Enterprises Inc v
Dep’t of Treasury, 285 Mich App 167,172; 775 NW2d 342 (2009). If the language is plain and
unambiguous, then we must apply the statute as written to the facts before us. PNC Nat’l Bank
Ass’n v Dep’t of Treasury, 285 Mich App 504,506; ___ NW2d ___ (2009). In such instances,
judicial construction is neither necessary, nor permitted. Beattie v Mickalich, 284 Mich App
564, 570; 773 NW2d 748 (2009).
Here, the first requirement of § 27a(7)(h) is satisfied. James and petitioner created a joint
tenancy in 2004 by a quitclaim deed. Before this joint tenancy was created, James was an
original owner of the property: He and his wife acquired the property by warranty deed in 1959.
Thus, as the parties do not dispute, “at least 1 of the persons was an original owner of the
property before the joint tenancy was initially created . . . .” MCL 211.27a(7)(h).
With respect to the second conditional requirement of § 27a(7)(h), we conclude that it is
not applicable because the condition triggering the second mandate is not present in this matter.
Specifically, and contrary to respondent’s argument on appeal, James’s death does not constitute
a “conveyance” within the meaning of § 27a(7)(h). As already noted, under the plain language
of § 27a(7)(h), the conditional requirement is only mandated in instances where the property was
held as a joint tenancy “at the time of conveyance . . . .” Id. (emphasis added). The GPTA does
not define the term conveyance and, in such instances, we give undefined terms their plain and
2
We note that although the tax assessor did not indicate what caused the “transfer of ownership”
in 2005, the parties below and on appeal focus exclusively on James’s death. Thus, it is not
necessary for us to consider whether the creation of the joint tenancy with Charles in 2005
constituted a transfer of ownership. Accordingly, our decision in this matter focuses solely on
whether James’s death constitutes a transfer of ownership under the statute.
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ordinary meaning and we may rely on dictionary definitions. TMW Enterprises Inc, supra at
172. We must also be cognizant of legal terms of art, which are to be accorded their peculiar and
appropriate meanings. Priority Health v Comm’r of the Office of Financial & Ins Services, 284
Mich App 40, 45; 770 NW2d 457 (2009); MCL 8.3a. It is well established, as a legal term, that
“conveyance” means every instrument in writing which affects the title to any real estate. See
MCL 565.35 (defining “conveyance”); McMurtry v Smith, 320 Mich 304, 307; 30 NW2d 880
(1948). Further, Black’s Law Dictionary (8th ed) defines “conveyance” as “[t]he transfer of an
interest in real property from one living person to another, by means of an instrument . . . [or the]
document . . . by which such a transfer occurs.” Accordingly, the term conveyance, as that term
is used in the second element of § 27a(7)(h) and giving it its peculiar and appropriate meaning,
requires that there be some instrument in writing affecting the title of the real property.
James’s death was not a conveyance. While James’s death had a de facto effect on the
property’s title, because by operation of law petitioner became the sole owner, the death did not,
in effect, create a conveyance because no instrument in writing was created that affected title to
the subject real estate. Rather, the most recent prior conveyance, as reflected on the record,
occurred when the joint tenancy was created between James and petitioner in 2004. And, at that
time, the property was not held as a joint tenancy, because James had a sole ownership interest in
the real estate.
Respondent provides little support for its contention that James’s death is a conveyance.
It merely asserts that James’s death terminated the joint tenancy and, thus, constituted a
conveyance and it otherwise fails to provide its own definition of conveyance. We cannot adopt
such an overly broad definition of that term, when it is plain that the word “conveyance” has
acquired a particular legal meaning. If we were to do so, it would be contrary to the
Legislature’s clear intent, because we must presume that the Legislature is aware that the term
“conveyance” is a legal term of art and intentionally chose to use it in lieu of some other broader,
or narrower, one. See Priority Health, supra at 45.
Because the property was not held as a joint tenancy at the time the property was
conveyed to James and petitioner, the conditional requirement set forth in § 27a(7)(h) simply
does not apply.
IV. CONCLUSION
Because petitioner meets the requirements of § 27a(7)(h), there was no transfer of
ownership and the taxable value of the property should not have been uncapped under MCL
211.27a(3). The Tax Tribunal erred by affirming the tax assessment. Given our conclusion, we
need not address petitioner’s claim that the board of review failed to articulate sufficient reasons
for its decision.
Reversed and remanded for further proceedings not inconsistent with this opinion. We
do not retain jurisdiction.
/s/ Stephen L. Borrello
/s/ William C. Whitbeck
/s/ Kirsten Frank Kelly
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