In Farr v. County of Nevada, (— Cal.Rptr.3d —-, Cal.App. 3 Dist., August 17, 2010), a court of appeal considered whether a county assessment appeals board erred when it failed to apply a statutory presumption affecting the burden of proof in favor of a homeowner at hearings on property assessment. The court of appeal held, given the specific facts involved, that the homeowner is entitled to a new hearing because the homeowner “was entitled to the presumption of correctness as against the [county assessor] until and unless the assessor produced contrary evidence.”
John M. Farr (“Farr”) disagreed with the assessment value placed on his newly-constructed home by the Nevada County Assessment Appeals Board (“Board”). Farr’s home is an owner-occupied single-family home. Farr initially filed for an informal review, but Farr and a senior appraiser could not resolve disputes regarding market analysis. At an initial hearing, the Board made Farr give his presentation first because the home at issue was not Farr’s principal place of residence. Farr submitted evidence, including an appraisal of $994,000 from a licensed appraiser, which Farr contended overvalued his home. The Assessor recommended an assessment of $1,212,000 for the home. Farr requested the Board reopen the matter and he gave the Board additional material regarding comparable sales and the quality of construction in his home.
At a Board meeting, the Board acknowledged Farr’s request to reopen. Counsel for the county and the Board noted that the Board was incorrect in their conclusion that Farr had the burden of proof. Counsel told the Board that because Farr’s home is an owner-occupied single-family home, the presumption is with Farr and the Assessor has the burden of proof. However, counsel later told the Board that the presumption “was not so much an advantage.” No formal ruling was made by the Board regarding the presumption. The hearing was reopened for the limited purpose of cross-examination. The Board found Farr’s additional evidence did not rebut the information provided by the Assessor. The Board valued Farr’s property at $1,298,659.
The Nevada County Board of Supervisors denied Farr’s appeal of the Board’s decision. Farr sought review of the Board’s decision in a superior court. The superior court upheld the Board’s decision.
The court of appeal held Farr was entitled to a new hearing because the Board did not apply the proper burden of proof. There are two types of rebuttable presumptions: (1) presumptions that affect the burden of producing evidence, and (2) presumptions that affect the burden of proof. When faced with a presumption that affects burden of producing evidence, a court must “assume the existence of the presumed fact unless and until evidence is introduced which would support a finding of its nonexistence, in which case the [court] shall determine the existence or nonexistence of the presumed fact from the evidence and without regard to the presumption.” On the other hand, a presumption that affects the burden of proof “places on the party against whom it operates the obligation to establish by evidence the requisite degree of belief concerning the nonexistence of the presumed fact in the mind of . . . the court.” Put another way, the person who has the burden of proof has an affirmative obligation to prove the presumed fact false by a preponderance of the evidence.
Generally, an assessor is “entitled to the presumption affecting the burden of proof provided in Evidence Code section 664 that he or she has properly performed his or her duty to assess all properties fairly and on an equal basis.” Therefore, the property owner usually has the burden of proving a property was improperly assessed and must present his or her evidence first.
Revenue and Tax Code section 167 (a), however, provides that a different allocation of the burden of proof should be applied in a hearing that involves a single-family home that is owner occupied. Section 167 (a) provides, in relevant part, the following: “Notwithstanding any other provision of law to the contrary, . . . there shall be a rebuttable presumption affecting the burden of proof in favor of the taxpayer or assessee who has supplied all information as required by law to the assessor in any administrative hearing involving the imposition of a tax on an owner-occupied single-family dwelling, the assessment of an owner-occupied single-family dwelling pursuant to this division, or the appeal of an escape assessment.” In other words, the valuation provided by the owner “is presumed correct and the burden is on the assessor to overcome the presumption.”
The State Board of Equalization regulations provide that section 167 (a) constitutes “a statutory exception to the normal burden of proof” placed on a taxpayer. The regulations also provide that an assessment appeals board cannot require an applicant to present his or her evidence first at a hearing if the hearing involves an assessment of a single-family dwelling that is owner occupied.
The court of appeals held Farr’s hearing before the Board did not conform to section 167 (a) because the Board required Farr to present his evidence first and then proceeded throughout the hearings “on the assumption that the Assessor’s valuation of the property was entitled to greater weight and that Farr’s valuation should be treated with suspicion.” The court found that “Farr was entitled to the presumption of correctness as against the Assessor until and unless the Assessor produced contrary persuasive evidence.” The court further found the appropriate remedy for the Board’s error is remand of the matter for a new hearing.
If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.
Brett L. Price | 661.864.3800