Dear Source:
Neither Del. Christensen's office nor any media publication I have read has explained how a huge crisis is to be resolved with retroactive property tax revaluation.
Retroactive revaluation–assessing a different (presumably increased) tax for property in years past–creates a crisis with property which has changed ownership during the period covered by the revaluation, including transfers to be completed in 2007. Taxes are prorated at closing based on the previous year's tax bill. (None of us has the 2006 tax bill, so presumably the 2005 tax bill would be used.) Pro-rating at closing (the date when title passes) assumes that the tax bill for the year in which title passes will be the same as in the previous year. If no tax bill reflecting the correct, changed amount is issued until after the property closes, the buyer will have been short-changed on the amount of prorated taxes credited, and the seller will have received a windfall by not being charged the additional amount of taxes for the time the seller owned the property. In short, these changes, which could not have been anticipated when the contracts were executed, materially and substantially affect contracts for the purchase and sale of real estate. No one has been able to explain how this problem is to be addressed.
Escrowing a greater amount at the time of closing does not adequately address the problem because there is no reasonable basis upon which to estimate the increased amount to be escrowed, and there has been no reasonable assumption for the past several years that revaluation would be forthcoming, for example, within twelve months of closing.
In order to avoid this crisis, the legislature should provide that no increases can take effect retroactively. The increases should be effective, at the earliest, in 2008.
I have never before lived in a jurisdiction in which property tax bills are issued retroactively.
I implore readers of the Source to respond with information concerning this very important matter. This is not a rhetorical question, nor is it asked for the mere amusement of Open Forum readers.
Impatiently Awaiting Answers
Dena Langdon
St. Thomas
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