Indiana Supreme Court: Application of a negative adjustment to common area land owned by Homeowners’ Associations, as required under a land order, was “inherently objective” and could be challenged using the former Form 133

Indiana Supreme Court: Application of a negative adjustment to common area land owned by Homeowners’ Associations, as required under a land order, was “inherently objective” and could be challenged using the former Form 133

In Muir Woods Section One Association, Inc., et al. v. Marion County Assessor (August  26, 2021), the Indiana Supreme Court concluded that, while determining value for the base rate of land may be a subjective determination, application of a land order’s negative adjustment to the base rate, once established, was “inherently objective.”  Use of the former Form 133 Petition for Correction of an Error, which could only be used to address objective issues, was appropriate.

In 2014, four Homeowners’ Associations (HOAs) filed 141 Form 133 Petitions for the 2001, 2002 and 2003 real property tax assessments, asserting several issues, including that the Assessor failed to apply a -80% adjustment to the base rates when calculating values of land comprising the HOAs’ common areas.  Both the Indiana Board of Tax Review and the Indiana Tax Court concluded that use of the Form 133 was improper, due to the “inherently subjective” judgment necessary to determine value.

Though no longer in use (it has effectively been replaced by Section III of the current Form 130), the Form 133 “could only be used to remedy errors which can be corrected without resort to subjective judgment and according to objective standards.” Slip op. at 4 (citation and internal quotes omitted). The Court held that, while the assessment and valuation of the base rate for land may be subjective, application of a discount required under the land order to the base rate was not.  “[O]nce the base rate is subjectively determined, common areas must be valued at twenty percent of the base rate. Whether a discount was applied is inherently objective: it was either applied or it wasn’t.” Slip op. at 5.  In other words, the Court held that the HOAs “are challenging the objective application of a prescribed discount rate to an already-determined base rate,” so that use of the Form 133 was “a proper avenue” for appeal.  The Tax Court’s ruling on this issue was reversed.

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