NEW INDIVIDUAL ACCOUNTS
Application requirements for continued Homestead eligibility have made it necessary to change the method cooperative corporations are maintained in our data system. Each dwelling unit in the cooperative must now have an individual account set up so that individual shareholder application information, occupancy status, credit amount and transfer information may be maintained. All existing and newly established cooperative corporations shall have an individual account created for each individual shareholder.
The following guidelines should be followed to establish the individual accounts and for setting up new accounts within a cooperative corporation:
1. Create an account in the AAVS System for each unit or dwelling in the cooperative.
2. The owners name and mailing address for each new account will be that of the cooperative corporation, not the individual shareholders.
3. The site address and legal description should reflect the individual unit’s address.
4. The owner occupancy status should be entered for each new account. Enter the actual occupancy information for each share holder if it is known, or “H” if the entire parent account was labeled owner occupied.
5. A BPRUC of “00070” should be entered in the Sites and Flag Tab. This code will identify cooperative corporations.
6. Base and Current Full Cash Values should be determined for each new account. For existing cooperatives that are converted at reassessment, the sum of the base full cash values for the new accounts should equal the corresponding base full cash value from the parent account.
7. The accounts are then valued according to the most appropriate valuation method. If the parent account for the cooperative had been receiving a Homestead credit, the prior tax year phase-in values and credits must be entered into the AAVS credit information screen for proper calculation of the following tax year’s credit. The credit amount for the individual units should be allocated from the parent at a ratio equivalent to the contribution of the individual unit, for example: If the parent account was comprised of 50 units, had a current full cash value of 12,500,000, a 07/08 Homestead credit of 3,750,000, and the full cash value attributed to one of the new units was 237,000, then the 07/08 Homestead credit attributed for this single unit would be 71,100 (i.e. 237,000 divided by 12,500,000 = .01896 then multiplied by 3,750,000 = 71,100).
8. The Homestead Division will have to be contacted so that it is a coordinated effort when establishing the accounts. This ensures that the proper homestead eligibility code is placed on the accounts that are owner occupied and receive a Homestead credit eligibility application.
9. The newly established accounts should be coded to receive the proper assessment notice of value from the AAVS system.
TRANSFER OF INDIVDUAL ACCOUNT
The Department has established regulations requiring cooperatives to furnish local assessment offices with ownership and transfer information as individual memberships transfer (COMAR Title 18 Subtitle 07 Chapter 03). A form must be completed by the cooperative corporation and filed with the local assessment office within 60 days of transfer (attachment 1). As offices receive transfer information, the individual account is to be updated in AAVS as stated below in order to set in motion the normal events that occur with the Homestead credit application and removal.. It should be noted that the transfer price is optional on the form since the Department only has the authority to require information needed to maintain the Homestead credit. The transfer price is private financial information that is similar to purchasing shares of stock in a corporation and is not made available to the public. Completing the transfer. Because the new member in the cooperative is a shareholder and not the owner of record (the owner of each unit is the cooperative corporation), it is very important to follow the instructions below when keying the transfer:
1. Create a transfer in the sales tab in AAVS. The Grantee and Grantor will be the same as the existing name of the cooperative corporation, it is not to be the individual shareholder’s name.
2. The deed reference number must be left blank.
3. Enter a consideration of $10 when the consideration is greater than zero, or when the actual consideration is not known. If the consideration is provided it cannot be made public, therefore the consideration is not to be keyed in the sales tab. By entering the transfer it will disqualify the credit for the new member and generate an eligibility application to be mailed.
4. The conveyance code should be entered as “4” as a non-arms length transfer. As Homestead applications are received, the shareholder’s name will be recorded in the Homestead database.
5. In the Sites & Flag Tab a flag type named Cooperative Transfer Date “COPD” should added when one doesn’t exist. The value field should contain the date of transfer.
6. In the Sites & Flag Tab a flag type named Cooperative Sale Price “COPS” should be created when the actual consideration is provided. The consideration should be keyed into the value field of the flag. This allows for the query of transfer information that can be exported to excel at each reassessment so a sales analysis can be completed. The transfer consideration should only be noted only as a non-public remark if typed into the parcel note section of AAVS.
7. In the Sites & Flag Tab a flag type named Cooperative Individuals Name “COPN” should be added. The value field should contain the Individual’s name not the corporation’s name. This aids when needing reference to a Homestead conflict report and when needing to verify the individual owner in order to provide worksheet.
Real property has inquiry rights to Homestead system in order to view ownership information for a Cooperative Account. The Supervisor should make contact with each cooperative annually to verify that all transfers have been reported properly prior to tax billing. Prior to inspection of the properties at reassessment, it is also beneficial to notify the cooperative management inspections will be occurring and the requirements needed when a transfer occurs.
VALUATION OF COOPERATIVE
In the event that the transfer prices are not known in order to develop a neighborhood adjustment factor, the assessor should use other resources to determine the valuation on the units. For example: Utilize the cost approach to valuation; develop a market approach based on sales of similar type and style units or dwellings from a competing neighborhood in which sales exist.
When the transfer prices are known, the dwelling or unit information along with the information from the Sites and Flag tab should be queried in order to complete a sales analysis. The most appropriate valuation method should be selected and then the appropriate factors or values should be updated.
Worksheets are provided to the Cooperative upon request. The may also be provided to the individual owner after verification of ownership in the Homestead database since they have legal interest in their dwelling or unit.
APPEALS
For 1st level appeals
A worksheet must be provided to the individual shareholder upon receiving an appeal, as they have legal interest in the dwelling unit under appeal. A letter should be sent with the worksheet that the appeal was received and will be scheduled.
Sales listings of the transfers that occurred within the Cooperative Corporation are NOT to be created and provided in the event the transfer prices were known.
In the event the appeal is filed by Cooperative Corporation for all the accounts under its management, transfer prices should be obtained in order to determine the value of the dwelling or units.
PTAAB Level Appeals
The Supervisor should use comparable properties outside the cooperative to support the value. An explanation to the Board should be made that the transfers within the cooperative neighborhood were used to assist in determining the market value. However, since the transfers are considered a private financial transfer of stock in a cooperation our agency may not disclose that information at this appeal level. If the owner provides transfers to the Board, the assessor may state the reasons to whether or not the sale was used in the analysis. The assessor may make mention that others sales were used in conjunction with what was submitted by the individual owner and that those indicated a higher market value for the subject. When information is listed on MRIS, the MRIS can be submitted by the assessor as evidence of the transfer price as comparables.
Maryland Tax Court Level
The Supervisor should consult with the Assistant Attorney General’s Office and State Supervisor for direction as there are means in which to keep financial documents sealed.
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