Grand Rapids Passes Affadavit Penalty

March 2, 2008
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GRAND RAPIDS — City commissioners recently approved what was called a kinder and gentler penalty for homeowners who don't file a property transfer affidavit on time.

The penalty commissioners approved tacks on a $5 fine for each day that exceeds a PTA filing deadline. The penalty carries a $200 limit for each homebuyer.

"If they don't respond in 30 days, then we will assess the penalty," said City CEO Scott Burher.

The kinder and gentler part of the penalty is the city will send buyers who haven't filed their PTAs with the city assessor a letter reminding them they need to file one. If an owner doesn't return a filled-out form to the city within 30 days, then the city will charge the maximum penalty of $200.

"If they do it within 30 days, then we will waive the penalty," said Burher.

The new PTA policy is a change from what the city has done in the past. Since 1995, the year after Proposal A made PTAs mandatory, the city didn't penalize a homeowner for not filing one. The expense, though, of chasing down non-filers has taken its toll on city coffers over the years.

The policy commissioners chose is less costly to new owners than another one that was offered. That one didn't include a reminder letter and a 30-day grace period. It would have automatically fined non-filers $200, the limit allowed under state law, 85 days after a filing deadline passed.

City Assessor Glen Beekman estimated that policy would have been worth about $19,000 in revenue to the city annually, while the one commissioners chose should be worth $10,000 a year to the city.

A PTA is necessary for assessments because it officially announces when ownership of a property changes hands. When that happens, a property is uncapped and gets reassessed for property tax purposes. Current state law limits a yearly tax increase to the inflation figure or 5 percent, whichever is less, as long as ownership remains the same.

But the limit doesn't apply in the year a property is uncapped, or sold to a new owner, as a new assessment is made on the home. Then a new taxable value is placed on it, a new property tax bill is created, and the tax-increase limit starts running again.

According to city officials, when commissioners passed the policy the city became the third municipality in the county to assess a fine for late PTAs.

"The failure to file is not usually due to the taxpayer, but due to the lender or mortgage title company," said Burher. "The taxpayer may not even know and still be struck with the penalty as the property owner."

But 2nd Ward Commissioner David LaGrand disagreed.

"By law, it's the homeowners' obligation," he said. "Mortgage companies can do this as a service to their customers, but aren't required to."

Beekman assured commissioners that his office always learns when a property changes hands.

"It might be 60 days later," he said. "But ultimately we always find out about it."

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