Updated MARCH 2019
Valuation Testimony before the Boards of Equalization
Property tax is based on the principle that equality is achieved by applying a uniform tax rate to the taxable value of each parcel. As a result, the higher the taxable value the greater the tax. Consequently, in most appeals to the boards of equalization the dispute is over the value of the property. The testimony regarding value is critical and, in preparing for the appeal, thought must be given to who will provide that testimony.
In Nevada the appraisal of real property is regulated by the Division of Real Estate pursuant to NRS Chapter 645C. Pursuant to this chapter an “analysis, opinion or conclusion… relating to the nature, quality, value or use of… real estate for or with the expectation of receiving compensation” constitutes an appraisal. NRS 645C.260. And, only appraisers who hold the appropriate certificate, license or permit issued by the Division may testify regarding an appraisal. Id. One who testifies without the appropriate authorization from the Division is potentially guilty of a misdemeanor (NRS 645C.260) and subject to a fine of not less than $5,000 (NRS 645C.215).
In addition to appraisers, property owners have traditionally been allowed to testify about the value of their own property. Nevada follows the general rule that the owner of a property is presumed to have special knowledge of the property and, therefore, may testify to its value without qualifying as an expert witness. City of Elko v. Zillich, 683 P.2d 5, 8 (Nev. 1984). This principle also allows officers of corporate entities to testify regarding the value of property held by the corporate entity. Dep’t of Highways v. Wells Cargo, Inc., 82 Nev. 82, 411 P.2d 120 (1966). In either instance the limitations of NRS Chapter 645C should not apply because the property owner is not offering the valuation analysis “for or with the expectation of receiving compensation.”
An appraiser and the owner of the property can testify before the boards of equalization regarding value, but it is also important to understand who cannot testify regarding value. An appeal to a county board can be filed by an authorized representative of the property owner (NRS 361.362), but that representative or agent cannot testify regarding the value of the property. There is no exception to Chapter 645C for an agent or representative of the property owner. The boards of equalization admonish agents who start to testify regarding value and regularly notify the Division of Real Estate regarding conduct they perceive as appraising property without the appropriate authorization. See NAC 361.729.
In short, the best practice is to retain a qualified appraiser. However, retaining an appraiser is not always cost effective or practical due to the short time frame allowed for administrative appeals. In these instances the owner of the property should be prepared to testify. And, since a corporation can only speak through its employees and officers, the appropriate corporate representative, one with actual personal knowledge about the property, should be prepared to testify.
Paul D. Bancroft
American Property Tax Counsel (APTC)