Property taxes on the rise

Dear Alex:

My property taxes last year increased by more than two percent over the year before.

I thought that property tax increases were limited to two percent per year by Proposition 13.

How is this possible?

Property taxes are based on the assessed value of property, so when we discuss property taxes, we are usually discussing the assessed value upon which taxes are calculated.

In 1978, California voters passed Proposition 13 that limited increases to annual assessment property values to two percent per year.

The value of property at the time of acquisition is called the “base year value.” This is the starting point for calculating property tax.

Each year under Prop. 13, the tax assessor applies an annual increase of two percent per year to your assessed value above the prior year. This gradually increasing amount is called the “trended base year value” and is what you are taxed on.

Property values in California typically grow faster than two percent per year, making Prop. 13 a savings for the taxpayer.

One instance in which your property taxes may have increased by more than two percent above the year prior is if there was a “reappraisal event.”

A reappraisal event causes your base year value to increase, and can be caused by the sale of a property, a total remodel, or other actions by the property owner.

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People sometimes disagree with their new base year value after reappraisal, so newly reappraised values can be contested.

Another reason you may have seen an increase in your property tax bill is that your property tax amounts may not have increased, and may have even decreased, during the recession.

While Proposition 13 provides for a limit to your tax increases, another law from 1978 called Proposition 8 can result in decreases.

This is a different law from the Proposition 8 that was in the news in 2008 concerning same-sex marriage.

The 1978-version of Proposition 8 provides for a reduction to your property taxes when the property’s fair market value is less than its trended base year value.

In years of decline, Prop. 8 protects the property owner. Prop. 8 says that if your property value drops beneath the trended base year value, you will only be taxed on the lower fair market value and not on the higher trended base year value.

During the recession, the fair market value of many properties in Napa County dropped below their trended base year value, which may have resulted in a property tax decrease during those years of low value.

Now that property values have bounced back, if the fair market value of your property has increased above the trended base year value, your taxes may again be assessed based upon your trended base year value.

This change from being taxed upon the previously lower fair market value, to the higher trended base year value, can be more than two percent year-over-year.

Just remember that the tax on your trended base year value is still less than being taxed upon fair market value.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on April 11th, 2017. You can read it on the Register's website here: "Property taxes on the rise"

Does koi pond cut into easement?

Dear Alex:

I own a vineyard and the most direct means of access is by using a 50-foot wide driveway easement which crosses my neighbor’s property. The driveway itself is only 20 feet wide.

The easement is recorded with the county and was granted 50 years ago.

Recently, the neighbors told me that they will be renovating their landscaping and they intend to build a koi pond, which extends 10 feet into the driveway easement.

Can they do this?

An easement can be described the right to enter someone else’s land. Easements can be tricky because although an easement is not an ownership interests in land, an easement can dramatically impact the ability to access and use a property.

Easements can be created in a number of ways, including by express grant or by necessity. The restrictions on how an easement can be changed depends upon how the easement was created.

In this case, you have an easement which was created by grant. This means that your easement, and your neighbors’ right to enter into and encroach upon the recorded easement area, will be subject to the rules written in the recorded easement document.

This type of easement problem is very common, particularly in rural areas. As larger ranches and estates have been subdivided over the decades, easements were commonly used to grant access to landlocked parcels which did not otherwise have access to a main road.

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In more modern times, many more roads have been built, which has improved access to most parcels of land, which means that frequently the old easements are more of a convenience than a necessity.

These old easements are further complicated because in the early 1900s, the documents were not drafted with as many specifics as would be used today, which can lead to ambiguities about the easement such as who can use an easement and for what purposes.

In your case, although the easement granted was 50 feet wide, if the driveway has been 30 feet wide for a long time, or if the neighbor has previously encroached into that 50-foot area without impeding your use of the driveway, it is very possible that this encroachment may be permissible. 

An easement is usually a nonexclusive right to use the easement area, which means that although you are all permitted to enter and use the easement, so is your neighbor, as long as the neighbor doesn’t impede your use.

Additionally, easements are typically created for a specific purpose. If the purpose of this easement is for driveway access, and a 30-foot wide driveway has been historically adequate, so the neighbor’s encroachment may not actually violate your easement rights.

On the other hand, if you had intentions to extend the driveway width, or if the language granting the easement is expressly clear and prohibits the neighbor’s entry into the easement, their intended encroachment may not be permitted.

Amicable resolution can frequently be achieved in easement disputes if the parties are willing to work together and communicate.

Sometimes, that may mean that one party will agree to pay money to the other party to change the easement, but often the actual dollar-value of the desired changes are nominal.

Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

This column originally ran in the Napa Valley Register on March 28th, 2017. You can read it on the Register's website here: "Does koi pond cut into easement?"