Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $67,400, assessed value of $12,810, as residential property. Complainant proposed a value of $16,000, assessed value of $3,040. A hearing was conducted on June 7, 2006, at the St. Louis County Government Center, Clayton, Missouri.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant’s Evidence

Complainant offered into evidence the testimony of Charles Karam, a principal in Complainant. Mr. Karam is an engineer and builder by training and experience. He testified as to the acquisition of the subject property by Complainant at a tax sale and the general description of the subject lot. It is the contention of Mr. Karam that since Complainant only has title under a Collector’s Deed and has not filed a Quiet Title action, Complainant does not have marketable title. Mr. Karam offered an opinion of value of $16,000. No further documentation was provided to support the opinion of value.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Bo Frumson, State Certified General Real Estate Appraiser for St. Louis County. Mr. Frumson had not prepared a narrative appraisal report. He had done some research as to comparable sale properties. The appraiser offered an hypothetical opinion of value under USPAP (Uniform Standards of Professional Appraisal Practice) of $90,000 based upon his research and the exhibits placed into evidence.

The following exhibits were received into evidence on behalf of Respondent.

Exhibit 1 – Aerial photograph of a portion of the subdivision in which the tract under appeal is located. Subject lot outline in broad yellow line on photograph.

Exhibit 2 – Photographs of the subject lot.

Exhibit 3 – Copy of an MLS (Multiple Listing Service) data or spawn sheet on the subject property.

Exhibit 4 – Copy of photograph and assessor’s data sheet on property at 16709 Jamestown Forest Dr.

Exhibit 5 – Copy of photograph and assessor’s data sheet on property at 14835 Sinks Rd, with certified copy of warranty deed and certificate of value on August, 2004 sale.

Exhibit 6 – Copy of assessor’s data sheet and MLS sale sheet on property at 12756 Old Jamestown Rd.

Exhibit 7 – Copy of Collector’s Deed for Taxes on subject property, dated December 27, 2004.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.

2. The subject property is located at 16634 Jamestown Forest Dr., Florissant, Missouri. The property is identified by locator number 04F110112. The property consists of 3.90 of an acre unimproved lot. The lot is in a platted subdivision, with storm sewers. There are electric, gas, public water and telephone utilities available to the site. There is no public sewer, septic system would need to be installed on the lot, which is common for the subdivision. The lot is heavily wooded, with a portion of cleared pastureland on the northwest corner and along the north side which is suitable for a building area for a home. There exist sinkholes on the property that limits to some extent where a house could be constructed on the lot. Exhibits 1, 2 & 3; Testimony of Mr. Karam; Testimony of Mr. Frumson.

3. There was no evidence of new construction and improvement from January 1, 2005, to January 1, 2006.

4. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2005, to be $16,000, as proposed.

5. The subject lot can be built upon. Exhibits 1 & 3; Testimony of Mr. Karam; Testimony of Mr. Frumson.

6. Lots in sizes of 5.52 acres, 3.40 acres and .98 in near proximity to the subject sold in 2002, 2004 and 2005 for $15,398, $22,500 and $57,142 per acre. Exhibits 4, 5 & 6.

7. Complainant purchased the property at a tax sale in 2004 for $15,300. Exhibit 7.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo. The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Section 138.431.4, RSMo.

Presumptions in Appeals

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).

In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2005. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).

The evidence presented on behalf of Complainant (testimony of Mr. Karam) was not sufficient to meet the required standard of substantial and persuasive to rebut the presumptions of correct assessment and establish a fair market value as of January 1, 2005 of only $16,000 for the property under appeal.

The owner of property is generally held competent to testify to its reasonable market value. Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970). The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). In the present appeal, a principal of Complainant testifies as to his opinion of fair market value. Mr. Karam raised the following issues or factors which he believed impacted upon the fair market value of Complainant’s property: (1) the existence of sinkholes on the property; (2) property not being on a public sewer system; (3) the property being under a federal tax lien of $30,897; and (4) title in Complainant has not been perfected by a quite title action.

While these are factors which may or may not impact fair market value, Complainant’s evidence failed to establish or demonstrate how each of these factors or all of them together would apply in a quantitative manner to the price that could have been expected to have been agreed to between a willing buyer and seller for a hypothetical sale on January 1, 2005. A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). The essential element of Complainant’s case is to establish fair market value as of January 1, 2005. Subsidiary to that element is establishing how and to what monetary extent the four factors above impact on fair market value, if in fact they would. In other words, how much does each of these factors lessen the value which could be expected if these factors did not exist? Complainant presented no evidence upon which the Hearing Officer can make such a determination. Complainant’s evidence throws out these factors and then leaves the answers to nothing more than the “nebulous twilight of speculation, conjecture and surmise.” This is not the proper element or the proper foundation to support a decision as advocated by the taxpayer.

Sinkholes

Both parties agree the property has sinkholes. However, both parties agree the lot can be built on. Sinkholes are not an unusual occurrence in this portion of St. Louis County or in the subject subdivision. Testimony of Mr. Frumson. The subject’s sinkholes are part of the natural topography of the woodland which makes up the major portion of the subject tract. A knowledgeable buyer would be aware of this condition. It may or may not have an impact upon the buyer’s offering price. In any event, Complainant failed to establish by an appropriate appraisal analysis to what, if any, extent the existence of sinkholes would otherwise reduce the value of the property as compared to a similar property which did not have sinkholes. The Hearing Officer can only exercise pure speculation as to this factor, an unacceptable standard for Commission Decisions.

Septic System

The fact that the subject is not on a public sewer system and would have to have its own septic system does not reduce the value of the subject lot as it existed on January 1, 2005. An analysis of similar lots which had sold not having access to public sewer and requiring the installation of a septic system was the appropriate manner in which to address this particular aspect of the valuation problem. Lots requiring septic systems are the standard in the subject subdivision.

This is a non-factor in valuation, unless an appraiser was attempting to value the subject based upon sales of lots which had access to public sewers. In such a case an adjustment based on market data of the difference in value, if any, between value of lots with public sewer and value of lots with septic system could be made. However, Complainant did not provide any sales data of unimproved lots having access to public sewer versus unimproved lots requiring septic systems. Accordingly, on this factor the Hearing Officer is once again left with nothing but speculation and conjecture as to how this factor might be addressed or even if this really impacts fair market value.

Federal Tax Lien

The existence of a federal tax lien does not keep the subject property from being marketable. Any prudent purchaser would require that the lien be paid. However, this does not reduce the fair market value of the subject lot. Assume the property as of January 1, 2005 had a fair market value of $67,400 as is established by the applicable presumptions in this case. That means a willing and informed buyer would be willing to pay $67,400 for the property. The willing seller would need to pay the lien so as to transfer title free and clear of the lien. It is possible a knowledgeable buyer might be willing to pay the seller $36,500 and then pay the tax lien himself. However, the total given in exchange for the property would still be $67,400, $36,500 to the seller and $30,900 to the IRS to clear the lien.

The existence of the tax lien does not reduce the fair market value of the property. It is a factor which must be addressed between the well informed parties, but it is not an element which an appraiser is going to make an adjustment for when performing a sales comparison analysis. If instead of a tax lien there existed a $30,900 balance on an outstanding mortgage that would not reduce the fair market value. It would simply be a factor which would be addressed at closing by the parties.

Collector’s Deed and Quiet Title Action

Complainant’s final argument is that because Complainant’s title came by way of purchase at a tax sale and a Collector’s Deed that there is no marketable title and therefore the property cannot be worth more than what was paid for it at the tax sale. Complainant’s theory is not persuasive. Complainant asserts that since no title company will issue title insurance, that no buyer will buy the property until there is a quiet title action. The Hearing Officer assumes for the purposes of this Decision that in point of fact title companies in the St. Louis Metropolitan area will not issue title insurance based upon a Collector’s Deed.

This factor does not render the fair market value to be what was paid at the tax sale. Any defect in title as a result of the seller having title by a Collector’s Deed is curable. It is not a physical feature of the land which renders the property less valuable. It is not an external factor to the land which reduces its value. It is simply a title issue which is curable so that fee simple title can pass.

If Complainant’s line of reasoning is carried to its logical extent, then a purchaser at a tax sale would be able to pay a greatly reduced amount of taxes year after year, because he had elected to not file a quite title suit so that a title company would not issue a policy of title insurance. This would mean that a tax sale purchaser with adequate capital could buy an unimproved property, substantially improve it and increase its value many times over the price paid at the tax sale, but simply continue to refuse to file a quiet title action. The result under Complainant’s theory would be that the property would not be valued at fair market value because title is held only under a Collector’s Deed.

At the very most giving some degree of validity to Complainant’s argument, a well informed buyer would insist on marketable title being established. This in no way prevents the hypothetical sale on January 1, 2005 that is the basis for valuation. Parties enter into contracts day in and day out to transfer land subject to clear title being established. The actual closing may not occur until months after the parties agree to the sale price. Real property is appraised for ad valorem tax purposes assuming fee simple (marketable title), the fact that an impairment to title would need to be cured does not establish that the property is to be valued at something less than its true value in money. Complainant failed to present any evidence or verification from any authoritative source that property is to be valued at some amount less than its fair market value because of what amounts to curable issues relating to title.

Summary and Conclusion

Complainant failed to present an opinion of fair market value based upon any recognized standard or methodology for the valuation of real property. The factors of existence of sinkholes and lack of access to public sewers would only come into play if an appraiser was utilizing sale comparables that did not have these elements. The existence of a federal tax lien and the asserted need to quiet title are simply elements that go to providing marketable title, they are curable matters. Complainant did not present any documentation from proper appraisal methodology that an adjustment is required to be made for clearing title. Complainant’s evidence did not meet the required standard of substantial and persuasive to rebut the presumptions of correct assessment and establish fair market value.

Since Complainant failed to meet its burden of proof, there is no need to do an analysis of Respondent’s evidence of fair market value. The presumptions of correct assessment stand.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.

The assessed value for the subject property for tax years 2005 and 2006 is set at $12,810.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 2000.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.