Opinion ID: 2224006
Heading Depth: 1
Heading Rank: 3

Heading: When Property Taxes Become Due and Payable With Respect to a Parcel

Text: In this case the trial court determined that the Tax Provision was ambiguous as to whether Trinity was obligated to pay the first installment of taxes after the closing of the contract which was based on an assessment of the entire tract of land, or the first installment of taxes based on the first individual assessment of Lot 38. The Court of Appeals agreed and construed the document against Trinity, the drafter. We agree that it is generally appropriate to construe an ambiguous agreement against its drafter. See MPACT Constr. Group, LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 910 (Ind.2004). But we also agree with Trinity and the Amici Curiae, the Builders Association of Greater Indianapolis, Inc. and the Indiana Builder's Association, that the Tax Provision is not ambiguous. Real property in Indiana is assessed for tax purposes on the first day of March of each year, but the taxes are not required to be paid until May 10 and November 10 of the following calendar year. See Ind. Code §§ 6-1.1-1-2, 6-1.1-22-9 (2004). Indiana Code section 6-1.1-2-4(a) also provides: The owner of any real property on the assessment date of a year is liable for the taxes imposed for that year on the property. . . . When a person other than the owner pays any property taxes, as required by this section, that person may recover the amount paid from the owner, unless the parties have agreed to other terms in a contract. Trinity argues that the Tax Provision unambiguously provided that Trinity would pay the first tax installment due and payable after the March 3, 2000 closing, and it did so by paying the installment due in May 2000. The term due and payable is the conventional terminology to describe the date when the taxes must be paid. As the Court of Appeals has observed: Barring any qualifying expression, in common usage the word due means that the debt or claim in question is now (presently or immediately) matured and enforceable. When qualified by the expression payable the word due means that the debt or claim is fixed and certain but the day appointed for its payment has not yet arrived. . . . [I]n the context of a real or personal property tax, the term has long been used to refer to the day appointed for its payment. Beiger Heritage Corp. v. Montandon, 691 N.E.2d 1334, 1337 (Ind.Ct.App.1998) (internal citations omitted). We think there is no serious question that the May 2000 installment was the first installment of any real estate tax that was due and payable after the March 3, 2000 closing on Fang's lot. The only issue is whether the installment was the first due and payable with respect to the real estate, i.e., on Fang's Lot 38. If the 1999 assessment had been allocated among the lots in the Brittany Chase subdivision as of March 1, 1999, then the taxes due in May 2000 would indisputably have been the first installment on Lot 38 due and payable after Fang's closing. However, neither the taxing authorities nor Trinity Homes allocated Lot 38's portion of the 1999 assessment on the entire tract of land. There was no separate assessment of Fang's lot until March 1, 2000, the assessment date for the taxes due and payable in May and November 2001. The taxes assessed in 1999, due and payable in 2000, were nevertheless taxes with respect to the real estate, i.e., taxes on the land that became Lot 38 and any improvement, if there was any construction at the time. Otherwise stated, the fact that a separate assessment of Fang's lot had not yet occurred did not relieve Lot 38 of its obligation for the taxes for the entire tract. The State acquired a lien on the entire tract, including Lot 38, on March 1, 1999. I.C. § 6-1.1-22-13(a) (The state acquires a lien . . . [which] attaches on the assessment date of the year for which the taxes are assessed.). If the taxes had not been paid, the entire tract, including Lot 38, would have been subject to collection procedures. Fang got a windfall by reason of the failure of Trinity (or the taxing authorities) to effect this allocation before the November 2000 installment of the 1999 taxes became due and payable. As a result, Trinity paid the November 2000 installment which under the contract was Fang's responsibility. In short, the entire tract was subject to the taxes for the entire tract as of the date of Fang's closing, and Fang's bill for the May 2001 installment of the 2000 taxes was the third installment with respect to Lot 38 due and payable after closing, and thus was Fang's obligation.