Court Opinion

ID: 6872686
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:03:21.574589+00
Date Added: 2024-06-11T16:05:26.060610
License: Public Domain

Munson, J.
(dissenting) — The effect of the majority opinion is that a county can never recover omitted taxes when encumbered new construction is omitted from the tax rolls by the County Assessor. I do not believe that was the intent of the Legislature.
A pertinent proviso in RCW 84.40.080, regarding omitted property, states: "That no such assessment shall be made in any case where a bona fide purchaser, encumbrancer, or contract buyer has acquired any interest in said property prior to the time such improvements are assessed." RCW 84.40.085 limits the assessment on omitted property to the 3 previous years.
The term "bona fide", as used in this context, is commonly understood to mean one who has acquired an interest in property without notice of any competing interest. Tomlinson v. Clarke, 118 Wn.2d 498, 510, 825 P.2d 706 (1992), aff'g, 60 Wn. App. 344, 803 P.2d 828 (1991).
Here, at the time of construction, Columbia Federal Savings & Loan extended a loan to Stanley and Nancy Smith. *484It was later converted to a conventional loan and a deed of trust taken as security. No assessment had been made to evaluate the apartment complex at that time nor was one expected until the 1987 tax year. Pursuant to tax policies in effect at the time these loans were made, the 1986 real property tax would be based on land assessment only.
Thus, when the conventional loan was granted and the trust deed given, both the owner and the lender were aware the assessed, value of the improvement had not yet been placed on the tax rolls. There was no intervening interest or outstanding right in anyone else. They should have been aware and have had an expectation that an improvement assessment would be made. Here, the lender had no reserve account for taxes in its agreement; the Smiths were paying the taxes directly. Thus, the lender would not receive a tax statement. For the years 1987, 1988, and 1989, the Smiths received and paid tax statements based on the assessed value of the land because of the Assessor's omission of an assessed value of improvements.
Once this omission was discovered, the County could and did go back 3 years to collect taxes on the omitted improvements. Had the Smiths sold this property in the meanwhile, a purchaser would not have been put on notice of the Assessor's omission; all the records would indicate the taxes due had been paid. There was no delinquency of record because of the omitted assessment. The new purchaser or encumbrancer would not have been given notice of a tax delinquency because the assessments had not been made, and the proviso would have been applicable. Tomlinson v. Clarke, supra; Grand Inv. Co. v. Savage, 49 Wn. App. 364, 368, 742 P.2d 1262 (1987).
Similar reasoning was followed in Nickelson v. Board of Cy. Comm'rs, 209 Kan. 53, 495 P.2d 1015 (1972). Construing a statute similar to Washington's,4 the Kansas court *485explained: "[T]he statute is fashioned to enable the county clerk to place on the tax rolls whatever escaped tax or assessment the property should have borne in the first instance — but, as the proviso recites, not at the expense of a good-faith interim pin-chaser." Nickelson, at 56. Accordingly, the statute was construed as permitting an omitted tax assessment to be added to the tax rolls "except where the property has in the meantime changed hands other than by means of gift, will or inheritance." (Italics mine.) Nickel-son, at 57. The Washington statute extends the same protection to interim encumbrancers and contract buyers, as well as purchasers.
Another issue neither raised nor briefed is whether the purchaser, the Smiths, can raise the possible defense of a nonparty, i.e., Columbia Federal Savings & Loan. I choose not to discuss this issue.
There being no subsequent purchasers, encumbrancers, or contract buyers between completion of this apartment complex and the omitted assessment, the County should retain the taxes. I would reverse the Superior Court.
Review denied at 120 Wn.2d 1027 (1993).

 " 'It shall be the duty of the county clerks in all cases where any lands or improvements in their respective counties for any reason have not been assessed for taxation or have escaped taxation for any former year or years when the same were liable to taxation, to place the same upon the assessment and tax *485rolls, and to charge against said lands or improvements taxes equal to and in accordance with the tax levies that would have been charged against said lands or improvements had they properly been listed and assessed at the time they should have been assessed under the provisions of the general laws governing the assessment and taxation of land: Provided, That no lands or improvements shall be assessed under the provisions of this section, where the same have changed ownership other than by will, inheritance or gift.'" Nickelson, at 55 (quoting Kan. Stat. Ann. § 79-417 (1989)).