Marc B. Terfloth v. Town of Scarborough
2014 ME 57
| Me. | 2014Background
- In 2009 Marc Terfloth bought a 0.65-acre Prout’s Neck house for $2,435,000; the Town’s assessor had continued to value the property at $3,503,800 (unchanged since 2005).
- Terfloth paid the 2010-11 tax and sought an abatement, arguing the sale price reflected fair market value and the assessment overvalued the property by $1,068,800.
- The Town relied on a long-standing assessor formula (a ‘‘square root of the fractional acre’’ method) and assessment-to-sale ratio data showing Terfloth’s property was assessed at 144% of its sale price — unusually high among Prout’s Neck parcels.
- The Scarborough Board of Assessment Review denied the abatement, finding the sale was an ‘‘aberration’’ and not proven to be an arm’s-length transaction; the assessor suggested more comparable sales were needed.
- After procedural remands and additional written findings, the Superior Court affirmed the Board; Terfloth appealed to the Maine Supreme Judicial Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the assessor’s valuation substantially overvalued the property | Terfloth: the arm’s-length 2009 sale price shows the assessment is manifestly wrong (substantial overvaluation) | Town: a single sale is not dispositive; assessor’s method and broader market data justify the assessment | Court: record compels conclusion the property was substantially overvalued; Board erred in discounting the arm’s-length sale |
| Whether the 2009 sale was arm’s-length and thus probative of market value | Terfloth: sale was arm’s-length, not foreclosure or related-party; sale price is best evidence of market value | Town: sale was atypical (time on market, assessor’s comment suggesting distress); more comparables needed before changing assessments | Court: no evidence supports non-arm’s-length finding; assessor’s contrary remark was unsupported and tautological; sale must be given substantial weight |
| Whether the Board permissibly disregarded the sale price because reassessing would require adjusting other properties | Terfloth: that rationale is improper; a bona fide sale cannot be ignored for administrative convenience | Town: reassessment of one lot would trigger reassessments; assessor reluctant without more sales | Court: administrative concerns do not justify discounting the arm’s-length sale; remand for reevaluation required |
| Whether the assessor’s methodology produced unjust discrimination (equalization) | Terfloth: assessor’s formula and failure to reassess after 2008 downturn produced unequal, inflated valuations | Town: formula reasonable and consistently applied; assessment comparable to neighborhood norms | Court: did not decide discrimination issue; remanded for reevaluation but found substantial overvaluation on the record |
Key Cases Cited
- UAH-Hydro Kennebec, L.P. v. Town of Winslow, 921 A.2d 146 (procedural standard for appellate review of board decisions)
- Town of Vienna v. Kokernak, 612 A.2d 870 (evidentiary sufficiency and deference to board findings)
- Weekley v. Town of Scarborough, 676 A.2d 932 (definition of just value as market value)
- Chase v. Town of Machiasport, 721 A.2d 636 (burden to show assessment manifestly wrong; two required findings)
- McCullough v. Town of Sanford, 687 A.2d 629 (sale price probative of market value)
- Town of Sw. Harbor v. Harwood, 763 A.2d 115 (arm’s-length sale price is best evidence of market value)
- Town of Bristol Taxpayers’ Ass’n v. Bd. of Selectmen/Assessors for the Town of Bristol, 957 A.2d 977 (standards for showing manifest overvaluation)
- Quoddy Realty Corp. v. City of Eastport, 704 A.2d 407 (fair market value requirement for assessments)
- Arnold v. Me. State Highway Comm’n, 283 A.2d 655 (weight of an actual sale near valuation date)