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Most folks laboring in the property tax and valuation vineyards would not think that an easement attached to a parcel of real estate could create a separate tax liability for its owner. That presumption might be true in most cases. However, the Massachusetts Appeals Court held recently that a parking easement in a condominium parking garage capable of being sold and used independently of the condo is subject to assessment and tax.
The Charles Bulfinch Condominium, created in Boston in 1986, comprises a nine-story, 37 residential unit building with 54 parking spaces. One of those spaces, however, was kept by the developer. It was specifically detached from the condo as an easement and declared to be transferable by the developer at its discretion.
In 1987, a resident bought this space/easement from the developer for $33,000. Fast forward 31 years when the City of Boston, for the first time, assessed the parking easement, valuing it at $56,000.
The owner asserted that her parking easement was not assessable as a separate real estate interest because the parking space was located within the condo parking garage, which is already taxed to the owners based on their respective interests in the condo; hence, taxing her interest separately amounted to improper “double taxation.”
The Appeals Court did not agree with the owner’s assertion and ruled, “as the only individual that derives value from and exercises control over (the) parking space, [the owner’s] interests closely resemble that of ownership.” Her ownership rights, including the ability to transfer the space to anyone she chooses, makes it logical and reasonable for her to pay taxes on the value of the space, the Court decided.
The Appeals Court’s ruling is a good reminder to real estate transaction lawyers who create condos and similar interests to warn their clients of the potential separate taxability of easements. This being said, the valuation of such an easement is a topic better left to another day, and another article.
Murrow v. Board of Assessors of Boston, 102 Massachusetts App. Ct. 278 (February 6, 2023).
Please feel free to contact any member of Pullman's Property Tax and Valuation Practice with any property tax questions that you may have.
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