Environmental Protections and Disclosures
Environmental laws are a significant layer of public encumbrance, often involving both state and federal statutes.
Environmental Laws and Audits
Major federal laws include the Clean Water Act, which penalizes water contamination, and the Clean Air Act, which prohibits air pollution. The Army Corps of Engineers also regulates the protection of wetlands to prevent unauthorized filling or plant removal.
A critical piece of legislation is CERCLA, also known as "The Superfund," which aims to clean up properties contaminated with hazardous waste. Because cleanup costs can be astronomical—averaging $25 million—and because lenders can be held liable for contamination on property they finance, the environmental audit industry has become essential.
- Phase I Environmental Audit: A review of property surveys, physical inspections, and historical records to determine if contamination is likely.
- Phase II Environmental Audit: If a Phase I audit suggests a risk, a Phase II is required, which involves much more expensive testing of the actual soil and water.
Mandatory Disclosures
To protect consumers, certain environmental hazards require specific disclosures:
- Radon Gas Disclosure: A warning that radon is a naturally occurring gas that can cause cancer if levels are too high.
- Lead-Based Paint Disclosure: For homes built prior to 1978, sellers must warn buyers about the potential presence of lead-based paint, which is hazardous if ingested.
Eminent Domain and Condemnation
The government possesses the power to take private property, but this power is strictly regulated.
Eminent Domain
Eminent domain is the power of the government (local, state, or federal) to take private property for public use. For a taking to be legal, two conditions must be met:
- The property must be taken for a public use (e.g., roads, sewers, airports, or parks).
- The owner must receive just compensation, defined as the fair market value of the property.
The landmark case Kelo v. City of New London expanded the definition of "public use" to include economic development, prompting many states, including Florida, to pass laws restricting the government from transferring taken property to private parties for non-infrastructure purposes.
Condemnation
While eminent domain involves taking land for public use, condemnation occurs when the government declares a property unsafe or uninhabitable. In these cases, the property is deemed unfit for occupancy until it is repaired and brought up to code.
Taxation and the Property Appraiser
Property owners are subject to ad valorem taxation, which is tax based on the value of the property.
The Role of the Property Appraiser
The local Property Appraiser is responsible for establishing a fair and just valuation of all real and tangible personal property within their jurisdiction. They aim to determine the market value, which is the most probable sales price in an open and competitive market.
Appraisers typically use one of three methods to determine value:
- Cost Approach: The cost to replace the property with similar materials and labor, adjusted for depreciation.
- Comparative Sales Approach: Comparing the property to similar properties that have sold recently (the most common method).
- Income Approach: Primarily for commercial property, calculating value based on the income the property could produce if rented.
Calculating Taxes: The Millage Rate
Taxes are calculated using a millage rate. A "mill" represents $1 per $1,000 of assessed value.
For example, if a home is valued at $300,000 and the total millage rate is 20 mills, the calculation is:
Annual Tax=1,000300,000⋅20=$6,000
Exam Tip: Remember that ad valorem taxes are based on the property's status as of January 1st of the current tax year. If a house is built on February 1st, the owner will only be taxed at the vacant land rate for that entire year.
Exemptions and Appeals
To ease the burden on certain populations, various exemptions exist, such as the Homestead Exemption, which provides a reduction in appraised value for a primary residence. Other exemptions include those for seniors, veterans, and the disabled.
If a property owner believes their assessment is incorrect, they can follow an appeals process:
- Informal Review: A consultation with the appraiser to correct errors.
- Formal Appeal: A petition to the Value Adjustment Board (VAB).
- Judicial Contest: If the VAB decision is unfavorable, the owner may contest the decision in the Circuit Court.
Note on Unpaid Taxes: Unpaid property taxes act as a first lien on the property, meaning they take priority over almost all other debts. If taxes remain unpaid, the state may sell a tax certificate at a public auction, which can eventually lead to a forced sale of the property.
