HOLLY TOWNSHIP, Michigan – The matter may still be lodged in the Michigan Court of Appeals, but on Wednesday, members of the Holly Township Board of Trustees voted in favor of allowing it’s Land Division Committee to split the 20-acre parcel of land formerly belonging to Holly Township residents, Timm and Maria Smith into three separate parcels solely for the purposes of tax collection.
The Smiths filed a lawsuit against Holly Township regarding ownership of a 10-acre portion of the 20-acre S. Holly Road property the Smiths once entirely owned. A legal land split of the parcel was never performed, and now the Smiths maintain that the mortgage on the 10-acre parcel on which they defaulted in 2008 was fraudulent.
The township is claiming ownership of the parcel. Because a legal land split never occurred, the Smiths maintain that the township violated the Land Division Act, the fraudulent mortgage should thus be null and void, and that the property should revert to them.
On Wednesday, Holly Township Treasurer Mark Freeman explained that the idea of splitting the 20-acre parcel was a way in which township officials said they could help the Smiths keep the remaining 10-acres they own.
“This property, as most of our board knows, is currently engaged in pending litigation and it’s in the Appellate Court at this time,” Freeman said. “We received an affidavit from Oakland County that the taxes have not been paid on the parcel and as a result on Mar. 1, the property would go for tax forfeiture.”
Freeman said 2010 and 2011 taxes have not been paid on the property.
“Normally, the Land Division Committee would act on all applications for land division on their own,” he said. “In this particular case after my discussions with our legal counsel, we came to the final conclusion that the township board should approve for the Land Division Committee to move forward because of the fact that it’s involved in pending litigation.”
Part of a long-standing Holly Township ordinance, the Land Division Committee is a three-member committee comprised of Freeman, Supervisor Dale Smith, and Oakland County Equalization Assessor, Joycelyn Isenberg. Freeman said the Land Division Committee accepts applications for land divisions or combinations, reviews the applications, and verifies that all taxes have been paid before going before the committee for approval. If approved, the matter is forwarded onto Oakland County Equalization for it’s approval.
“It’s going to create three parcels for tax purposes only, and as you’ve read in the memorandum, our legal counsel is going to record a notice at Oakland County Register of Deeds stating that the parcels as they now exist – this would be after the division – are not entitled to a building permit,” Freeman said. “The Smiths or a future owner would need to make application to the Zoning Board of Appeals or possibly secure some other relief to lawfully build on the property.”
Calling the land split a “temporary Band Aid,” Freeman said the board had two options.
“One is to do nothing,” Freeman said. “If we don’t, the property will go to a land sale and it will go through tax forfeiture on Mar. 1, 2013,” he added. “If we do approve this, then it will authorize the Land Division Committee to proceed with a split.” Authorizing the land split, Freeman said, will give the Smiths one final opportunity to make good on their back taxes, penalties and interest, thus preventing it from going into tax forfeiture.
Freeman said the Smiths would only be responsible for paying back taxes on the two 5-acre parcels they own, and that after the split, an assessment would be done on each parcel to arrive at a taxable value for the land.
Trustee Janet Leslie said it was her understanding that the Smiths had asked for a tax bill more than a year ago, but had never received one.
Freeman said the 10-acres of property were Quit Claim Deeded to Holly Township, and that the Smiths had filed a lawsuit against the township. “The PHH Mortgage Corporation is the one that Quit Claimed it,” Freeman said. “The property was left in the name of PHH Mortgage Corporation because of the lawsuit being filed – that way, a tax bill would continue to be generated for the full 20-acres because it is only one parcel with one parcel ID number.” Placing the property into the name of Holly Township, Freeman said, would have prevented a tax bill from being generated due to the fact that Holly Township is tax exempt.
“Well, because this is so complicated, I’m just concerned that we don’t make another mistake that would have other repercussions,” Leslie said, adding that she recalled PHH Mortgage initially inquiring about a property split. “If we split it now, would they call foul and say, you know, ‘We initiated that and you said it couldn’t be done, but now after you own it, now you’re choosing to split it?’”
Clerk Karin Winchester said PHH Mortgage could have split the property, but had they done so, they would have found themselves in the exact position of the township. “They’re unbuildable,” Winchester said of the two 5-acre parcels in question.
“You said you don’t want to make another mistake,” Freeman said. “In my opinion, no mistakes have been made.”
Leslie said her other concerns revolve around the fact that to date, the township has paid approximately $60,000 in legal costs associated with the lawsuit.
“Well, we’re going to belabor this issue again, but I’ve said it numerous times,” Freeman said. “Anyone can sue anyone at any time for anything, and when they do, you have to get an attorney to defend yourself – you have no control over where those expenses are going to go.”
Freeman acknowledged that it’s long been the township’s position that the 20-acre parcel has been regarded as just that – one parcel with one parcel ID number.
“So this kind of goes against the grain of what our position has been, but at the same time, our failure to act could lead to further litigation,” he said.
Trustee Mark Cornwell said he had a successful experience in splitting some Holly Township property that he owns, but that it required that he put an approved private road right of way in to prevent the new parcel from being “landlocked.”
“And (the Smiths) were aware of the fact that it would require a private road,” Freeman said of the couple’s original inquiry into splitting their 20-acre parcel.
In 2001, the Smiths looked for ways in which they could divide the property into four 5-acre parcels. In the end, they came up with two 5-acre parcels in the back – one along the Shiawassee River, and one on the eastern border of the property, and a 10-acre parcel in the middle.
During that time, the Smiths said they took their proposal to the board, but were told that it would require constructing a road all the way to the back of the property with a cul de sac – something that would come at a cost of $120,000, and something the family couldn’t afford.
“But for tax purposes, we’re able to split it without a private road?” Leslie asked. “I’m just wondering if (the Smiths) came – did they ask for a split before?”
“They never applied for one,” Freeman said.
“OK, well, I just want us to be careful that we’re not granting ourselves a privilege that we did not extend to the Smiths,” Leslie said.
“This is the recommendation from our legal counsel,” Freeman reiterated.
“This helps them, it doesn’t hurt them,” Supervisor Dale Smith said. “I understand Ms. Leslie’s concerns and you are well-versed – you’ve sat through this for years and I haven’t, but to me it’s a simple matter and we need to do this.”
Leslie pressed further.
“If we did nothing as we said, it would go back to the county,” Leslie said. “Then the county would offer it to the state, correct?”
“That’s correct,” Freeman answered.
“Then it would come to us,” Leslie said.
“And at that point we would have the choice to either pass on it, or we could pay those taxes and get the whole 20 acres,” Leslie said. “If we passed on it, it would go to a tax sale which would give the Smiths the opportunity to pay the back taxes and get the whole 20 acres.”
Freeman said the Smiths would have that very option if the board approved the land split.
“No, if we approve this, then it’s split,” Leslie replied. “And then it wouldn’t go to tax sale and even if it did, it wouldn’t go for the whole 20 acres.”
“Then we lose all that we have invested into this property because of the lawsuit,” Winchester said. “Or if we chose to buy it at the tax sale then we’d have to pay more.”
“What would happen – without belaboring that – what would happen is the state probably would refuse it and it would go to us and we would take it, and that would not look good for the township,” Freeman answered.
“It certainly wouldn’t,” Leslie said.
Holly Township Supervisor, Dal...
With that, Smith called for a motion to be made.
“I would make a motion to approve the Land Division Committee splitting the property at 1031 S. Holly for tax purposes only and for the reasons stated in the Dec. 14 attorney- client memorandum,” Winchester said.
Without any support from any of the remaining board members, Smith seconded Winchester’s motion.
“Again, I just don’t feel that we’ve had enough examination of the possibilities with this, and I’m looking out for our potential liabilities,” Leslie said.
In a vote of 4-1, the motion passed, with Leslie casting the lone dissenting vote.