Slatten v. Hamilton Cty. Assessor

226 N.E.3d 270

Pamela SLATTEN, Petitioner,

v.HAMILTON COUNTY ASSESSOR, Respondent.

Case No. 22T-TA-00004

Tax Court of Indiana.

December 29, 2023

ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW

ATTORNEY FOR PETITIONER: JOHN C. SLATTEN, ATTORNEY AT LAW, Indianapolis, IN

ATTORNEYS FOR RESPONDENT: MARILYN S. MEIGHEN, ATTORNEY AT LAW, Carmel, IN, ZACHARY D. PRICE, ATTORNEY AT LAW, Indianapolis, IN

MCADAM, J.

This case examines when, under Indiana Code § 6-1.1-12-37, an individual must record a memorandum of contract documenting the purchase of residential property to qualify for Indiana’s standard homestead deduction. The Indiana Board of Tax Review ("Indiana Board") determined that the statute requires an individual to record the memorandum no later than December 31 of the assessment year for which the deduction is sought. The taxpayer contends that the Indiana Board’s interpretation is inconsistent with the purpose of the homestead deduction, asserting that she had until January 5 of the next year to record her memorandum. She argues that the Indiana Board’s interpretation contra- venes the rules of grammar and that two other statutory provisions, Indiana Code §§ 6-1.1-12-45(f) and 6-1.1-12-37(b)(2), independently extend the time to record a memorandum of contract. Upon review, the Court affirms the Indiana Board’s final determination.

FACTS AND PROCEDURAL HISTORY

Pamela Slatten moved to the home in Carmel, Indiana, that is the subject of this case in October of 2020. She contracted to purchase the home later that same year on December 31, 2020, completing and signing an application for Indiana’s homestead deduction (i.e., Form HC10) the same day. Five days later, on January 5, 2021, Slatten recorded a memorandum of contract documenting her purchase with the Hamilton County Recorder and filed her completed homestead deduction application with the Hamilton County Auditor.¹

The Auditor granted Slatten the homestead deduction for the 2021 assessment year but denied the deduction for the 2020 assessment year. The Auditor denied the 2020 deduction because she believed the law required Slatten to record her memorandum of contract by December 31, 2020.

Slatten appealed the 2020 homestead deduction denial first to the Hamilton County Property Tax Assessment Board of Appeals and then to the Indiana Board. The Indiana Board held a telephonic hearing on Slatten’s appeal on October 19, 2021, and issued a final determination on February 1, 2022, denying Slatten’s request for relief.

Slatten initiated this original tax appeal on March 18, 2022. The Court heard the parties’ oral arguments on August 24, 2022.

STANDARD OF REVIEW

The party seeking to overturn an Indiana Board final determination bears the burden of demonstrating its invalidity. Ind. Code § 33-26-6-6(b) (2023). To prevail in her appeal, Slatten must demonstrate to the Court that the Indiana Board’s final determination is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without observance of the procedure required by law; or unsupported by substantial or reliable evidence. I.C. § 33-26-6-6(e)(1)-(5).

THE HOMESTEAD DEDUCTION

Indiana law provides what is known as the "standard homestead deduction."² See Ind. Code § 6-1.1-12-37 (2020) (amended 2022). During the 2020 assessment year, the deduction removed from annual property taxation the first $45,000 of assessed value of one’s homestead.³ See I.C. § 6-1.1-12-37(b)-(c).

A taxpayer may claim the homestead deduction in one of two ways. The taxpay- er may file the homestead application form (Form HC10) with the county auditor. I.C. § 6-1.1-12-37(b)(2), (e). That form must be "completed and dated" by December 31 of the assessment year and filed by January 5 of the next year. See I.C. § 6-1.1-12-37(e). A taxpayer may also use a sales disclosure form as an application for the homestead deduction. See I.C. § 6-1.1-12-37(b)(2). That form must be submitted "on or before December 31" of the year the homestead is purchased to obtain the deduction for that year. Ind. Code § 6-1.1-12-44 (2020) (amended 2023).

DISCUSSION AND DECISION

This case presents the issue of when a taxpayer must record a memorandum of contract documenting a property’s purchase to qualify for the homestead deduction. The taxpayer, Slatten, contends that the Indiana Board’s conclusion that Indiana law required her to record her memorandum by December 31, 2020, is an abuse of discretion and contrary to law.

Deadline for Recording under the "Homestead" Definition

The homestead deduction applies to property that qualifies as a "homestead" for a particular assessment year. The word "homestead" is a term of art specifically defined in statute and, for purposes of this case, means an individual’s principal place of residence in Indiana that:

(ii) the individual is buying under a contract recorded in the county recorder’s office, or evidenced by a memorandum of contract recorded in the county recorder’s office under IC 36-2-11-20, that provides that the individual is to pay the property taxes on the residence, and that obligates the owner to convey title to the individual upon completion of all of the individual’s contract obligations[.]

I.C. § 6-1.1-12-37(a)(2)(B)(ii) (emphasis added). Here, the parties’ dispute centers on the timing of the "recorded" requirement contained in this section. The parties agree that Slatten recorded her memorandum of contract on January 5, 2021. They disagree, however, whether that January 5 recording was timely for purposes of claiming the homestead deduction for the 2020 assessment year.

[1] On appeal, Slatten contends that the meaning of the term "recorded" is apparent from the rules of grammar. She asserts that "recorded" is a past participle and as such is a nonfinite verb that has no tense. She concludes that "[o]ne cannot infer a deadline, a point in time by which an act must be completed, from a past participle." (Pet’r Reply Br. at 1.)

But Slatten’s grammatical argument actually works against her. While the Court agrees that the word "recorded" is best understood as a past participle, it does not agree that past participles cannot communicate timing or sequence. Slatten’s argument is heavily premised on her assertion that past participles do not have tense, a premise on which there is authoritative disagreement. Compare, e.g., Bryan A. Garner, Garner’s Modern English Usage 1229, 1246 (5th ed. 2022) (explaining that a past participle is a nonfinite verb that is "[a] verb form that has no tense, person, or singular or plural form, and is not limited by inflection") with The Chicago Manual of Style § 5.108 at 233 (16th ed. 2010) (stating that "[a] participle is a nonfinite verb that is not limited by person, number, or mood, but does have tense"). Nonetheless, the Court need not resolve the question of tense to decide this case because past participles inherently signal that the participle’s action is completed because they convey a "perfective aspect." Garner’s at 1196, 1229 (stating that a past participle is "[a] nonfinite verb form … used in verb phrases … to signal a perfective aspect" and defining "perfective aspect" as "[a] verb aspect that expresses action as complete – or implies that it is so"); Chicago Manual of Style § 5.108 at 233 (explaining that a past participle "denotes the verb’s action as completed"). That a participle conveys timing and sequence is made clearer by contrasting the past participle with the present participle. The present participle embodies a progressive aspect that signals that the participle’s action is "in progress or incomplete at the time expressed by the sentence’s principal verb." Chicago Manual of Style § 5.108 at 233. See also Garner’s at 1196, 1229 (explaining that a present participle is "used … to signal the progressive aspect," which "show[s] that an action or state – past, present, or future – was, is, or will be unfinished at the time referred to").

These grammatical nuances confirm that the recording required by the homestead definition must be completed during the assessment year for which a deduction is sought. They dispel any notion that recording need only be in progress at the end of the assessment year to meet the "homestead" requirements. As a past participle, the word "recorded" as used in Indiana Code § 6-1.1-12-37(a)(2)(B)(ii) signals that the recording is complete at the time a property is qualified as a homestead. Had the Legislature intended otherwise, it could have used the present participle of "recorded" or separated the recording requirement from the "homestead" definition altogether. Consequently, for Slatten to receive the homestead deduction for the 2020 assessment year, her property needed to be a homestead in 2020. And, to be a homestead in 2020, Slatten needed to record her memorandum of contract in 2020 (i.e., by the end of the assessment year for which the deduction was sought – December 31, 2020).⁴,⁵

[2] Slatten emphasizes that her interpretation "avoid[s] the unfair result that people who buy houses near the end of the year would be denied the benefit of the homestead deduction because of it being difficult to prepare, file, and record documents during the end-of-year holidays." (Pet’r Br. at 14.) The Court is sympathetic to the concerns raised by Slatten. The statute does not reveal the legislative purpose for the recordation requirement. It may be intended as a safeguard against fraud or for administrative effectiveness as Section 37(a)(2)(B)(ii) applies to prospective sales that are not yet complete. But, regardless of the reason, this Court, like any other, may not usurp legislative prerogative by construing a statute in a manner contrary to its plain language. See Southlake Indiana, LLC v. Lake Cnty. Assessor, 174 N.E.3d 177, 180 (Ind. 2021) ...