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(This story originally appeared in the Daily Business Review.)

MIAMI-Claims of under-reported purchase prices at a Pembroke Park mobile-home co-op community are prompting broader scrutiny of how more than 12,000 co-op units in Broward County are assessed for taxes.

Hundreds of millions of dollars in lost property tax revenues are estimated to be at stake countywide, said Ron Cacciatore, director of professional standards and compliance in the Broward County property appraiser’s office.

Scott Lewis, supervisor of the office’s condominium department, estimates that at least 75% of the county’s 12,371 co-ops are under-assessed for tax purposes because of how purchases are recorded.

Broward County property appraiser Lori Parrish wants lawmakers in Tallahassee to change state law to require that a purchase contract be filed with the share transfer when a co-op is sold so the price can be recorded.

Parrish and the Broward County state attorney’s office are investigating the 330-unit Dale Village community on Hallandale Beach Boulevard west of I-95 after a whistle-blower reported earlier this year that the units’ recorded purchase prices were low-balled to minimize taxes, Pembroke Park town manager Robert Levy said.

The problem stems from the unusual ownership structure of co-ops. Instead of acquiring title to real estate, buyers of co-ops become shareholders in a corporation that owns the property. The buyers then assume a leasehold interest in their residence.

In the outright sale of real estate, the sale price is disclosed on a deed that is recorded with the county, which makes it easy for the county to calculate its tax cut on the transaction.

In co-op deals, however, the sale is recorded as a share transfer. When buyers or their representatives record the purchase with the county, they declare the price of the unit without being required to provide documentation, county recorder Sue Baldwin said. The county’s recording clerks are not required to ask for further proof of the purchase price, she said.

And that often leads buyers, hoping to minimize their tax bite, to undervalue their new homes, officials say.

To determine taxes, county appraisers estimate the assessed value of co-ops. That’s made difficult because co-op deals are almost always all-cash sales so no liens or mortgages are recorded that would provide purchase information. And because co-ops aren’t real estate, their prices can’t be compared to condos.

“What you are buying is not real estate, and that’s some of the issue,” said attorney and title insurance agent Michael Lyons of Lyons & Smith in Miami and Hollywood. “This is intangible property that is actually taxed as real property. It’s a weird animal.”

Co-ops are common in New York, but in South Florida they primarily exist in older buildings along the coast, including the Galt Ocean Mile area of northeast Fort Lauderdale.

In South Florida, the under-reporting of co-op values seems to be unique to Broward County. Miami-Dade and Palm Beach counties together have about 9,400 units, county appraisal departments say.

Palm Beach County appraisers several years ago discovered co-op share transfers were being lumped into other transactions. The office created a way to filter them out for better evaluation, said Tom Barnhart, director of appraisal services. “We haven’t identified it as an area of great loss,” he said.

Miami-Dade County property appraiser Marcus Saiz de la Mora said co-ops have been dwindling because many have been converted to condos. He added that co-op sales have been too few to be considered a problem.

Only 74 of Miami-Dade’s 3,200 co-ops sold this year. Saiz de la Mora acknowledged the units are tough to appraise, but said their value range can be established if they are kept separate from condos and apartment buildings.

Al Guttman, a Broward assistant state attorney in the economic crimes division, confirmed an investigation of co-op valuations is under way but declined further comment.

Several Dale Village residents were subpoenaed two weeks ago. The probe had also targeted the nearby 677-unit Park Lake mobile home co-op but was dropped after investigators found no evidence of organized under-reporting, Levy said.

Park Lake and Dale Village are among the largest co-op communities in the county. Many of the mobile homes are assessed for less than $100,000. But they can sell for $500,000 or more because of lake locations, extensive remodeling and room additions by their owners, who often are seasonal residents that don’t benefit from the 3 percent tax cap on homesteaded property.

Levy, Cacciatore and Lewis refused to say who flagged what Cacciatore called “organized fraud” at Dale Village.

Michael Soucy, a former Pembroke Park code enforcement officer and a Dale Village resident, said he brought his concerns to the appraiser’s office after a resident told him of several individuals in the community who would take charge of recording purchases on behalf of buyers and under-report the sales price to the county recorder’s office.

The mobile homes sell for $300,000 to $600,000, and a vacant lot in Park Lake can sell for as much as $200,000, said Soucy, a licensed but inactive real estate salesperson who said he works as a property manager for a Pompano Beach condo.

“So you can see how far off we are with appraising Park Lake at $65,000 and Dale Village at $85,000,” he said. “If someone comes down [from Canada] and pays $200,000 and says it is $50,000, we all get ripped off” in underpaid taxes.

Appraiser Murdo Mackenzie of LB Slater Real Estate Services, which handles sales in the communities, said co-ops typically are valued significantly less than condos largely because few lenders will finance the deals, which depresses the values. But he said he has seen “low-balling” of recorded co-op sales in property records and has heard of association board members intentionally revising purchase contracts to keep taxes down.

“You can tell when you search the data and the [share transfer] is at such a conservative price when the rest of the market was going bonkers,” Mackenzie said.

Roger Gareau, a Canadian who lives in Park Lake six months every year, said he paid approximately $100,000 for his mobile-home co-op about four years ago. Since then, Gareau said, he’s spent about $250,000 in upgrading his property and estimates it would sell for $400,000.

Yet, according to public records his share in the Park Lake Inc. co-operative is valued at $100. Gareau paid $1,551.52 in taxes on an assessed value that increased this year to $65,700 from $47,600.

By comparison, Lewis estimates that a non-homesteaded co-op valued at $400,000, would be assessed at about $340,000 and the owner would pay $7,500 in taxes.

Dale Village board president Serge Boyer said the tax raise unfairly lumps all owners together regardless of their unit size or purchase price. He said he doesn’t know of any intentional under-reporting of purchase prices and that the board has no control over what a buyer reports to the county.

Boyer paid $27,600 for his single-wide mobile home in 1994 and has made about $20,000 in improvements. “There are houses in here maybe worth $120,000 to $130,000 that are much nicer than mine, but I’m evaluated the same as the others,” he said.

Deals are made more complicated because furniture is sometimes included in the sale, Boyer said. “Depending on the house, there could be $50,000 worth of furniture,” Boyer said. He welcomes uniform state rules to govern the registration of co-op sales. “There are no guidelines whatsoever,” Boyer said.

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