Purchaser of vacant lots from original developers entitled to tax assessments based on the developers' acquisition cost.(Recent Court Decisions)(BMI Construction Company, LLC )

The Supreme Court of Oklahoma ruled that a home builder who purchased vacant lots from developers was entitled to tax assessments calculated using the developers' acquisition cost method because the lots contained no buildings.

In 2004, BMI Construction Company, LLC (BMI) purchased four vacant lots from developers for the purpose of building homes. For the 2005 tax year, the county assessed each lot's fair market value at the price BMI paid for it. BM] appealed, arguing that the parcels should be valued at the "developers' acquisition cost," calculated by dividing the total purchase price for the entire tract by the number of separate lots. The applicable tax code provision states that the fair market value of a lot shall be the developer's acquisition cost "until the lot with building or buildings located thereon shall have been conveyed to a bona fide purchaser," leased, or occupied by the owner other than as a sales office. The county argued that BMI was a bona fide purchaser and therefore not entitled to assessments calculated using the developers' acquisition cost method. The board of equalization affirmed the county's assessments, but the trial court reversed, ruling in favor of BMI. The county appealed.

On appeal, the county argued that when a developer conveys to a bona fide purchaser a lot that was previously assessed at the developer's acquisition cost, the lot must be revalued at its purchase price regardless of whether it contains a building. The state supreme court disagreed, holding that the tax code unambiguously prohibited revaluation of a lot conveyed to a bona fide purchaser unless the lot contained at least one building. In addition, the court pointed ...