The Michigan General Property Tax Act (the Act) requires real property in Michigan be assessed yearly and taxed at one-half (1/2) of its true cash value (true cash value is the same as market value). However, with the passage of the Headlee Amendment to the Michigan Constitution in 1994, limitations were placed on how much assessments and taxes could go up each year. Since 1994-1995, annual property tax increases have been “capped” at levels specified in the Act and remain capped until a “transfer of ownership” occurs. Once a transfer of ownership occurs, the property is reassessed at one-half (1/2) of the “true cash value” as of that date and the taxes, in most cases, go up substantially. The property tax is capped at the new, higher amount until the next transfer of ownership takes place (Michigan property tax bills show a “Taxable Value” and a “State Equalized Value.” The Taxable Value is the capped value upon which the property tax is assessed. The State Equalized Value approximates one-half (1/2) of the true cash value/market value of the property. Once the property tax is uncapped, the State Equalized Value and the Taxable Value become the same for the year in which the uncapping occurred and the cap goes back into effect at that amount).

The key term in all of this is “transfer of ownership,” which basically means a conveyance of title to, or a present interest in, real property. However, not all conveyances constitute a transfer of ownership. One such exclusion is for a transfer of ownership between two or more persons that creates or terminates a joint tenancy if
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Do you entertain in your family cottage or have your children’s friends over to the family cottage for play dates while on vacation? Perhaps you enjoy having family and friends over for summer cookouts in the summer and holiday parties in December on occasion when you are visiting your family cottage. Have you ever thought about what would happen if your brother-in-law severely burnt his hand on the hot grill while trying to help you cook the hamburgers and you knew your grill was not working properly? What about your aunt Helen, who at eighty-six years old insists on wearing four inch heels to your Christmas party and always has the bottomless glass of eggnog in her hand while spinning in circles under the mistletoe waiting for someone to kiss her?

Injuries and legal action are typically not at the forefront of our minds when inviting friends and family over to the family cottage for a few hours of fun and conversation. But when aunt Helen breaks an ankle, or worse a hip, under the mistletoe and she blames it on your freshly polished wood floor, you will wish you had used some forethought before inviting the family and friends over to the family cottage for a party. Even if we lived reclusively, there is the possibility that someone could stumble on an uneven sidewalk paver or slip on a patch of loose gravel in the driveway while trying to deliver a package. Unavoidable accidents happen, but you should know your liability if someone is physically injured while on your cottage property and take precautions to guard against them. Although having adequate liability insurance and additional host liability insurance is a smart thing to have, it does not prevent a lawsuit.

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