Any time a transfer of ownership takes place on a property, the buyer or grantee (person receiving the property) is required by Michigan State Law to file a Property Transfer Affidavit with the local Assessor’s Office within 45 days of the transfer. The form can be found on the state’s website via www.michigan.gov and a keyword search for “property transfer affidavit,” or by going to the following link on the state’s website: https://michigan.michigan.gov/documents/l4260f_2688_7.pdf
The property transfer affidavit is a one page form that must be filed with the local Assessor’s Office for typical sales between unrelated buyers and sellers. In addition, it is also a required filing for any transfer of ownership. Some examples are a transfer to a trust, transfer to a spouse, sale of property using a land contract, quit claim deed, giving property to children or other estate planning transfers, foreclosures, etc.
The three main reasons this form is important to the local Assessor are:
1. The Assessor needs to know who the current owner of the property is so that the taxes are billed to the appropriate person.
2. The sale price must be given on this form, whether it was or wasn’t shown on the deed and whether or not the purchase price reflects the actual market value. The sale price is vitally important as it helps the local Assessor’s Office know what properties are currently selling for in the real estate market. Along with the sale price, items 10-15 on the form help the Assessor determine if the sale was a typical market transaction or if there were other factors that affected the sale price such as: purchasing from a relative at a discount, short sale at a reduced price before a foreclosure, a land contract with an excessive interest rate, or a purchase that included other items such as a vehicle or other personal property (appliances, furniture, etc.).
3. The transfer of ownership may or may not require an “uncapping” of the taxable value. Normally, the year after a property sells, the taxable value is “uncapped” and reset to whatever the property’s assessed value is. However, in some cases, the transfer of ownership may be exempt from “uncapping” of the taxable value. The information provided on the property transfer affidavit allows the Assessor to determine whether or not to uncap the taxable value.
Per state law, if this form is not timely filed with the local Assessor’s Office within 45 days of the transfer of ownership, a penalty of $5/day (maximum $200) will be applied to the winter tax bill on the property. Filing of the form by the buyer is a win/win situation that ensures the correct person receives the tax bills and that the Assessor’s Office gains valuable information about sales activity in the local market.