Condominium Owners 5-7 Slade Avenue v. Supervisor of Assessments

•Smith, J., delivered the opinion of the Court. We shall here hold that the taxing authorities and the courts which have considered this matter have erred in their interpretation of the statute formerly governing the assessment of condominiums. Thus, we shall reverse the decision of the Court of Special Appeals in an unreported opinion in this matter (No. 106, September Term, 1977, decided November 4, 1977). The assessment is for the year July 1,1974 — June 30,1975.

Thus, under Maryland Code (1957,1969 Repl. Vol., 1973 Cum. Supp.) Art. 81, § 29A the date of finality was January 1,1974. The statute in controversy is Code (1957,1973 Repl.

Vol.) Art. 21, § 11-122 (reenacted without relevant change as Code (1974) § 11-122, Real Property Article.) 1 The statute in question provides in pertinent part: “(a) Each property hereafter declared into a horizontal housing regime in the manner ³¹ hereinabove set forth shall continue its original identity and unity for the purpose of evaluating the whole for assessment purposes in the manner now prescribed by law. The total evaluation thus produced shall be distributed among the condominium units into which the property was divided and the assessment of each unit shall be in direct proportion to the share and interest of each unit as established in the master deed and the declaration of the property into the regime and an individual assessment thereby placed on each condominium unit in accordance with such proportion that such unit bears to the whole property covered by the original declaration. “(b) Each of said condominium units shall be carried on the tax records of the county ... in which it is located as a separate and distinct entity and all real estate taxes ... shall be assessed, levied, and collected against each of the said several, separate and distinct units in conformity with the percentages of ownership established by the declaration in the same manner and to the same extent as such assessments are levied and collected in the case of individual land parcels.” Appellants (the Owners) own condominium units located in a building at 5-7 Slade Avenue in Baltimore County. The Supervisor of Assessments of Baltimore County (the Assessor), appellee here, analyzed sales for a number of units in the condominium for a period of approximately six months between the date of creation of the condominium and the date of finality. From this sample he computed the value of the whole.

It is the contention of the Owners that the Assessor and the courts which have since reviewed the matter failed to give effect to the statutory language which they say requires valuation of the whole. We agree. The Owners were unsuccessful before the Maryland Tax Court, the Circuit Court for Baltimore County, and the Court of Special Appeals. Code (1957, 1975 Repl.

Vol., 1977 Cum. ³² Supp.) Art. 81, § 229 (o) provides that review by a circuit court of a decision of the tax court shall be upon the record made in the tax court, and that the latter’s order shall be affirmed “if it is not erroneous as a matter of law and if it is supported by substantial evidence appearing in the record.” The Owners rely heavily upon our decision in Supervisor v. Southgate Harbor, 279 Md. 586 , 369 A. 2d 1053 (1977). The taxpayers there contended that it was discriminatory error for the assessor to use a square foot basis of valuation of the land of the condominiums when a front foot basis was used for certain other land in the Annapolis area. They seized upon the language in Art. 21, § 11-122 (b) to the effect that “condominium units shall be carried on the tax records of the county ... as a separate and distinct entity and all real estate taxes ... shall be assessed ... and collected against each of the said ... units ... in the same manner ... as such assessments are levied and collected in the case of individual land parcels.” From this it was argued that if other waterfront land in the Annapolis area were assessed on a front foot basis, then their land must also be so assessed. Citing Thomas v. State, 277 Md. 314, 317 , 353 A. 2d 256 (1976), together with the cases referred to in Thomas , we spoke in Southgate Harbor of the hornbook rule of statutory construction to which this Court has alluded many times: In ascertaining the intention of the General Assembly, all parts of a statute are to be read together to find the intention as to any one part, and all parts are to be reconciled and harmonized if possible.

A corollary to that rule is that if there is no clear indication to the contrary, and it is reasonably possible, a statute is to be read so that no word, clause, sentence or phrase shall be rendered surplusage, superfluous, meaningless, or nugatory. We noted that the term “property” as used in § 11-122 is defined in § 11-101 (m) as “meaning] and including] the land, whether leasehold or in fee simple, the building or buildings, all improvements and structures thereon, and all easements, rights and appurtenances thereunto belonging.” We further noted that the language of a statute must be considered in its natural and ordinary signification, citing Bartell v. Bartell, 278 Md. ³³ 12, 17, 357 A. 2d 343 (1976), and St. Paul Fire & Mar. v. Ins. Comm’r, 275 Md. 130, 139 , 339 A. 2d 291 (1975). We then said: “Thus, we read the command here as one that a property brought ‘into a horizontal housing regime’ shall first be evaluated as a whole in the same manner in which it would be evaluated were it not under the Horizontal Property Act.

After this has been done the value thus established is to be divided among the various units in the proportion established by the deed. Then under subsection (b) the assessed value for each of those units is to be carried on the tax records and taxes are to be collected from their owners based on those assessments in the same way in which taxes would be collected from the owner of a property not under the Horizontal Property Act based on the existing assessment for that property. Accordingly, the phrase ‘in the same manner and to the same extent’ in subsection (b) does not mandate that any given method of valuing a property must be used for all land in a given area.” 279 Md. at 591 . It will be noted that in Southgate Harbor we were primarily concerned with interpreting the language used in § 11-122 (b).

However, what we said concerning § 11-122 (a) has relevance to this controversy. William Kerr, in Condominium — Statutory Implementation, 38 St. John’s L. Rev. 1 (1963), opens his discussion by saying, "The term ‘condominium' was practically unknown in this country until 1960 when residents of Puerto Rico sought an amendment to the National Housing Act authorizing Federal Housing Administration insurance of mortgages on individual apartments or units in multi-unit buildings.” The model statute for such ownership was promulgated by the Federal Housing Administration. See 1A P. Rohan & M. Reskin, Condominium Law & Practice, Appendix B-3 (1965). Kerr comments, at 2, in explaining the condominium concept, “The undivided ownership is in a fixed ratio, generally that which the value of the apartment bears ³⁴ to the value of the entire property at the time the condominium is established.” He further states on the subject of real estate taxes: “It is important economically that the method employed in assessing apartments will not result in a higher aggregate assessed value of the property than would result from the assessment of the property as a whole.

If the condominium is exploited to get more assessed valuation out of apartment buildings than would otherwise be obtainable, the economic advantage of condominium ownership over renting may be largely lost. “In Puerto Rico the property is in practice valued as an entirety and the assessed valuations of the apartments are arrived at by applying against the over-all valuation the percentage of each owner’s interest in the common elements. This appears to be not only simple but fair to the apartment owners and the taxpaying public. It should help to minimize any increase in the cost of operating an assessor’s office which might otherwise be caused by the creation of condominiums.” Id. at 38. The master deed necessary for the creation of a condominium at the time here pertinent was required by Art. 21, § 11-109 (d) to express the “[vjalue of the property and of each unit, and, according to these basic values, the percentage appertaining to the co-owners in the expenses of and rights in the elements held in common.” Thus, the Maryland provision did not differ markedly from 111.

Rev. Stat. 1969, ch. 30, § 304 (c), specifying that there be expressed in such a deed: “The percentage of ownership interest in the common elements allocated to each unit. Such percentages shall be computed by taking as a basis the value of each unit in relation to the value of the property as a whole, and having once been determined and set forth as herein provided, such ³⁵ percentages shall remain constant unless thereafter changed by agreement of all unit owners.” 111. Rev. Stat. ch. 30, § 310 provides that “[rjeal property taxes ... shall be assessed against and levied upon each unit and the owner’s corresponding percentage of ownership in the common elements as a tract, and not upon the property as a whole.” Accordingly, the discussion in Kane & Helms, The Illinois Condominium Property Act, 1970 U. Ill. L. F. 157 (1970), as to assessment for real estate tax purposes is of interest: “It would seem that the most practical method of assessing a condominium for real estate tax purposes would be for the local assessor to determine a value for the land and a value for all improvements as is now done for all other multi-unit rental or co-op buildings.

The total valuation for the land and improvements should then be allocated among the unit ownerships in a condominium according to each unit’s percentage interest in the common elements as stated in the declaration. Since each unit’s percentage interest in the common elements is determined on a value ratio basis, the real estate tax assessment of a condominium should logically be allocated among the unit ownerships in the same manner. However, it is not clear what should happen when certain unit owners make major improvements to their respective units which result in a substantial variation in the respective fair market values of the units compared to their respective percentages of ownership interest as stated in the declaration. It could be argued in such a situation that the local assessor should not strictly follow the percentages of ownership interest and that he should make an independent valuation of each unit ownership.

Even though the Illinois Act requires the unanimous agreement of all unit owners to change the percentages of ownership interest, it could also be argued that when such percentages become substantially at variance with ³⁶ the respective values of the units, the real burden is on the unit owners to change those percentages by amending the declaration.” Id. at 172 (footnotes omitted). We are of the view that the plain language of the statute mandates the interpretation placed upon it by the Owners. If we had any doubt on that subject,