Recently, California Real Estate Commissioner, Jeff Davi, observed that a down market brings out the scammers. He is right. We have already, in the past months, become familiar with "foreclosure rescue" scams, "short sale facilitation" scams, and "loan modification" scams. Now, a recent memo from the California Association of Realtors® alerts us to "property tax reduction" scams. These are private companies -- often posing as governmental agencies -- who will charge property owners for filing a tax assessment appeal. It is enough of a problem that the Los Angeles County Tax Assessor has posted a warning about it on his web site.

The Tax Assessor’s site reads, in part, as follows: "Various private companies are sending mailings to property owners offering their services to pursue a reduction in their property taxes. These companies may charge hundreds of dollars to file for a reduction in value on behalf of the property owner. Some companies are even imposing late fees if the application is received after an arbitrary deadline. Be aware that solicitations from private companies offering to pursue a reduction in property taxes must clearly indicate that they are NOT a government agency and that their services are NOT approved or endorsed by any government agency."

There is nothing illegal about charging for the service of filing an assessment appeal. But it must be made clear that the company offering the service is not a government agency and that their services are not approved by any government agency. Even if proper disclosure is made, though, it is not clear why anyone would pay for such a service.

The Los Angeles County Tax Assessor notes that his agency, like many of his counterparts, initiates review processes on its own. Last year, the Los Angeles County Assessor’s office "initiated a review of single-family residences and condos purchased between July 1, 2004 and June 30, 2007. About 318,000 homes were reviewed, resulting in substantial savings for 128,000 homeowners." In 2009, the review will be expanded to some 500,000 single family homes and condos purchased between July, 2003 and June,.2008. The office notes, "There is no reason to pay for a review that will be done for free."

"All 500,000 owners whose homes are reviewed will receive a letter by the end of June notifying them of the results. Owners who disagree with the results or were not included in the review, may file an application through December 31." There is no charge for this.

Of course, tax assessments and appeal/review procedures differ from state to state. Nonetheless, we suspect that the fee-for-appeal services bear a similarity throughout the country. Certainly, anyone who wants to challenge their tax assessment should become familiar with the local process before shelling out money to some company that wants to charge for making an appeal.

In California, it can be a little tricky to determine whether your tax assessment is too high. People tend to forget that the assessment is based on a value determined at the first of the year; and then the bill can stretch into the following year. For example, Californians have until April, 2009 to pay the second half of their current property tax bill. That’s the second half of a fiscal year that started July 1, 2008. And the bill was based on an assessment of value as of January 1, 2008. So there is, today, more than a year’s lag between the assessed value and today’s market value. Sure, market values have decreased since last January, but that’s not relevant for the current bill.

When an assessment is challenged, it’s all about the "comps" – sales of comparable properties. And the comps in question may be from a number of months ago. This kind of information is often inaccessible, or difficult to come by for an ordinary citizen. But, do you need to pay a company a substantial fee to do the work? Probably not, if you have a local Realtor® who specializes in your neighborhood or area. He or she would probably be happy to help you put together the information. At no charge.