I know someone whose house was massively under-appraised (tax appraisal) after it was constructed on their lot due to some sort of glitch or misunderstanding.
It turns out the appraisal was much lower than the actual value of the home ( maybe 2x-3x too low, so say 500K vs. 1.5M), based on neighboring properties and attributes of the house. From what I understand, there was a house on the lot in the past that no longer existed at the time the lot was purchased. That house was much older and smaller than the house that was constructed, but the appraisal and whatever other documentation exists seems to suggest whoever did the appraisal thought the previous structure was the one being built, or something like that.
I don't know much about real estate, but my first thought is that they've essentially had much lower property tax than they otherwise would have for years now. So my question is - if the local government knew they had under-appraised the property, would they try to hold the homeowner liable for the lost tax burden? Even though it was their screw-up? Are there laws regarding this type of thing?
And are there other implications this could have, good or bad?