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Author Archives: Finney Law Firm

How the snail darter could undermine Obamacare

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At the Volokh Conspiracy, Jonathan Adler draws a parallel between the activist litigation challenge to the Tellico Dam project, Tennessee Valley Authority v. Hill, insisting on a strict reading of the Endangered Species Act, and the activist litigation challenge to Obamacare, King v. Burwell, insisting on a strict reading of the ACA’s provision for state exchanges.

Adler points to the TVA decision to suggest that Court will apply a strict reading to Obamacare and undo the federal exchange that has taken the place of state exchanges in states that have not created their own. Read Adler’s analysis here.

Public auction price can be true value (Cuyahoga Court of Appeals Ruling upholds 98.5% property value reduction)

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In NDHMD, Inc. v. Cuyahoga County Board of Revision, et al., 2015-Ohio-174, the Eighth District Court of Appeals reviewed the finding by the Cuyahoga County Common Pleas Court that the surplus land auction conducted by the Cuyahoga County Auditor constituted an arm’s length transaction.

In 2009, the County Treasurer foreclosed on a property for delinquent taxes. Two attempts at auction failed, resulting in the property being turned over to the state. In March, 2010, the County Auditor placed the property for sale as part of a surplus land auction. The auction was conducted on March 24. One week later (but prior to the filing of the executed deed) the winning bidder (at $1,500) filed a challenge to the property valuation with the Board of Revision.

At the Board of Revision, the value was reduced from $963,300 to $444,720. The owner appealed that decision to the Cuyahoga County Court of Common Pleas, which upheld the BOR decision. The owner then appealed to the Court of Appeals, which ruled that because the challenge to the BOR was filed prior to the recording of the deed, the owner did not have standing to bring the challenge and dismissed the complaint (returning the value back to $963,300).

During the same triennial, the owner filed a new challenge for tax year 2011. Having satisfied the jurisdictional requirement of recorded ownership, the owner now faced the statutory prohibition against bringing two challenges in the same triennial absent an exception (one of which is an intervening arm’s length sale).

The Auditor argued that the surplus auction sale is not an arm’s length transaction.

Relying on the Ohio Supreme Court ruling in Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, Slip Opinion No.2014–Ohio–4723, the Cuyahoga Court of Appeals found that, while an auction sales price is presumably not a voluntary, arm’s length transaction, this presumption can be rebutted.

Supporting the finding that the transaction was arm’s length was the fact that the county auditor had not been compelled to auction the property; that two prior auctions had failed, resulting in the property being transferred to the state; that the auction had been advertised; and that there were multiple bidders.

The finding that the auction constituted an arm’s length transaction was crucial for two reasons in this case. First, because NDHMD had filed a prior challenge to the value of the property (that had been dismissed on jurisdictional grounds), the sale provided an opportunity to bring the challenge at all. Second, as an arm’s length transaction, under the applicable law (since amended) the County Auditor was required to use the sale price as the true value of the property.

The final result is that a property that the County Auditor had valued at $963,300.00 was given a new value of $1,500.00, at least for the remainder of that triennial (in the most recent triennial, 2012, the value was adjusted to $170,100).

Notwithstanding the results in this case, the Court was clear that the general presumption remains that an auction price is not the true value for tax purposes.

Have a question about the County Auditor and Board of Revision Valuation Process? Contact Anna Ausman at (513) 943-6651.

 

Getting a Mortgage after filing for bankruptcy or losing your home in foreclosure?

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How long will it be until I can buy a house again? This is one of the first questions many people ask when filing for bankruptcy and/or after losing a house to foreclosure. The common misconception, often perpetuated by creditors, is that you will never be able to buy another house or that you will not be able to for ten years. This is just not true. New programs allow debtors to purchase a home much faster than they usually think is possible.

The mandatory waiting periods to apply for mortgages backed by Fannie Mae, United States Department of Agriculture (“USDA”), or the Federal Housing Administration (“FHA”) is between one and four years depending on your situation and the type of loan you apply for.

Conventional loans backed by Fannie Mae backed loans have a longer waiting period than those backed by the FHA. Individuals who receive a discharge in a Chapter 7 bankruptcy have to wait four years from their discharge date. Those who filed Chapter 13 bankruptcy have a two year waiting period from the date of discharge. If your Chapter 13 bankruptcy was dismissed you must wait four years from the date of dismissal.

USDA loans carry a three year waiting period for a Chapter 7 discharge. During a Chapter 13, you can receive a USDA loan as quickly as 12 months after filing. You must have both court approval and evidence 12 consecutive Chapter 13 Plan payments. You are also eligible for a USDA loan one year after your Chapter 13 discharge.

The FHA’s new programs may offer the best possible solution for those who have filed for bankruptcy or lost their home to foreclosure. The FHA’s Back to Work – Extenuating Circumstances program allows borrowers to qualify for a new FHA loan just one year after a foreclosure, short sale, deed in lieu of foreclosure, or bankruptcy. This program began on August 15, 2013 and is set to expire September 30, 2016. Not everybody will qualify for this new program but it may be very beneficial for many borrowers.
Individuals can also receive an FHA loan during a Chapter 13 bankruptcy as long as that individual has made 12 months of satisfactory Chapter 13 plan payments and has the Court’s approval.

Your credit score will affect the rates you receive on post-bankruptcy mortgage loans. Your credit score will be low immediately after you file but should consistently rise as you maintain your monthly payments and do not have any further delinquent payments.

As always, please discuss any and all programs with your bankruptcy attorney before deciding on a certain course of action.

Specific performance in real estate contracts

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Real EstateA recent Enquirer article highlighted Specific Performance as a remedy in real estate contracts. Specific Performance, as opposed to money damages, means that the judge will order the parties to a
contract to complete the contract. This is a rarely used remedy. In the case covered by the Enquirer, the seller is seeking an order from the Judge to force the buyers to go through with the sale and purchase his property.

Finney Law Firm recently represented buyers in seeking specific performance after the woman they contracted to purchase a home from informed the buyers that the she would not go through with the sale.

Our clients were beside themselves. They had hunted throughout the area for the perfect home and finally found it, negotiated and executed a contract for the home, and sold their home in reliance on that contract. Their dreams of settling into their new home were dashed in an instant.

The seller had gotten cold feet and found an attorney who suggested that there never was a valid contract because she hadn’t returned the accepted contract until a few hours after the time for acceptance set forth in the contract.

After reviewing the case law we determined that the contract was a valid notwithstanding the seller’s argument.

Explaining the costs and risks of litigation, we worked with our clients to weigh their options. They could walk away from the purchase and begin the house-hunt anew; they could offer more money in the hopes of warming the seller’s cold feet; or they could bring suit for specific performance on the contract. As with almost every case, litigation was offered as a last resort.

Ultimately, believing that the seller would not negotiate and they could not find a comparable home, our clients decided to sue to enforce the contract.

It took thirteen months to get to summary judgment, but eventually we prevailed and Judge Nadel ordered specific performance of the contract (for the first time in his judicial career).

After Judge Nadel ordered specific performance we were able to negotiate a settlement payment for damages and attorney fees and finally close on the sale. We’ve never seen two people happier to sign mortgage documents.

Let us know how we can make a difference for you and your real estate needs.

First District Court of Appeals takes up the “Firefighter’s Rule”  

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In 2008 two firefighters perished while answering an emergency call to a house fire in Colerain Township.

Investigators determined the source of the fire was a fan used in a basement orchid cultivation room. In another part of the basement was a marijuana cultivation room. The family of one of the firefighters brought a wrongful death suit against the homeowner alleging that the orchids were being used as a subterfuge to camouflage the illegal marijuana operation. The suit also included claims against the manufacturers of the radio and other equipment used by the firefighters.

In Ohio, property owners are generally immune from liability for such suits. The “Firefighter’s Rule” is a judicial rule that provides a general immunity to property owners from liability to injuries or death to firefighters incurred in the call of duty.

Imagine if a property owner was afraid to call 911 to report a fire for fear of being sued if the firefighters were injured. As a society, we want to encourage people to report fires and utilize our emergency services to combat fire. Indeed, we spend a great deal of money to provide those services and make sure that firefighters are prepared to fight fires. We teach our children to dial 911.

Firefighting is a dangerous job; that danger is accounted for via financial compensation and benefits, as well as life insurance for the firefighter’s family.

The Firefighter’s Rule provides four exceptions to the broad immunity for property owners: (1) where the injury resulted from the owner’s willful or wanton misconduct or affirmative negligent act; (2) where the injury is a result of a hidden trap on the premises; (3) where the injury resulted from the owner’s violation of a duty imposed by law enacted for the benefit of firefighters; or (4) where the owner knew of the firefighter’s presence on the premises but failed to warn the firefighter of a known, hidden danger on the premises. Hack v. Gillespie, 74 Ohio St.3d 362, 365, 658 N.E.2d 1046, 1049 (Ohio, 1996) quoting Scheurer v. Trustees of Open Bible Church (1963), 175 Ohio St. 163, 23 O.O.2d 453, 192 N.E.2d 38.

In this case, the firefighter’s family alleged that the marijuana growing constituted willful or wanton misconduct, but failed to establish (a) that cultivating marijuana is per se willful or wanton conduct or (b) that the marijuana cultivation caused the firefighter’s death.

In reviewing the facts of the case and the above exceptions to the Firefighter’s Rule, the trial court found that none of the exceptions applied and granted summary judgment to the homeowners.

While the trial court’s decision may seem like harsh justice, the Firefighter’s Rule represents a public policy choice that recognizes that Firefighters have dangerous jobs, and as such, the cost of that risk is spread across the entire community and in effect “prepaid” in the form of salaries and benefits, rather than assessed against individual property owners via lawsuits after the fact.

The case is currently before the Hamilton County Court of Appeals, Case No. C 1400274.

 

 

Residential Landlords and Tenants – The Security Deposit

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The residential landlord-tenant relationship is among the most regulated areas of commerce in Ohio. From remedies for breach by both parties to statutory provisions for making rent payments into an escrow account, it is crucial for both residential landlords and tenants to understand the legal implications of each phase of the landlord-tenant relationship.

The attorneys of Finney Law Firm have represented both landlords and tenants in disputes under Ohio’s Landlord Tenant Law (O.R.C. § 5321).

RentalWhile there is a common belief that the Landlord Tenant Law tilts in favor of the tenant and against the landlord, to the extent that this is true, the “tilt” reflects a policy choice that recognizes the unequal bargaining power that generally exists between landlords and tenants.

Recently, we represented a tenant who was having difficulty recovering his security deposit. Ohio law requires the landlord return the deposit (or an itemized list of deductions for damages made by the tenant or use for payment of rent) within thirty days of the termination of the leasehold. If the landlord fails to refund the security deposit (or provide the itemized list) within the thirty-day period, the tenant is entitled to double damages and reasonable attorney fees.

However, before the tenant can recover he must have provided the landlord with a forwarding address. Additionally, tenants should consider whether they caused damages to the home beyond “normal wear and tear.” If you left holes in the walls, damaged the appliances, or have unpaid rent, the security deposit may not be enough to cover those damages – leaving you exposed to a claim by the landlord for those repairs.

In our case, our client had fully complied with his lease, had proof of payment for every month of his tenancy (four years!), and proof that he had provided a forwarding address.

The security deposit in this case was $725.00. Perhaps a small amount to some; but for our client, a new homeowner, every dollar counts. Utilizing Ohio’s landlord tenant law, we were able to secure a judgment of $1,450.00 for our client. The only question left for the judge was the amount of attorney fees to award. We negotiated a full settlement for $4,500.00. Meaning the landlord’s failure to comply with the statute cost him an additional $3,775 (plus his own attorney fees) and our client was made whole without incurring any legal expenses.

Not every case is as straightforward as this client’s. Whether you are a landlord or a tenant, Finney Law Firm can help you understand your responsibilities and secure your rights under Ohio’s Landlord Tenant Law. Read about potential landlord liability for the safety of tenants’ guests here.

Changes to Property Valuation Law recognize changes in commercial finance

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In the past decade, businesses, particularly restaurant chains have been utilizing real estate sale-leasebacks as a financing tool. The sale-leaseback typically involves an above market purchase price followed by an above market lease; providing current cash to the seller/lessee and an income stream for the buyer/lessor. Federal tax law encourages this system with favorable tax treatment.

However, this system tends to clash with Ohio’s property valuation scheme mandating that an arm’s-length purchase price was the “market value” for property tax purposes. Thus, much of the federal tax benefit of the sale-leaseback was eaten up by the increased property taxes.

Two recent changes to Ohio law recognize the nature of sale-leasebacks; allowing businesses the carrot of the federal tax advantages without the stick associated with Ohio’s prior tax law.

First, the auditor is now required to determine the value of real property “as if unencumbered,” meaning that the value of the leaseback portion of the sale-leaseback is to be disregarded in determining the value of the real estate (i.e., to the extent the price paid is elevated by consideration of the income stream).

Second, purchase price is no longer dispositive of market value, underscoring the necessity of recognizing the hybrid nature of the sale-leaseback and allowing a proper allocation between the financing tool and the real estate purchase.

Finney Law Firm’s property valuation team is versed in these changes, assisting our clients achieve fair values for properties before local Boards of Revision.

 

Disinheriting in Ohio – it’s not as simple as you may think

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A recent First District Court of Appeals decision highlights the importance of a thorough and properly executed will – particularly if you are seeking to disinherit a child or grandchild.

In Chambers v. Davis, C-130645, the decedent’s will specified that her daughter and grandson were to receive nothing from the estate, and bequeathed specified items to a niece.  The execution of the will was witnessed by the niece and one other witness.  There was no residuary clause directing the disposal of any remaining assets.

In general, Ohio Revised Code Section 2107.15 invalidates bequests to a person who is one of only two witnesses to the execution of the will.  Based on this section, the Probate Court declared the bequests to the niece void.  Because there was no residuary clause directing the gift otherwise, the specific property left to the niece was then distributed as if the decedent died without a will.

Under the statute of descent and distribution, the property that had been left to the niece passed to the disinherited daughter contrary to the desire of the decedent.

The court reported that Ohio probate law requires more than a simple statement directing that the disinherited party receive nothing.  To effectuate a disinheritance, you must properly disinherit the applicable party, and bequeath your assets to devisees other than the disinherited party.

To make sure your wishes are carried out, make sure your will contains a residuary clause and is properly witnessed.

How can Chapter 13 Bankruptcy help me keep my home?

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One of the most common questions people ask when considering filing for bankruptcy is whether or not they can keep their house. This makes sense as a house is often the most valuable asset you own and the place you live and raise your family. Many people fall behind on their payments due to an unexpected income reduction due to a job loss or illness. Later, they find a new job and/or their financial situation changes and they need a way to catch up their house payments to stop the bank from foreclosing against their property. Chapter 13 Bankruptcy offers homeowners a way to protect their homes and stop foreclosure lawsuits in their tracks.

When you file Chapter 13 Bankruptcy you receive the protection of the automatic stay. The automatic stops any creditor’s attempts to begin, continue, or complete a foreclosure lawsuit in state court. The automatic stay goes into place immediately after you file and will stop a court ordered sheriff’s sale from proceeding. The automatic stay allows you to breathe easier knowing that your house will not be lost on the courthouse steps.

Chapter 13 offers many benefits that allow you use your income to repay some or all of your debt. You may also have the benefit of paying your unsecured creditors back a reduced amount that is based on your income. Your bankruptcy attorney will propose a Chapter 13 Plan that allows you to pay back your past-due mortgage payments and penalties over the course of 36 to 60 months depending on your income. You are still responsible for making your standard monthly mortgage payment in addition to your new additional Plan payment, but your back payments are spread out over the course of the Plan to make them affordable.

Chapter 13 can be beneficial for you if you have a 2nd mortgage that is not secured against your property because your house is worth less than the balance of your first mortgage. An example is if your 1st mortgage is $100,000 and you have a 2nd mortgage or home equity line of credit for $20,000, and your house is only worth $85,000, you may be able to ‘strip’ off the 2nd mortgage and only pay back a percentage of the amount owed on the 2nd mortgage. At the end of your Chapter 13 your 2nd mortgage is eliminated and you will only owe the balance on your 1st mortgage. Please consult your bankruptcy attorney to see if you would qualify.

If you successfully complete your Chapter 13 by making all of your plan payments, you debt will be discharged and your mortgage payments will be deemed current. From this time on you can continue to make your normal monthly payments until your mortgage is paid off. You will also have your other eligible debts discharged as well. Chapter 13 is a great vehicle for eligible homeowners to use to save their homes and reduce their debt. Contact Finney Law Firm today for a free consultation to see if Chapter 13 bankruptcy is the right option for you.

Will Ohio’s Supreme Court reliberalize Ohio’s Open Meetings Act?

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Once considered a model for open and accountable government, Ohio’s Open Meetings Act (R.C. § 121.22, et seq.) was intended to be “liberally construed to require public officials to take official action and to conduct all deliberations upon official business only in open meetings unless the subject matter is specifically excepted by law.”

What appears to be pretty straightforward language, telling the courts to read the statute in favor of open government, the courts have slowly whittled away at what had been a model law.

But there is hope. Adam Stewart v. Board of Education of Lockland School District challenges a school board’s decision to hold an employee disciplinary hearing in executive session (non-public), even though the employee himself demanded a public hearing. The trial court and court of appeals relied on a 1980 Ohio Supreme Court case that interpreted the law to allow the School Board to hold a non-public hearing despite the employee’s demand.  So where is the hope? The Ohio Supreme Court has agreed to hear the appeal of the decision in the Stewart case. Stewart will have the opportunity to ask the Court to revisit its 1980 decision and re-liberalize Ohio’s Open Meeting Act.

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