Many people have become familiar with the concept of “reasonable accommodation” under the Americans with Disabilities Act (“ADA”). Basically, the law requires employers to “accommodate” the needs of a disabled employee if it can be done reasonably, and without causing an “undue hardship” to the employer.

Less well-known is the employer’s duty to accommodate the religious beliefs of its employees. This duty arises under Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of such characteristics as race, color, sex, and religion.

The classic example of a religious accommodation case under Title VII is whether an employer must excuse an employee from working on their Sabbath day if their religion prohibits it. As in the case of the ADA, the law requires employers covered by the Act to reasonably accommodate the sincerely held religious beliefs of an employee if it can be done without causing an undue hardship for the employer.

But what constitutes an “undue hardship“? If providing an accommodation would cause some inconvenience, difficulty, or expense for an employer, how do we determine whether it is significant enough to be considered an “undue” hardship under the law? How much hardship is “too much”?

Recently, in a case called Groff v. DeJoy, the United States Supreme Court provided some guidance on this question. In doing so, it significantly increased the burden of proof employers must meet in order to show that a proposed accommodation of an employee’s beliefs would impose upon it an “undue hardship.”

Previously, the Court had suggested that any hardship that was more than “de minimis“ – meaning, “barely noticeable” – was enough to constitute an “undue” hardship in the context of a reasonable accommodation. This was a pretty low burden for employers to meet. In Groff, however, the Court held that the employer must meet a significantly higher burden. Specifically, employers must be able to show that a proposed accommodation would impose a burden that is “substantial,” such as by causing the employer to incur “substantially increased costs,” if it wanted to deny an accommodation on the basis of undue hardship. If it cannot show a “substantial“ hardship, then the employer must ordinarily accommodate the beliefs of the employee.

While the exact contours of this definition are still somewhat unclear, the Court is certainly saying an employer must now show much more than a “minimal” hardship in order to legally deny a requested accommodation of an employee’s religious beliefs.

Both employers and employees should be mindful of this new standard, and should seek competent employment counsel for guidance when these issues arise.

Although there is a lot of conversation and worry regarding the issue, estate and gift taxes do not affect most households.

In Ohio, there is currently no estate taxes for state taxation purposes.  The Ohio estate tax was repealed effective January 1, 2013.

There is a federal estate and gift tax that is 40% on assets subject to the tax; however, there is a large exemption that covers the average household.

The estate and gift tax exemption is the amount of money that can be transferred without having to pay estate taxes.  For 2023, the estate and gift tax exemption is $12.92 million individual, and $25.84 million for a married couple.  There will likely be a substantial reduction at the end of 2025. Unless new legislation is passed, the estate and gift tax exemption is scheduled to sunset back to the 2017 exemption amount (indexed to inflation), and will be approximately $7 million per individual, and $14 million for a married couple, depending on inflation over the next two years.

If your wealth exceeds your available estate and gift tax exemption, there is an opportunity to make gifts using the higher exemption amount prior to the sunset.  For individuals or couples close to the exemption amount after the sunset, it makes sense to explore options in order to try to avoid making the federal government a beneficiary of your estate.

As real estate attorneys and licensed Ohio title insurance agents, we must constantly be on the lookout for the latest scheme to defraud buyers, sellers, lenders and others in real estate transactions.  We have already written about ever-persistent attempts at wire fraud.  (This one is never going away, we fear.)  But yet another fraud that is borne from the bountiful information available on and the anonymity of the internet is on the rise: Seller impersonation schemes.

According to one of our underwriters, First American Title Insurance, Seller impersonation schemes have increased 73% in 2023.  We personally have seen this attempted — but caught — to two separate commercial Realtor clients.

Here’s how the scam works, according to First American:

  1. Scammers search public records to identify real estate that is free of a mortgage or other liens. These often include vacant lots or rental properties. The identity of the landowner is also obtained through these public records searches.
  2. Scammers pose as property owners and contact a real estate agent to list the property for sale. All communications are through email and other electronic means and not in person.
  3. The listing price of the property is typically set below the current market value to generate immediate interest in the property.
  4. When an offer comes in, the scammer quickly accepts it, with a preference for cash sales.
  5. The title company or closing attorney transfers the closing proceeds to the scammer. The fraud is typically not discovered until the time of recording of transferring documents with the applicable county.

The natural reaction of a Realtor or buyer is: “that it’s the job of the closing attorney or title agent to ascertain the true identity of the seller,” but in the cases of limited liability companies and corporations, there typically is no public information at all (including the Secretary of State’s records), to ascertain the true owners and officers of these entities.  In the case of individual sellers, if they are shipping to Ohio a notarized deed signed out of state, it is possible that no one even asked for their I.D.

Thus, not only is it not negligence on the part of the attorney or title agent to fully ferret out the “authority” question, it’s something that’s not even possible in many instances.  In short, it’s one of the inherent risks in real estate transactions.

Thus — and it sounds self-serving to say this, but it’s true — one of the only sure ways a buyer can protect himself against his scam is to purchase an Owner’s Policy of Title Insurance at the time of the acquisition.  (And, no, simply buying coverage for the lender is simply insufficient — it is in fact NO COVERAGE AT ALL for the buyer).  In the above scenario, a non-fraudulent buyer who purchases an Owner’s Policy is covered if they fall victim to this scam.

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We are tremendously proud of the title presence we have in Ohio and Kentucky through Ivy Pointe Title.  Our residential division headed by Rick Turner (513.943.5660), and our commercial division headed by Eli Krafte-Jacobs (513.797.2853) are — as our tag line says — “accurate and on time, every time.”  They are here to protect you from these kinds of scams and schemes.  Let us know how we can help you safely close your next transaction.

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Our own Chris Finney will be speaking on a legal panel — Legal Issues Forum – Avoiding Legal Nightmares — at the Ohio Association of Realtors convention to be held in Cincinnati on Wednesday, September 13, 2023 at the Hyatt Regency in Cincinnati.

The planned topics for the program — in addition to panel discussion and Q & A from the Realtors in attendance — include (a) Avoiding Scams, (b) Taxes can be Taxing, and (c) Disclosure issues.  Mr. Finney will be teaching with Cincinnati attorneys Chip Brigham and Roccina Niehaus.

For both commercial properties as well as single family homes, owners have flooded us with inquiries about their notices from County Auditors in Hamilton, Butler, Clermont and Montgomery Counties as to new property valuations.  We can’t imagine the number of calls the County Auditors must be getting.

A few guideposts for you:

  • First, read this important blog entry that essentially tells you that the first 30% of the valuation increases in southwest Ohio will not result in an increase (or at least not a significant increase) in your actual tax bill.
  • Second, Auditor’s property valuation is not some magical number — for the January 2024 tax bill, it is to be the fair market value as of January 1, 2023.  Thus, if your property was worth more then than in the prior valuation period, you should expect a valuation increase — perhaps one even above average for all properties in the marketplace.  Some clients seem to think that since valuations were less than what they thought the property was actually worth in the past, the Auditor’s valuation process is supposed to yield a lower number.  Well, it’s not.
  • Third, if your property was purchased since the last triennial valuation date (January 1, 2020), the sale price likely will be reflected in the valuation.  As this blog entry addresses, a recent arm’s length sale essentially — and largely irrebuttably — IS the value by law.
  • Fourth, if your property falls in one of the gazelle categories of properties whose values have leaped ahead of the market — single family homes, warehouse and industrial properties, and apartment buildings — you should both celebrate your good fortune and expect a bigger tax bill as a result.
  • Fifth, on the flip side, if you are a victim of the weak office market or the mall or downtown retail market weaknesses, you should should see some tax relief in the January tax bills.
  • Sixth, gas prices are up, grocery prices are up, car prices are up.  You have not had a valuation increase in three years.  Wouldn’t you expect your tax bill would rise some, at least modestly?
  • Seventh, for both buyers and sellers in today’s market, the looming valuation increases create both a possible problem and an opportunity as to contractual tax prorations for sales between now and January when the new — very different — valuations come out.  Read here for more detail on this.
  • Eighth, remember, the Board of Revision process to challenge property valuations is a two-way street.  If your property truly is undervalued, you risk an increase.  Cautiously keep in mind the upward dynamics of the real estate market over the past three years.  You could wind up with an increased valuation as opposed to the sought reduction if you overplay your hand.
  • Finally, I had a client recently ask me “why would single family home valuations be increasing in Cincinnati?” and I swear he must live under a rock.  I responded, “haven’t you seen newspaper articles explaining that Cincinnati has had one of the hottest housing markets in the nation since the start of COVID?”  The response, “ummm, no.”  It is surprising since we deal with this every day, and to some extent it is just denial of the obvious fact that we are blessed in Cincinnati with a fantastic housing and commercial real estate market.  Enjoy it while it lasts!

If, after reading this and the prior blog entry on the new valuations coming out in January, you still have tax valuation questions, please contact me (513.943.6655) or another member of our tax team.  We are glad to help.

In the category of “you learn something new all the time,” this week I learned something new about Remote Online Notaries (“RONs”) used for real estate closings.

The scenario was that a seller was unaware until he reached the closing table that the signature of his wife — married since the house was acquired — was needed on the deed in order to release her rights of dower.  Unfortunately, the wife was (a) a non-citizen of the USA, (b) she had a green card and had resided in the US for years, and (c) was physically located in Germany as of the time of the closing.

In the days before RONs, the only option was (a) email the deed to the signer and have them print it out in the remote jurisdiction (usually on funny-sized paper), (b) make an appointment at the U.S. Embassy for an overseas equivalent of a notary (or acknowledgement) (typically you can’t just drop in unannounced), (c) wait for that  appointment and (d) Fed Ex the deed back to Cincinnati.

The wife was able to get a quick appointment at the U.S. Embassy and would be able to get a deed back to Cincinnati about five days after the initial closing (even including an intervening weekend).  Unfortunately, the buyer just could not wait the five days and was throwing a fit, demanding thousands of dollars of concessions for (what we saw as) a relatively short delay.

So, RON to the rescue, right?

Not so fast.  The title underwriter’s (the guys who ultimately make the call as to whether we can close or not) first reaction was “so long as she is a US citizen, we can use a RON closing.”  I replied, “well no, in addition to being out of the country she is not a US citizen.”

Digging deeper (which we appreciate our title underwriter doing), it turns out that the “US citizen” thing is not a bright line test.  Rather, RON closings use sophisticated Knowledge-based Authentication (“KBA”).  These are whose odd security questions that pull and query minute details from your past (many times when I am asked a KBA question, I don’t even know the answer, even though the question is about something I should know!).  Well, as it turns out, those KBA questions are primarily pulled from information contained deep in your credit report, and — if your contacts to the US and its credit-reporting system ae sufficiently robust — RONs can possibly work for non-US citizens, including those who at the time are overseas.  (You actually find out “if it works” during the execution of a RON closing.)

So, the closing was saved — RON got it done within hours of the first phone call.  And I learned more about RON, citizenship and what “KBA” is.

#MakingADifference

 

Many employers require their employees to sign noncompete agreements as a condition of employment. These agreements purport to prohibit employees from working for a competitor for a period of time after their employment ends, usually a year.

These agreements are enforceable in most states, with certain restrictions. They have to be reasonable in time and scope, and they cannot impose an undue hardship on the employee, or be injurious to the public interest.

In recent years, however, many states have passed laws to place significant limits on noncompete agreements, and even to outlaw them altogether. In Ohio, Kentucky, and Indiana, however, these agreements are still legal and enforceable in most instances.

Now, noncompete agreements are under attack on a national level. The Federal Trade Commission has proposed a rule that would ban noncompetes nationwide, except in very limited circumstances. The FTC is currently receiving public comment on its proposed rule, and a final rule is expected to be issued early next year.

The National Labor Relations Board has also gotten into the act. This Board, which regulates employer-employee relations and the rights of workers to act in concert with one another, recently issued a ruling banning confidentiality clauses and non-disparagement clauses in  employees’ severance agreements. Recently, the general counsel (lead attorney) of the NLRB issued a memorandum expressing the view that noncompete agreements violate the legal right of workers to engage in “concerted activity” about their working conditions, because they effectively prevent workers from resigning, or threatening to resign, over unsatisfactory conditions in the workplace. Although the general counsel’s memorandum does not have the force of law, it signifies that the Board may make that ruling in the near future.

As of now, noncompete agreements are still often enforceable in Ohio and surrounding states. That could be changing very soon, however. Stay tuned!

As we reported here, Finney Law Firm participated in a successful class action to force the City of Cincinnati to stop collecting alarm registration fees and to refund illegally-collected fees for years past.

Those refund checks were dropped in the mail over the past few weeks and the final batch is to be mailed this week.

In the event that you did not properly receive a refund check due to you, contact the City’s False Alarm Reduction Unit at (513) 352-1272.

If you continue to have problems, do let Chris Finney (513.943.6655) know.

Our phones are ringing and email boxes are filling up at Finney Law Firm about notices from County Auditors throughout the state of Ohio about dramatic property tax valuation increases coming with the January 2024 tax bills.

Read this shocking paragraph from an article from Paula Christian at WCPO (Channel 9):

The [Ohio Department of Taxation] recommended a 43% increase in property values in Clermont County and 42% in Butler County. The updates will be reflected in 2024 tax bills, which are sent out early next year and will last for three years until reappraisal.

So, the natural reaction from property owners receiving such notices is that their tax bill (i.e., the amount of taxes they are obligated to pay) will rise a similar amount.  This is not true — not by a long shot — given the intricacies of Ohio property taxation.

How could that be?  We explain:

  • First, the County Auditors throughout Ohio are charged by statute with re-valuing properties in their County every three years (a “Triennial”).  The statutory duty is to value each parcel at its fair market value (in the case of new tax valuations coming in January of next year, that is a January 1, 2023 valuation).
  • In southwest Ohio, January of 2024 will see new valuations for each of Hamilton, Butler, Clermont and Montgomery Counties.  Warren County will have new valuations in January of 2025.
  • It is not the Auditor’s job to show mercy, or to “shade” the fact that the real estate market has changed dramatically since the prior 3-year valuation date (in the case of Counties having new valuation in January of 2024, that would be a January 1, 2020 valuation as a comparison).  They are obligated by statute to value properties fairly (i.e., what a reasonable buyer would pay a reasonable seller for that property).
  • Your property taxes are, very roughly, a result of this formula:

(Tax Valuation * Tax rate) – certain credits = tax bill.

  • Thus, it is natural to assume that to the same degree your valuation rises, so does your tax bill.
  • However, it is much more complicated than that.
    • About 10% of your tax bill is inside millage which does stay at the same tax rate (i.e., it does generate more revenue in direct proportion to your increasing valuation).  But that is a very small part of your tax bill.
    • About 90% of your tax bill is outside millage, which is a result of tax levies that year after year generate a fixed amount of revenue for the levy recipients (depending on the district, schools are about 55-70% of your tax bill).  For example, a specific levy passed by the voters years ago may generate a fixed $40,000,000 in taxes each year (regardless of inflation or valuation increases).
    • That means that for the great majority of your Ohio tax bill, as the valuations increase, the rate rolls back, generating the roughly same revenue for the levy recipient overall each and every year.
    • Therefore, if your property has a lower-than-average valuation increase, the outside millage portion of your tax bill will actually decrease.  To the extent that your increase is merely average for that taxing district, the outside millage portion stays the same.  And to the extent that your valuation increase is more than average, the outside millage portion of your taxes will rise, but only to the extent of that excess increase.
    • Remember the last school levy campaign where the pro-levy advocates told you that “taxes don’t keep pace with inflation”?  Well, as a result of the formula set forth above, that’s actually true.

Do remember that when you get a changed value, that’s the first change in three years, so the increase reflects that entire Triennial period (i.e., 8% per year compounded would exceed a 25% valuation increase over three years).

Also keep in mind that certain categories of real estate have in fact seen dramatic changes since three years ago.  Indeed, our region has seen much greater-than-average appreciation than the rest of the nation for single family homes: “Cincinnati has seen the highest percentage of home-sale price increases in the country over the last year.”    As a result, our view is that property values in certain categories of real estate have skyrocketed in the past few years, especially single family residential and apartments, as well as warehouse and industrial properties.  Office properties, especially downtown, may have seen a decrease in valuation.  County Auditors simply are required by state law — as overseen by the State Department of Taxation — to recognize the full measure of those increases in their triennial valuation work. They have no choice.

Chicken Little cries from taxpayers that “the sky is falling” as a result of these properly-recognized valuation hikes are vastly over-stated.  For most taxpayers, the increase in their tax actually paid will be less than the inflation over that Triennial cycle.

By the way, two of the primary bases we see clients try to raise against the valuation increases of their properties are simply not valid in Ohio:

  • “My property could not have risen in value by this amount.”  While that statement well could be true, the Auditor may have undervalued your property in prior years, resulting in an above-market hike.
  • “The Auditor has valued four similar houses on my street lower than my valuation.”  As entirely unfair as it may seem, the value the Auditor places on another property — as similar in location, size, age and other characteristics as it may be — is irrelevant as a matter of law.  What is relevant are sales of similar properties (which is different than the Auditor’s opinion as to values).

This all leads to a significant caution for those desiring to charge into the Board of Revision and challenge the value of their property: The Board can raise your property value even more if the then-current valuation does not reflect market.  Proceed with great caution.

If you have questions about your new tax valuation, please call the professionals at the Finney Law Firm.  We can answer your questions as well as challenge any valuation that exceeds fair market value of your property.  Contact Jessica Gibson (513.943.5677) or Chris Finney (513.943.6655) to help with that assignment.

 

Reporter Paula Christian of WCPO features here the racketeering lawsuit recently certified by Federal District Court Judge Douglas Cole as a class action.  The case is against a bevy of defendants, including Build Realty, Edgar Construction, First Title, Gary Bailey and George Triantafilou (among others) for a sinister and complex real estate scheme that defrauded hundreds of local investors out of millions of hard-earned dollars.

Matters remain tied up on stays and motion work, but we hope to move the case along soon.  Watch this blog for regular updates.