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.

We will write more on this later, but we are pleased to announce that — six years after we first filed in State Court, and nearly four years after we moved the case to Federal Court — on Tuesday of this week Federal U.S. District Court Judge Douglas R. Cole certified our firm’s RICO and breach of fiduciary duty claims against the following Defendants as a class action:

  • Build Realty, Inc.
  • Edgar Construction, LLC
  • Cincy Construction, LLC
  • McGregor Construction, LLC
  • Cowtown Holdings, LLC
  • Build NKY, LLC
  • Greenleaf Support Services, LLC
  • Build SWO, LLC
  • Gary Bailey (as trustee and individually)
  • George Triantafilou (as trustee and individually)
  • G2 Technologies, LLC
  • GT Financial, LLC
  • Five Mile Capital Partners, LLC
  • First Title Agency, LLC

In doing so, Judge Cole certified all victims of the alleged RICO and breach of fiduciary duty scheme as class members and certified a sub-class of investors who had their properties improperly taken away by scheme participants.

A class notice is being negotiated and should be sent to class members within the coming month or so.  If you have an updated physical address or email address please email it to [email protected] and we will try to keep you updated on developments.

This is a major victory for victims of this scheme, but we have many miles to trial to achieve final justice in this matter.  We will endeavor to keep the public updated through this blog.

For more background on this case, read here, here, here, here and here.

Our able co-counsel in this case is Bill Markovits and the firm of Markovits, Stock and DeMarco.

We are pleased to be “Making a Difference” for our now many clients in this long and very complex litigation.

You may read the Class Certification Order below.

 

We are pleased to announce the latest addition to Finney Law Firm, attorney Diana L. Emerson.  Diana earned her Juris Doctor degree from the J. David Rosenberg College of Law at the University of Kentucky in the spring of 2022 and joined the Kentucky bar in the fall.  She joins our Labor and Employment Department headed by Stephen E. Imm.

Diana earned her bachelor’s degree in History and Social Science from Lindsey Wilson College and thereafter worked on Capital Hill as a Staff Assistant for a United States Representative of the Commonwealth of Kentucky.

In order to “Make a Difference” for our clients, we continuously invest in new talent and the addition of Diana is  significant and tangible part of that commitment.

 

The anonymity of beneficial ownership of corporate and LLC interests has been a “feature” of small business governance for time immemorial.

This has vexed federal, state and local regulators, as well as private litigants trying to get to the bottom of their ownership puzzle.  And it has been a source of comfort to owners who want — for whatever motivations — to remain anonymous.  As a result, there are limited circumstances in which states (Kentucky, for example) and cities (City of Cincinnati, for example) presently do require disclosure of ownership of LLCs and corporations that hold real property in their jurisdictions.

But, by and large, the beneficial ownership of closely-held corporations and LLCs is a “black hole” in terms of registration of the identities of owners of closely-held businesses and limited liability companies.

In a limited way, that anonymity comes to an end in one year according to a final federal rule issued in September:

  • As of January 1, 2024 the Corporate Transparency Act requires newly-formed LLCs and corporations to disclose information about their beneficial owners to the federal Financial Crimes Enforcement Network (FinCEN) within 30 days, and
  • Corporations and LLCs that existed prior to January 1, 2024 must make that same disclosure by January 1, 2025.

The reason for the new law, according to FinCEN, is “to crack down on illicit finance and enhance transparency…to stop criminal actors, including oligarchs, kleptocrats, drug traffickers, human traffickers, and those who would use anonymous shell companies to hide their illicit proceeds.”

FinCEN has also issued a proposed rule (to be finalized later this year) for sharing the information with other federal, state and local agencies.  From the proposed rule:

FinCEN’s proposal limits access to beneficial ownership information to Federal agencies engaged in national security, intelligence, or law enforcement activities; state, local, and Tribal law enforcement agencies with court authorization; financial institutions with customer due diligence requirements and regulators supervising them for compliance with such requirements; foreign law enforcement agencies, prosecutors, judges, and other agencies that meet specific criteria; and Treasury officers and employees under certain circumstances. FinCEN further proposes to subject each category of authorized recipients to security and confidentiality protocols that align with the scope of the access and use provisions.

In other words, the general public will not have access to beneficial ownership information filed with FinCEN, but it will be shared with state and local law enforcement as appropriate.

These rules will certainly call for the end of 100% anonymity for closely-held corporations and LLCs and a mandatory new federal filing requirement for each entity (presumably updated as ownership changes from time to time).  Whether it will change the way small businesses in America are substantively regulated is yet to be seen.

Please contact Eli Krafte-Jacobs (513.797.2853), Isaac Heintz (513.943-6654) or Casey Jones (513.943.5673) for more information on the Corporate Transparency Act and these new regulations or about your closely-held business issues generally.

Today brought to a Finney Law Firm client a judgment for $222,836.53 for trespass onto his residential property and the removal of a tree and a portion of a wooden fence.

It’s been a big week for the Finney Law Firm in many ways, closing out yet another record year for the law firm.  And today we got our second huge, years-in-the-works victory in one week.  The Cincinnati/Alarms Registration case (final entry linked here) was five years in the making and this new “tree” case took 39 months to bring to conclusion.

The win was significant for several reasons.  First, this was the last civil trial for Hamilton County, Ohio Common Pleas Judge Judge Robert Ruehlman, the longest-ever serving Judge on the Hamilton County Common Pleas bench.  He retires from the bench January 2, 2023.    Second, awards of punitive damages and attorneys fees are fairly uncommon (either cases settle or the requisite legal standard is not met for punitive damages).  But, the Judge ruled that such standard for proof of the case and an award of attorneys fees was met by Plaintiffs, and was met by “clear and convincing evidence.”

A copy of this “tree case” order is here.  Congratulations to our client, William Chapel, and to our team consisting of Christopher Finney, Julie Gugino, Jessica Gibson and Kimi Richards, along with our expert witnesses and A/V consultant (Kevin Lewis and Media Stew!) for a wonderfully executed case from intake and filing to trial and judgment.

Now on to collections!

 

A big win was had today in Court for two classes of Cincinnati taxpayers.

After more than four years of litigation — through Common Pleas Court, the Court of Appeals, an attempt for Ohio Supreme Court review and back — today Hamilton County Common Pleas Court Judge Wende Cross signed the Order Approving Class Action Settlement in the case of Andrew White et al. v. City of Cincinnati, Ohio, Hamilton County, Ohio Common Pleas Court Case No. A1804206 (known as the “Alarms Tax Case”).

Background

The Order established a common fund of $3,277,802.25 from illegal alarms registration fees  (NOTE: not false alarm fees) collected by the City of Cincinnati from 2014 to present.  That nearly $3.3 million fund is to pay refunds to those who paid the illegal tax and attorneys fees incurred in the litigation.  The litigation in this matter was led by Maurice Thompson of the 1851 Center for Constitutional Law.  Finney Law Firm and attorneys Christopher Finney and Julie Gugino served as co-counsel.

As we explain in more detail here, Judge Cross certified two classes to receive refunds (a) residential and (b) non-residential payors of the Cincinnati alarms tax.  The City charged residential alarm-system-owners $50 per year to register their systems and commercial owners $100 per year to register their systems.  Last fall, the 1st District Court of Appeals unanimously ruled the tax illegal under Ohio law and unconstitutional, overruling a trial Court ruling on the same subject.  In March of this year, the Ohio Supreme Court preserved that victory for Cincinnati property owners when it refused to accept discretionary review of the case.

Making a difference

“Making a difference” for our clients is the mission of Finney Law Firm and its capable attorneys.  In this case, we successfully enjoined the enforcement of the illegal tax and achieved more than seven years of refunds for payors.  The victory was won under both state law (the assessment was an illegal tax) and the U.S. Constitution (the tax was an infringement on free speech rights by preventing or making more difficult reporting of crimes to the police).

How to get your refund

If you were a Cincinnati alarm registration payor at any time from 2014 to today, you should already have received a postcard, email or voicemail about the refund.  If we have a current address for you (i.e., you received the postcard), you should be receiving a refund by by February 21, 2023.

If you have not gotten a mailed postcard, please make sure we have your name and current address (and the address for which the alarm tax was paid) (will post information shortly of where to write with this info).  Write to [email protected] with this information: your name, the payor’s name, your address, and the property for which the alarm registration fee was paid.