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Arbitration — the first and last stop on the railroad

Author By Christopher P. FinneyPosted on

Many commercial contracts have provisions mandating binding arbitration of disputes.  These contractual provisions have powerful consequences for the parties accepting them.

As a matter of due process, under our legal system, everyone has access to the Courts for resolution of disputes, unless they have waived that right, for example, by agreeing to submit disputes to a private arbitration process.

Arbitration is generally a non-governmental process for the resolution of disputes. In arbitration, a single arbitrator or panel of arbitrators acts in the role of a “judge” deciding disputes.  This is in contrast to mediation in which a third party “neutral” attempts to convince the parties to settle the dispute between or among them. A chosen arbitration process can be either “binding,” meaning that the parties are bound by the decision of the arbitrator, or non-binding, in which case the decision essentially is merely advisory.

We advise clients that arbitration is typically both the first and last stop on the railroad of dispute resolution for two main reasons:

  1. First, an arbitration clause is generally enforceable in commercial contracts.  (In consumer contracts, perhaps not so much.)  As such, the arbitration process will be mandatory for all dispute resolution.  O.R.C Section 2711.01 provides:

“A provision in any written contract…to settle by arbitration a controversy that subsequently arises out of the contract…shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.

  1. Second, an arbitration decision is not appealable in the manner that a court judgment is appealable.  For court judgments, appeals can be based upon an error of law or even that the judgment was “against the manifest weight of evidence.”  It is not quite a “second bite at the apple,” but it can be close.       Arbitration awards, on the other hand, can only be challenged on the basis of some corruption, fraud or partiality in the arbitration process, a very difficult hurdle indeed.  Thus, regardless of how outrageous an arbitration award may be, it generally is final and very difficult to appeal. See, O.R.C Section 2711.010.

So, consider agreeing to arbitration clauses carefully. You may not be able to reconsider that decision.

 

Christopher Finney teaching two continuing education courses this week to Realtors

Author By Christopher P. FinneyPosted on

This week, Christopher Finney will be teaching two courses to Cincinnati-area Realtors:

1)  On Wednesday, Mr. Finney will teach “Core Law” to the Cincinnati Area Board of Realtors from 9 to noon.  The course will cover, among other things, the new form contract of the Cincinnati Board of Realtors, new residential loan and closing forms required starting this summer, laws allowing for electronic signatures and new rules for registering clandestine drug labs.

2) On Thursday, Mr. Finney will teach a course on Ohio Condominium Law for the Comey & Shepherd, Realtors from 1 to 4 PM.

If your company or group wants a presentation on a matter of Ohio real estate law, Mr. Finney is glad to cooperate.

 

New Cincinnati Area Board of Realtors contract contains substantial changes

Author By Christopher P. FinneyPosted on

The Cincinnati Area Board of Realtors implemented a new residential contract form for use starting January 1, 2015.  The changes are substantial, compared to Board contracts in effect prior to now:

  • The contract gives an option for a “short proration” of real estate taxes.  Instead of prorating for the entire period of unpaid taxes, the proration is only for the current period (a difference of about six months).  This is largely a new concept to the Cincinnati marketplace;
  • The contract calls for payment from the seller to the buyer of the CAUV recoupment amount.  This change alone could result in a substantial credit on closings of agricultural property;
  • Shifting of expenses from buyer to seller, including an option for the seller to pay $300 of an owners’ policy of title insurance; and
  • The obligation for the seller to provide extensive information on covenants and assessments.

So, it’s “buyer beware” and “seller beware” with respect to the new contract form.

Christopher Finney to deliver two February courses on property tax reduction

Author By Christopher P. FinneyPosted on

Next week, Christopher Finney will present “Reducing your property taxes” in two forums:

1) The consistently ground-breaking Empower-U lecture series will host Christopher Finney at Connections Christian Church, 7421 East Galbraith Road, on Tuesday, February 24, from 7 to 8:30 PM.  You can register and read about all of their course offerings for the Spring here.

2) Cincinnati Realtor Ellie Kowalchik and Summit Funding’s Aaron Denton team up for an informative evening on Thursday, February 26, from 6:30 to 8 PM at the Oasis Conference Center, Loveland, Ohio.  You may RSVP by emailing Ellie at [email protected] by February 18th.

All are invited to each of these courses.  We look forward to seeing you there!

Massachusetts False Claims statute challenged

Author By Christopher P. FinneyPosted on

On the heels of Judge Black’s historic decision striking down Ohio’s false claims statute as a violation of the First Amendment, a Plaintiff in Massachusetts is challenging the constitutionality of a similar statute in that state.

There, the statute calls for direct criminal prosecution of those who are claimed to have made a false statement during the course of a political campaign.  In contrast, in Ohio, there first must be a proceeding and finding of violation before the Ohio Elections Commission.  Indeed, the Plaintiff in the Massachusetts action has been charged criminally for a claimed false statement made about a candidate during the course of an election campaign.

The Boston Globe reports that noted Constitutional scholar Lawrence Tribe of Harvard says of the law: “It’s dramatically unconstitutional in its sweep….This is an easy one.”

Read the entire story here.

 

Be careful of recoupment of reduced taxation of current agricultural use valuation

Author By Christopher P. FinneyPosted on

The Ohio legislature has provided for significantly reduced property tax valuation (and thus, reduced property taxes) for property used for qualifying agricultural purposes.  This is referred to in the Ohio Revised Code as “Current Agricultural Use Valuation” and is shorted as “CAUV.”  This reduction is embodied at O.R.C Section 5713.31.

However, when the owner of property subject to such reduced valuation changes its use from a qualified agricultural use, Ohio Revised Code Sections 5713.34 and .35 provide that the savings for the past three years are to be recouped.  This can be a whopping one-time tax bill!

Further,  the recoupment is a lien against the real estate retroactive to the first of the year in which the change of use occurs.  Thus, when a change of use occurs in conjunction with a transfer of real estate, the buyer and seller need to carefully allocate between themselves the amount of such CAUV recoupment.

Because the seller received the benefit of the reduction; but it is the buyer’s change of use that is causing the CAUV recoupment to become due, it is not always understood between the parties who should bear this expense.

A buyer will be “stuck” with this CAUV recoupment charge as a lien against his property.  It is prudent for parties, Realtors and attorneys to assure the issue is addressed between the parties in the contract and at the closing, to avoid an unpleasant and expensive post-closing surprise.

The Listing Agreement: All Realtor agency agreements must have definitive expiration dates

Author By Christopher P. FinneyPosted on

It is a violation of Ohio license law, and likely will void Ohio Realtor agency agreements, to fail to include in such instruments a firm expiration date.  There is no limitation as to how long the term of such agreements must be, but simply that they must expire on a date certain.

O.R.C. Section 4535.18(A)(28) provides that it is a violation of Ohio license law for:

Having failed to put definite expiration dates in all written agency agreements to which the broker is a party.

For purposes of this section, an “agency agreement” should be considered any listing agreement (whether for sale or lease and whether exclusive agency agreement or exclusive right to sell/lease), any property management agreement, and any contract for buyer representation.

Our attorneys once handled a case for a client under which he had entered into a settlement agreement with a client upon the early termination by the owner of a listing agreement. As a compromise, the Realtor agreed with the owner that whenever the owner decided to again place the house not he market, it would be with the subject Realtor.  The problem was that the Realtor did not list a definite expiration of the right to list, and thus, arguably, the agreement violated the referenced code section.

So, on standard listing agreements and non-customary agreements to list property for sale or lease, all must have definite expiration dates in them.

 

Maple Heights, OH Mayor sued for releasing income tax data of Council member

Author By Christopher P. FinneyPosted on

In one of the more outrageous political acts we have witnessed, in last fall’s election on a Charter Amendment banning Red Light Cameras, officials of the City of Maple Heights (a suburb of Cleveland) obtained and released confidential income tax information of initiative proponent Bill Brownlee, a member of the  City Council.

The information was in a flyer ostensibly designed and distributed to dissuade voters from voting for the ballot initiative, but appeared more aimed at smearing several of the Mayor’s political opponents.

Ohio Revised Code Section 718.13(A) expressly makes all information in municipal tax returns confidential.  This protection is then repeated in the Maple Heights Municipal Code. 

The Mayor, the Law Director, and the Council President also have worked in other ways to target their political opponent and suppress his speech.

Our firm filed suit for Bill Brownlee two weeks ago to recover damages arising from the referenced conduct and discourage its repetition.  A link to the suit is here.

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