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Fraud, fraud and cyber fraud!

Author By Christopher P. FinneyPosted on

We all know of creative and incessant attempts to defraud us of our hard-earned money, many (but not all) internet- and email-based.  But nonetheless (i) the efforts of snooker us never stop, and (ii) we must constantly tell others in our family and our organization to be wary.  Eternal vigilance is a business and personal requisite these days.  The criminals are absolutely relentless.

Just this last week, our firm and my family were “almost” taken in by two of these international criminals:

  • Our firm (because we have a great web site and use internet marketing tools) constantly gets “new client inquiries” (usually via our web portal or regular email) from fraudsters asking us “do you review contracts?” or “can you sue someone for us?,” pretty generic and bland (but transparently fraudulent) inquiries.  I generally just “delete,” but one of these made it to one of our newer associates.  It was a client from Dubai who wanted us to assert certain contractual claims against another party.  We did so, and the matter instantly settled with a $385,000 certified check payable to our firm escrow account.  The fraudulent client then wanted us to wire the escrowed monies to him and a third party, both overseas (major red flag there!).  Fortunately, our crack bookkeeping staff saw the certified check was dishonored before we wired out the funds — disaster averted!.  But it was a close call.

[Something to note about these fraudulent inquiries: (i) they never want to communicate via telephone (but rather by email), (ii) the phone number they provide is always bad, and (iii) they always have some bland *@Gmail address.”  I sometimes respond to the email address they provide “please call me,” and they never do.  I call the phone number and it is bad for one reason or another.]

  • Sunday, right before the Superbowl, I stopped to have lunch with my wife.  She related to me that a piece of furniture she had for sale in Facebook Marketplace had sold to a buyer in California.  He was going to send us “certified funds” and then wanted us to pay his moving company to bring the piece to California.  “Wait a minute,” I said.  “why would we pay his mover,” and it vaguely reminded me of a fraud scheme I had heard from a client or read about on the internet.  Sure enough, I Googled “pay the mover” and found out this is a common scam.  You wire or pay funds to a mover, and later the “certified funds” are dishonored.  The victim is “out” the moving fee and the scammer never intended to pay for your furniture!  My wife told the would-be buyer that we would hold the “certified funds” for 10 days before shipping the goods, and he went radio silent immediately.  Fraudster!

Our firms, and our title company in particular, are attacked by fraudsters almost daily.  Fortunately, we are alert to the most common scams, and have avoided them all (we have clients who have not been so lucky).  But these two close calls — at the office and at home – remind us that vigilance is required and gullibility, and trust, in the internet era are simply foolish!

Be cautious with your funds and your property.  There are loads of fraudsters — some anonymous on the internet and some that you think are your friends — who will gladly and shamelessly steal your money and leave you wondering why you fell for their scam!

Be cautious!  Be aware!  Trust very few.

Real Estate Legal Pro Tip: How to avoid Ohio mechanics liens on construction and renovation projects

Author By Christopher P. FinneyPosted on

Buying real estate improved by an existing building is in itself a legally intricate undertaking. However, new construction and renovation introduce a whole new level of complexity, difficulty, legal complication and financial risk.

This blog entry explores just one of those categories of added risk in the construction and renovation arena: mechanics liens. This article also is not the definitive, all-encompassing explanation of the Ohio mechanics lien statute (it has a multitude intricacies).  Rather, we provide herein three (or four) simple steps to assure that the extraordinary “muscle” added by mechanics lien claims is not applied against you as a property owner.

General risks of real estate investing

In short, real estate investing is not for amateurs or the faint of heart.  Many of the entries on this blog explore how to avoid pitfalls associated with real property acquisitions involving existing improvements, such as issues relating to matters of title, tax, physical defects in the property and improvements (and seller fraud relating to the same), zoning, land use and other regulatory hurdles,  and seller fraud in financial misrepresentations, just to name a few.

Additional risks inherent in new construction and building renovation

However, taking raw land or a developed lot (the difference being built roadways, utilities, addressing zoning and full subdivision) and building a new structure, or renovating an existing structure, are fraught with a host of added risks: Proper planning and design, zoning and land use restrictions, utility access, building code permitting and inspections, selecting an honest and qualified contractor who has a corral of qualified subcontractors, materialmen and laborers.  The list of added complexities associated with adding improvements to real estate is almost endless.  Properly executing a construction project from beginning to end is difficult.  That difficulty today is enhanced by the lack of availability of skilled labor and subcontractors, increasing pricing and drawing into the field entirely unqualified, untrained and unsupervised laborers.

The special risks associated with mechanics lien

One of the biggest legal challenges is protecting property owners and lenders against mechanics liens from contractors, subcontractors, materialmen and laborers on the project.

What is a mechanics lien?

Mechanics liens (not at all for what we think of as “mechanics” in normal parlance) are purely creatures of statute, meaning they don’t exist as a matter of contract nor are they common law rights.  Rather, R.C. §1311.011 (one- and two-family residential dwellings) (addressed partially in this blog entry)  and R.C §1311.02 (commercial properties) provide statutory lien rights to unpaid contractors, subcontractors, laborers and materialmen.  All of these rights are strictly limited in time, amount and circumstances allowed by statute.

These statutes provide a tremendously powerful tool for these parties to assure payment from the property owner, secured firmly by the equity in the property, so long as their claim is narrowly allowed under the statute, and those rights will not extend beyond the statute. (The effective date of priority of liens as against mortgages and other lien holders is yet another a matter not addressed in this entry.)

These lien rights can transcend the contractual obligations of the property owner, meaning an owner can in fact owe money to someone with whom he has no contract at all (the owner may never have known their name or that they did work on his job, or supplied materials to his job).  An owner can, under some circumstances, owe money to a subcontractor, materialman or laborer even though he already has paid everything he owes to the general contractor (this principle applies to commercial projects only).   These can be jarring revelations to an unsuspecting property owner who has not taken the simple steps in this blog entry to protect himself from mechanics liens.  In other words, unaddressed, this is dangerous territory for a property owner making improvements to his property.

Three simple steps an owner can employ to protect himself from mechanics liens

Again, the Ohio mechanic’s lien statutes are tremendously involved, and this blog entry is not attempting to explore the many intricacies in that statute.  That’s for another day.  Rather, this article offers a few simple steps that a property owner undertaking a construction project can employ to avoid the potential of financially and legally catastrophic consequences from liens sinking a project or ruining the finances of a property owner.

  1. Pay no more to the contractor than the true value of work actually completed as of the draw, and perhaps less.  In some ways, this step is self-explanatory. As a construction project progresses, the owner should take great care to pay the contractor only for the value to the owner and the project of the work finished at the time of payment. In a reverse analysis, the owner should always have enough money left in his construction budget to finish the job if the contractor walks away after the most recent payment.  Now, estimating these two amounts (the value of work completed and remaining cost to complete) is tricky, and the owner should realize that the contractor — knowing the construction costs and business better than him — is in a superior position to estimate this, but relying on the contractor’s “word” is equally risky.  So, this step requires the owner to have a good understanding of the real cost of each stage of the work.  It also requires assuring the work completed at each stage is code compliant, contract compliant, and of good quality and workmanship.  Beyond this step, many owners will require “retainage” of an addition 10-20% from the “actual value of the improvements to date” to assure there is always enough left in the construction budget to complete the project.  This retainage is then paid at the end of the project (usually upon issuance of a certificate of occupancy, “substantial completion” as certified by the architect or some other objective metric).
  2. Affidavits of full payment. As each installment (or “draw”) of the construction budget is paid to the general contractor, the general contractor should provide an affidavit — a sworn statement, the falsity of which is a felony and the basis for a civil fraud claim– of what he is owed, and critically, the names of each subcontractor, materialman, and laborer, and the amounts owed at that stage to each.  In good practice, that “master affidavit” is then also accompanied by further affidavits from each subcontractor, materialman and laborer as to the amounts they are owed at that point in the project.
  3. Joint checks.  Then, the owner should cut joint checks to (a) the contractor and (b) each subcontractor, materialman and laborer, to assure that the amounts they themselves swear are due and owing are in fact paid in full.  These joint checks should track the sworn statements in the various affidavits.

If a property owner on a project follows these three simple steps, the risk of a mechanics lien is limited to (a) those subcontractors, materialmen and laborers not listed on the affidavits (falsely) and (b) only those claims for additional work arising from the most recent payment.

Beyond these three simple steps, a one-to-two family residential property owner is also protected from liens of subcontractors, materialmen, and laborers to the extent that he has paid the general contractor in full, or is limited only to the amounts owed under the master contract to the general contractor.  That statutory principle is more fully explored here.

  • Lien waivers.  A drastic fourth protection that can be employed by a property owner is to allow no contractor, subcontractor, materialman or laborer to step foot on the job or to supply materials to the job unless they have signed in advance a lien waiver, saying (a) in the case of the contractor, they will look only to the contract (and the courts in a typical collection action) to assure payment and (b) in the case of subcontractors, materialman and laborers, saying they will look only to the general contractor for payment, not to the owner and not to a lien against the property.  These lien waivers, heavy-handed and unusual as they may be, are legally effective.

So, there is much much more, legally and business-wise to being successful in the execution of a of residential or commercial construction project, and so much more of a winding path in the Ohio mechanics lien statutes, but these three (or four) simple steps can change the dynamics of a construction project strongly in favor of the property owner.

For assistance with mechanics lien issues or other legal challenges relating to new construction, feel free to contact me at 513.943.6655.

Jennings Kleeman

Ohio’s statute of conveyances: Its application to real estate leases and its exceptions

Author By Jennings D. KleemanPosted on

For most contracts, an agreement is an agreement: If the parties agreed, orally, on paper, or even just electronically, in an email, text message, or through social media, generally, the agreement can be legally binding.

However, agreements relating to the purchase, sale and leasing of real estate can have special requirements for their enforceability. Here, we explore the Ohio Statute of Frauds (O.R.C § 1335.05), which requires certain agreements (i) be in writing and (ii) signed by “the party to be charged therewith,” i.e., the buyer, seller, landlord or tenant. And for real estate instruments, the Ohio Statute of Frauds has those requirements for contracts for the purchase and sale of real estate and for leases (residential or commercial) extending beyond one year. Many people are familiar with the requirement of the Ohio Statute of Frauds as it relates to real estate.

Less familiar to laymen and even real estate professionals is Ohio’s Statute of Conveyances, which requires deeds, mortgages, land installment contracts and leases with a term in excess of three years to be “acknowledged” before a notary public (i.e., “notarized”).  This derives from O.R.C. § 5301.01, which requires these instruments to be notarized and O.R.C. § 5301.08, which then excepts from that requirement leases for less than three years.

 But what does the Statute of Conveyances mean? Is it that, if you have a signed lease, residential or commercial, that is not notarized, and (i) a tenant has moved in, (ii) a landlord or tenant has made expensive improvements to a premises, or (iii) a tenant has made a long-term commitment to having its operations at a specific location, the other party can simply terminate the lease due to it not being notarized?  Despite this seeming like a harsh outcome, the answer is yes, to a degree.

To bypass such harsh outcome, the Courts have carved out equitable exceptions to the Statute of Conveyances. This blog entry explores the enforceability of non-notarized leases in excess of three years in Ohio under the Statute of Conveyances on the one hand and those common law exceptions on the other.

Enforceability of non-notarized leases in excess of three years in Ohio

Where parties execute a lease without notarizing it, the lease is considered defectively executed. A defectively executed lease is invalid and does not create the exact lease sought to be created. That said, the terms of the defectively executed lease are controlling once the tenant moves in and starts paying rent under said lease, except for duration. The duration is determined by the provision for the payment of rent. For example, a lease with monthly rent payments results in a month-to-month lease, while a lease with annual rent payments results in a year-to-year lease.

Where parties do sign and notarize a lease as required by the Statute of Conveyances, and such lease contains an option to renew, the act of accepting an option to renew does not require a second formal execution.  However, where there is not an option to renew, a grant of an additional term is an independent and separate transaction requiring its own compliance with the Statute of Conveyances.

Common law exceptions

The applicable law in a defectively executed lease case depends on the type of the relief pursued. If the party suing seeks to recover damages for breach of the lease, then the applicable route is that of the equitable doctrine of Partial Performance. If the party suing seeks to have the defective lease treated as a contract to make a lease, then the applicable route is that of the equitable doctrine of Specific Performance.

(A) Partial Performance:

A defectively executed lease can be validated through Partial Performance. Partial Performance is based in fairness and is utilized where it would be unfair to permit the Statute of Conveyances to invalidate the defectively executed lease. Partial Performance validates a defectively executed lease where the following four factors are present: (i) unequivocal acts by the party relying on the agreement; (ii) the acts are exclusively referable to the agreement; (iii) the acts change the party’s position to his detriment; and (iv) the acts make it impossible to place the parties in “statu quo”. The party wishing to benefit from Partial Performance must show that the facts of their particular matter meeting the aforementioned four factors are, more likely than not, true.

Generally, the facts of the cases, where the courts allow Partial Performance to validate defectively executed leases from the Statute of Conveyances, include: (i) expending sums of money, (ii) extending credit, (iii) making improvements, and (iv) following what the parties called for in the defectively executed lease. That said, it is important to note that moving in and paying rent is not sufficient to relieve the parties from the Statue of Conveyances.

(B) Specific Performance

Courts may allow for Specific Performance of defectively executed leases where no adequate remedies at law exist. Whether courts will allow for Specific Performance of defectively executed leases is within each respective court’s discretion. As such, Specific Performance is not guaranteed.

Where parties seek to enforce defectively executed leases through, and courts allow for, Specific Performance, the Statute of Conveyances does not impede such enforcing parties’ right to recovery. This is because defectively executed leases are enforceable, as a matter of fairness, as contracts to make a lease between the parties who intended to be bound by them. Courts may order Specific Performance of such contracts.

Conclusion

So, if you are a party to a defectively executed lease, and you are concerned with its enforceability, it is prudent to take some time to call the Finney Law Firm. We can help determine whether your lease is compliant with the Statute of Conveyances, and what you might be able to do if it is not.

National Association of Realtors to feature African American Realtors arrested for simply showing homes

Author By Christopher P. FinneyPosted on

Two years ago, Finney Law Firm was proud to represent African American Realtor Jerry Isham and his African American home buyer, Tony Edwards, who were accosted by seven Cincinnati Police officers, guns drawn, then handcuffed for nearly five minutes, and forcibly searched, simply for the “crime” of showing a home listed for sale (and really it was no more complicated than that).  The City of Cincinnati settled the civil claim 16 hours and 30 minutes after the suit was filed by Finney Law Firm attorneys.

Then, in August of this year, the Isham story appeared to repeat itself in Grand Rapids, Michigan with the arrest of African American Realtor Eric Brown of Keller Williams and his buyer, Roy Thorne, who were arrested simply for viewing a home listed for sale. Read about that here.

On November 13, the National Association of Realtors will feature Isham and Brown in a symposium entitled “Race & Real Estate” at its annual Realtors  Conference & Expo in San Diego, California to shine a spotlight on the extra challenges faced by African Americans in the real estate industry.

Our firm was proud to represent Jerry Isham, a top real estate professional in Cincinnati and the owner of Movement Realty, who did not deserve this shabby treatment by Cincinnati Police, in this matter.  We are pleased that his case has been given this important platform for further exploration of racism in the real estate industry.

Isham is the former President of both the Ohio and Cincinnati Realtists Associations and is currently the Region VIII Vice President of the National Association of Real Estate Brokers.

Our Public Interest Law team at Finney Law Firm, including Chris Finney and Curt Hartman, pursued the public records (mostly dash cam and body cam videos) of the incident, and filed this case in federal court on behalf of Isham and Edwards.

If you are attending the National Association of Realtors’ Convention & Expo, we encourage you to attend this important session.

  • For more background on the Isham story and the work of the Finney Law Firm’s Public Interest Law team, read here and watch here. The story captivated Cincinnati television viewers and was the topic of radio talk shows for weeks.  Watch here, here, here, and here and read here and here.  It even made news internationally.  Read here. Veteran Cincinnati reporter Jennifer Edwards Baker of WXIX, Channel 19, initially broke the story. The Youtube video linked to this story analyzing in detail the Isham/Edwards arrest has had more than 5.6 million views, so the story has since captivated the nation.

 

 

How do private covenants restrict property use versus zoning restrictions

Author By Christopher P. FinneyPosted on

Frequently we are asked by clients whether they are permitted to do “x” on their property: Move lot lines, build above a certain height, use a certain type of siding or trim or modify building setback lines. What rules govern these concerns?

The answer is: Both governmental restrictions and private contracts or covenants.

Let us explain.

Governmental restrictions

Zoning code, building code, fire code, subdivision regulations, engineer rules, and on and on and on, there a host of governmental regulations that dictate the use of, development of and construction on private property. And for each of these restrictions, there is a procedure for altering or “varying” the strict compliance with the restriction. These might include a board of zoning appeals, a board of building appeals,  or even an administrative appeal in Ohio Common Pleas Court or Kentucky Circuit Court.

So, once you jump through the hoops to get governmental approval, you are good to go, right?  Ummm, wrong.

Private covenants

For most modern subdivisions, commercial and residential, and for older ones going back decades, there are a series of private covenants against the land that many times mirror and then exceed the requirements in the governmental regulations. These covenants are recorded in the land records — in Ohio the County Recorder’s Office and in Kentucky in the County Clerk’s office. These covenants — whether the property owner is actually aware of them or not — are binding on each property owner in the subdivision as if the owner himself signed them. They are, in essence, a contract to which each subdivision property owner has expressly agreed.  These covenants may be in a textual document (many exceeding 50-100 pages) and they may be on a plat of subdivision as a graphically-drawn easement or restriction or text on the face of a plat.  Each have equal weight under the law. (Consider: did you understand as a property buyer that you were entering into 100-page contract and were bound to each provision thereof?)

Take for example building setbacks.  Zoning might require a minimum front yard of 25′, but the private covenants may require 50′. As to front entry garages, zoning may allow them, but private covenants may prohibit them.

Under private covenants, the “varying” or waiver could require unanimous approval of all lot owners, could require approval of the homeowners association board or an architectural committee thereof. Some covenants can be waived simply by a signature of the developer. The bottom line is that they are a matter of contract.  What the restrictions are and how they are waivered or varied is a question typically answered in the document itself.

Effect of governmental variance on private covenants (and vice versa)

So, as a property owner, once you go through the entire governmental variance process to allow a front entry garage or a smaller front yard setback, does that then solve the covenant problem?  Absolutely not. These two sets of restrictions each stand alone and must be modified or waived independently.

Similarly, if a property owner were to pursue a variance from requirements from a homeowners’ association, would that “fix” the violation of the governmental restriction? Still, no.

Thus, it will many times require two sets of approvals to get around a restriction that is in both the zoning code and the subdivision covenants.

Conclusion

For assistance with a zoning or covenant issue, please contact Jennings Kleeman (513.797.2858), Eli Krafte-Jacobs (513.797.2853) or Isaac Heintz (513.943.6654).

City of Cincinnati adds yet one more renter protection

Author By Julie M. GuginoPosted on

Ohio has a broad landlord/tenant statute, Ohio Revised Code Chapter 5321, that contains tenant protections that landlords throughout Ohio must follow.

But in addition to those procedures and protections, the City of Cincinnati has its own laws providing extra regulation of the landlord/tenant relationship. We have written about some of those here, including rental registration, late fee regulation, and security deposit regulation. As we address here, it also layers more regulation than set forth in the Ohio Revised Code Chapter 5313 for Land Installment Contracts.

Hamilton County alone has 49 cities, villages and townships. These laws apply only in the City’s 52 neighborhoods, and none of the areas outside of City limits.

Now Cincinnati has enacted one more landlord/tenant regulation: a “pay to stay” ordinance, similar to laws passed in Toledo and Dayton, that allows tenants facing eviction for non-payment of rent to assert that rent has been paid, or that rental assistance has been applied for, as an affirmative defense in any proceeding. Here are the details:

  • A tenant can cure his lease default and maintain a right to continued occupancy in property prior to the filing of an eviction action by paying the full amount of delinquent rent plus the statutorily-permitted late fee (see above). Typically, this would be after the provision of a statutory 3-day notice to vacate, but before the filing of the eviction action.
  • Additionally, a tenant can cure his lease default after the filing of an eviction action, but before a writ granting possession back to the landlord, by paying (a) back rent in full, (b) up to $125 in attorneys fees, and (c) the court costs of the eviction action.

For assistance in landlord/tenant matters, contact Julie Gugino at 513.943.5669.

 

Finney Law Firm sues Ohio Department of Education over simply bizarre speech restrictions regarding Critical Race Theory

Author By Christopher P. FinneyPosted on

Whether one agrees or disagrees with the Ohio Department of Education’s adoption of Critical Race Theory and the 1619 Project’s for implementation throughout Ohio’s school systems, we should all agree that an open and robust debate about that policy before public bodies is appropriate and required under the U.S. Constitution. But that’s not how the Ohio Board of Education sees things.

Once they hastily adopted the new policies, they then formally forbade speakers before them from criticizing their decision. The ODE allows public comment on all other topics, but specifically not these two.

So, last week, the Finney Law Firm filed suit against ODE challenging these restrictions on speech during the public comment section of Board meetings. Read that suit here.

The Board did not just quietly and unconstitutionally squelch in a public forum,  but they explained why they were privileged — indeed compelled — to trample on the Constitution in this instance:

  • “[O]ur board president has instituted a policy that prevents people from speaking to our group in reference to any of these issues about critical race theory, etc.…  I’m not sure why we have a filter on what we’re allowed to hear here, but we do.”
  • “I was really glad when [LAURA KOHLER] said we weren’t going to have those speeches anymore”
  • “I would just prefer that we not have a conversation about critical race theory, or 1619….”
  • “I don’t want to sit here again and listen to two months of people – they have their opinions….  This is not what I’m here for”
  • “I’m using race and I don’t feel ashamed about that”
  • That if such public comments or testimony were allowed then the meeting of the OHIO STATE BOARD OF EDUCATION “would not longer be a safe space for me”

I suppose if you are that delicate and thin-skinned, perhaps you should not sign up for the rough and tumble of public office. Just a thought.

Media coverage of this is below:

For inquiries on this story, contact Curt Hartman (513.379.2923) or Chris Finney (513.943.6655).

All the info you need to know on property tax valuation issues in Ohio

Author By Christopher P. FinneyPosted on

Tax bills in Hamilton County will be mailed on January 7 and are due February 1. Nonetheless, the County Auditor has sent out notices to homeowners in December as to the new valuation of properties that will appear on the January tax bills. Since the January 2021 tax bills represent the start of a new tax triennial, every property owner in Hamilton, Butler and Clermont Counties will get new valuations in those upcoming tax bills. As a result, our phones are starting to ring about help with property tax valuation reductions.

If you are thinking about challenging your property’s tax valuation, below are linked two blog entries with lots of information on the wisdom of taking such a path, and the detailed procedures for doing so. One of them has an instructional video on tax valuation reduction in Ohio.

Ohio and Kentucky property tax valuation challenges vexing in 2021

’tis the season for property tax valuation reduction (with How To video)

Contact Chris Finney (513-.943.6655) or Casey Taylor (513.943.5673) for information on how we can help get your property taxes reduced.

 

 

 

Finney Law Firm Property Tax Valuation

Tips on real estate title and debt in divorce proceedings

Author By Christopher P. FinneyPosted on

Over my years of practice, I have seen countless (and needless) debt and real estate title problems arising from divorce proceedings, some arising many years after the divorce decree goes on. In this blog entry, I address several of these.

For anyone going through a divorce, or who has already been through a divorce, I’d recommend “checking all the boxes” in this blog entry to avoid costly problems arising from a divorce. (Just because your divorce was years ago does not mean some of these problems won’t still raise their ugly head.)

  • First, on Day #1, cancel all joint credit cards and terminate all joint lines of credit. Time and time again, I have seen one spouse run up credit card charges on joint accounts, and run up lines of credit — maybe secured by a lien on the house — to the max either as the divorce is proceeding or after the divorce. Worse, they have spent it on jewelry, trips, cars, flowers and candy for the new girlfriend (classy!). On Day #1, and I mean Day #1, stop the soon-to-be ex-spouse’s access to joint credit.  Otherwise, when they go bankrupt or insolvent, you may be left holding the bag.
  • Terminate all accounts on which you are liable: The one that is most common is a cell phone account. But it might be a utility service (water, sewer, gas, electric), a joint account at a retailer, a business line of credit, etc. Close those accounts or take your name off of them. Do it in writing. Do it promptly as the divorce proceeds.
  • A common resolution of the division of the home (or other property) jointly owned by the divorcing husband and wife is that the divorce court orders one spouse to convey their 1/2 interest in such house or property to the other party. And associated with that that, the grantee then is ordered to refinance the mortgage on the house so that the grantor is released from the debt associated with the the-existing joint mortgage. That is fine as far as it goes, but countless times I have seen one or the other spouse not follow through on that. Here are some problems I have seen with this:
    • The ex-spouse who is supposed to grant the real property delays interminably and fails to do so. The grantee ex-spouse ignores the failure, sometimes for years. This is a huge mistake. Get that deed.
    • The grantee ex-spouse gets a deed, but tucks it into her dresser drawer and forgets about it. You have to record that deed immediately, otherwise intervening liens and bankruptcy of the grantor ex-spouse filings take priority! In the case I recall, the grantor spouse filed bankruptcy years later, and that 1/2 interest in the house went to the ex-spouse’s creditors rather than to the grantee. The problem was not fixable.
    • The grantee ex-wife was the signer on a line of credit for the grantor ex-husband’s business. That line of credit was secured with a lien on their marital residence that was ordered by the Court to be granted to the ex-wife. The ex-husband did in fact give the deed to the ex-wife, but ex-wife did not refinance the house as the divorce decree required (which would have almost certainly revealed the second mortgage securing the line of credit that she forgot). Thus, the second mortgage securing the line of credit was never released.  Thirteen years later, the ex-husband hit hard times financially, and ran up the line of credit — that was still secured with a mortgage against the ex-wife’s house. Ex-wife’s property is then subject to a six-figure second mortgage for the ex-husband’s post-decree debt, rather than free of that debt as it should have been. So, cancel all secured lines of credit immediately, and get a title exam on the granted house to assure title you are getting is clear.

These things are not automatically addressed by either a divorce filing or by the decree in a divorce. They have to be carefully implemented to conclusion. Everything bad that can go wrong in these steps does go wrong, time and time again. And while said ex-spouse may be on the hook for the breach of the divorce decree, that does not change the reality that the third party creditor has a right to get paid. And if the ex-spouse is flat busted, there will be no recovery from him or her. This is commonly the case.

At present Finney Law Firm does not handle most domestic matters.  But, these are some tips to form a discussion with your divorce attorney to assure all “I’s” are dotted and all “T’s” are crossed in divorce proceedings.

Please share this with a friend going through a divorce. It may save them headaches and a lot of money.

 

 

 

 

 

Ohio and Kentucky property tax valuation challenges vexing in 2021

Author By Christopher P. FinneyPosted on

To appeal your taxes or not appeal your real property taxes, that is the question.

For some property investors, 2020 has been a difficult year: Many retail properties, hotels and office buildings have suffered from high vacancies, high rental defaults, and slow-to-no calls from new tenants. For these categories of income-producing properties, the enormous challenges presented by COVID-19 seem to have caused a significant reduction in property values.

Thus, it makes perfect sense to challenge those values in 2021, right?

Well, not so fast. Here are some considerations:

State of Ohio

  • Tax valuation challenges filed in Ohio in 2021 are for tax year 2020, and the “tax lien date,” the target date for valuation decisions is January 1, 2020.
  • That is, of course, months before the deleterious effects of COVID-19 impacted the USA real estate market.
  • Therefore, an Ohio property owner is likely to lose a valuation challenge brought in 2021 based primarily or solely upon a downturn starting in March of April of 2020.
  • Even worse, a property owner is entitled to bring tax valuation challenges only once in a “triennial,” the 3-year cycle which Ohio uses for Board of Revision cases.
  • Hamilton County, Clermont County, Butler County, Franklin County (Columbus) and Montgomery County (Dayton) all start new triennial cycles in tax year 2020. This means that if a property owner brings and loses a tax valuation challenge brought in calendar year 2021 in those counties, the valuation by law must stay in place through tax year 2022 (first challenged again in 2023).
  • On the other hand, if a property owner waits until first quarter of 2022 to file a challenge (for tax year 2021) in those counties, he will have a much stronger basis for valuation reduction (valuation target date is then January 1, 2021).
  • On the other hand, Warren County, Lucas County (Toledo), Stark County (Canton) and Cuyahoga County (Cleveland) (among others) are in their last year of the triennial in 2020, meaning a property owner can bring a complaint in 2021 (win or lose) and then turn around and bring a fresh challenge in 2022.

So, an Ohio property owner should carefully consider whether to bring a 2021 challenge. It could bring great rewards or lock in an articificllay high value for three years, potentially unnecessarily.

State of Kentucky

Kentucky is an entirely different matter. Challenges of value — which are started by PVA meetings the first two weeks of May — in 2021 are for tax year 2021. Thus, the full impact of COVID-19 on property values are at issue in challenges in 2021. It is much more straightforward.

Conclusion

For assistance with an Ohio or Kentucky property tax valuation matter, contact Casey Jones (513.943.5673) or Chris Finney (513.943-6655).

 

 

 

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