Each year for the past six years, we have been pleased to co-teach with County Auditor Dusty Rhodes a continuing education class to the Cincinnati Area Board of Realtors entitled “How to Reduce Your Property Taxes.”
The 3-hour class is designed to teach Realtors in detail how their Ohio tax bill is calculated and presented, and the process for challenging the Auditor’s valuation before Ohio’s 88 Boards of Revison.
This year the class, at the Board offices, was held on Wednesday, January 21.
Finney Law Firm’s attorneys are experienced practitioners before the Boards of Revision throughout Ohio and the property valuation administrators of Kentucky to challenge the valuation of real property — thus resulting in a reduction of real estate taxes.
March 31 is the statutory deadline each year in Ohio to file a challenge to the valuation of real property. If you miss that deadline, you must wait until the next tax year, and tax refunds for over-valued property only cover the current tax year. Thus, a missed deadline is a missed potential refund of taxes.
If you desire for Finney Law Firm to analyze the valuation of your real property for a possible reduction, please contact Christopher P. Finney at 513-943-6655 for a free preliminary assessment.
The most popular question this week at our seminar on Ohio Condominium law was:
What’s the difference between a condominium and a landominium under Ohio law?
Well, we hate to give such a lawyerly answer, but the question requires it.
We are taught to think of rights in real estate as a bundle of straws with an infinite number of straws in it. One straw might be the right to possession for a year, another straw might be the mineral rights under the property, another straw might be the right to occupy in common certain areas of the property, such as a shared easement. The owner of property has the right to parcel out these rights contractually as he sees fit.
Ohio law does not define a landominium, and a developer signing a declaration “dividing up” these property rights can thus largely on his own determine the contractual rights and obligations under the landominium documents, such as what are common areas, what areas the association maintains, voting rights of owners, etc. Acccordingly, a landominium is largely whatever a developer says it is. And it will be different project -to-project.
In some degree of contrast, Ohio law does define a condominium. And a declaration dividing up those property rights in a condominium has some minimum contents under the Ohio condominium statute. For example, all condominium property is divided between “unit” and “common areas,” and “common areas” are divided between “general common areas” and “limited common areas,” i.e., limited in use to fewer than all unit owners.
But, again, the creation of a condominium is largely a creature of contract, not statute. So, within the minimum constraints of the condominium statute, the developer largely decides what the declaration will contain and how to allocate the rights among the unit owners.
So, in short, to be a “condominium” under Ohio law the declaration must contain the minimum requirements of the statute, and a “landominium” is whatever the developer says it is.
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.
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:
So, it’s “buyer beware” and “seller beware” with respect to the new contract form.
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!
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.
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.
In NDHMD, Inc. v. Cuyahoga County Board of Revision, et al., 2015-Ohio-174, the Eighth District Court of Appeals reviewed the finding by the Cuyahoga County Common Pleas Court that the surplus land auction conducted by the Cuyahoga County Auditor constituted an arm’s length transaction.
In 2009, the County Treasurer foreclosed on a property for delinquent taxes. Two attempts at auction failed, resulting in the property being turned over to the state. In March, 2010, the County Auditor placed the property for sale as part of a surplus land auction. The auction was conducted on March 24. One week later (but prior to the filing of the executed deed) the winning bidder (at $1,500) filed a challenge to the property valuation with the Board of Revision.
At the Board of Revision, the value was reduced from $963,300 to $444,720. The owner appealed that decision to the Cuyahoga County Court of Common Pleas, which upheld the BOR decision. The owner then appealed to the Court of Appeals, which ruled that because the challenge to the BOR was filed prior to the recording of the deed, the owner did not have standing to bring the challenge and dismissed the complaint (returning the value back to $963,300).
During the same triennial, the owner filed a new challenge for tax year 2011. Having satisfied the jurisdictional requirement of recorded ownership, the owner now faced the statutory prohibition against bringing two challenges in the same triennial absent an exception (one of which is an intervening arm’s length sale).
The Auditor argued that the surplus auction sale is not an arm’s length transaction.
Relying on the Ohio Supreme Court ruling in Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, Slip Opinion No.2014–Ohio–4723, the Cuyahoga Court of Appeals found that, while an auction sales price is presumably not a voluntary, arm’s length transaction, this presumption can be rebutted.
Supporting the finding that the transaction was arm’s length was the fact that the county auditor had not been compelled to auction the property; that two prior auctions had failed, resulting in the property being transferred to the state; that the auction had been advertised; and that there were multiple bidders.
The finding that the auction constituted an arm’s length transaction was crucial for two reasons in this case. First, because NDHMD had filed a prior challenge to the value of the property (that had been dismissed on jurisdictional grounds), the sale provided an opportunity to bring the challenge at all. Second, as an arm’s length transaction, under the applicable law (since amended) the County Auditor was required to use the sale price as the true value of the property.
The final result is that a property that the County Auditor had valued at $963,300.00 was given a new value of $1,500.00, at least for the remainder of that triennial (in the most recent triennial, 2012, the value was adjusted to $170,100).
Notwithstanding the results in this case, the Court was clear that the general presumption remains that an auction price is not the true value for tax purposes.
Have a question about the County Auditor and Board of Revision Valuation Process? Contact Anna Ausman at (513) 943-6651.
Since our firm assists property owners in reducing the taxes on their real property by challenging the valuation placed by the County Auditor on that property, we are frequently asked “is my property valuation too high?” Indeed, we provide a free initial assessment of property valuation to ascertain if savings might be available through the Board of Revision process.
As a starting point, “tax valuation” should follow the simple formula of “what a willing buyer would pay a willing seller for the property.” The Boards of Revision of Ohio largely follow the same rules marketplace participants follow: Valuation should reflect the actual value.
Two fallacies about valuation:
1) Many owners think their property must be over-valued if they experienced a significant increase in valuation from the prior triennial. This simply is not true. It is entirely possible the property was — and still is — significantly under-valued. Just because a property experienced a significant — or above market average — increase in valuation means nothing. The new valuation is compared to current parker, not prior valuation.
2) Many property owners want to compare their Auditor’s valuation to that of their neighbors’ property. But this is a false comparison. What the Auditor thinks your neighbor’s property is worth is simply not evidence of value before the Board of Revision. Comparable sales in your neighborhood, or new construction data is appropriate evidence.