It’s fun to turn a losing case into a winner.

The Ohio Real Estate Recovery Fund (O.R.C. Section 4735.12) has the potential of taking a case that can’t be “won,” because the client can’t collect against the defendant, into a “winner” by accessing this special professional indemnity pool.

A¬†plaintiff client who has a claim against an Ohio real estate agent who is insolvent — uncollectable — would typically just “walk away.” ¬†“You can’t get blood from a turnip,” they say. ¬†“Throwing good money after bad.”

But these are not necessarily losing claims.

In the limited instance in which the claim is (i) against an Ohio real estate salesperson or broker, (ii)¬†“on the grounds of conduct that is in violation of” the real estate brokerage laws of the state, and (iii) for an act that¬†“is associated with” Ohio real estate brokerage activities, a plaintiff can recover from the state of Ohio up to $40,000 per licensee (not per claim) any unpaid judgment¬†“that represents the actual and direct loss sustained by the applicant.”

The statute is highly technical to invoke, and the Ohio Division of Real Estate that administers the fund and the Ohio Attorney General’s Office that defends against claims from the fund guard the funds zealously, meaning you have to carefully jump through a lot of hoops to access these funds.

Attorneys in our firm have successfully made a claim for funds from the Ohio real estate recovery fund.

There are separate and similar recovery funds for losses arising from the misdeeds of:

  • Ohio appraisers in the scope of their licensed activities (O.R.C. Section 4763.16). ¬†Claims from that fund are limited to $10,000 per judgment.
  • Ohio auctioneers in the scope of their licensed activities (O.R.C. Section 4707.25). ¬†Claims from that fund are limited to $50,000 per judgment.

Allow us to “make a difference” for you by pursuing claims against a statutory recovery fund of Ohio licensees.

The Finney Law Firm has been retained by leading real estate attorneys and property owners in Hamilton County to defend our system of “Land Registration” that is being threatened by¬†some of our elected officials. ¬†Read about that process and political battle here (in an unfortunately-slanted piece).

There are two ways in Ohio to hold title to real property¬†— “regular” land title and the Torrens system of registered land.

Under the regular system,¬†evidence of title is placed of record by means of recording of deeds, mortgages, easements, liens and such in the real property records. ¬†Under the Torrens land registration system, title is¬†evidenced by the notations on a single “Registered Land Certificate.”

In Hamilton County, more than anywhere else in the State, we have registered land — and lots of it. ¬†About 20% of all parcels, about 52,000 in total, were voluntarily placed into the system by the owners bringing suit years ago to “register” their title. ¬†Thereafter, all changes to title have to be handled in a careful, methodical system that assures that claims against title and transfers of title are registered on the certificate.¬† If someone wants to opt out of the system,¬†there is a¬†simple and inexpensive process that can be followed.

Until recently, the only way to de-register land en-masse and without regard to the preference of the owners of the land was to send a certified letter to each property owner, and then, following some significant legal formalities, have a vote of the County Commission to abolish the registration in that County.  Recently, the Ohio legislature dispatched with the mailed notice required to property owners.

Now, under that new abbreviated system, Hamilton County Commissioners are considering a vote to abolish all registered land in the County.  If two Commissioners vote to approve the change, the additional protections that the owners of 52,000 parcels of land in the County have paid for will disappear.

Our firm has been retained to (i) work to defeat such policy change, and (ii) if it is enacted, to bring suit on behalf of affected property owners to overturn such decision.

We are honored to have been selected to help “make a difference” for our clients in this important battle.

Many of Ohio’s major urban counties, including Hamilton (Cincinnati), Franklin (Columbus), and Montgomery (Dayton), as well as Butler and Warren in Southwest Ohio have either major reassessment years or simpler “updates” for property tax year 2014 ¬†(bills issued first in 2015), and thus the total value of property in each taxing district will either rise and fall next year.

Now this is all a bit complicated, but, vastly simplified, the way taxes work in Ohio is that as property valuations at large fall, tax rates automatically rise close to the same percentages, thus raising much the same revenue off of the new, smaller tax base that that the larger base raised in the prior tax year.  And, conversely, as property tax valuations rise, rates automatically fall.  This entry from the Cuyahoga County Fiscal Officer explains a little more about this.

As this entry explains, the early returns in Ohio for Dayton area assessments and Summit County (Akron)¬†show that¬†the tax bills first issued in 2015 will have lower on-average assessments for properties. ¬†That means, even without a single tax increase on the ballot in those counties, rates will rise about the percentage. ¬†Thus, if your property does not decline in assessed value the amount of the “average” property in that county, your overall taxes will rise.

The effect of this can be seen most noticeably in Montgomery County, where today real property tax rates exceed 3% of of the¬†Auditor’s assessed¬†total true value of properties. ¬†This compares to rates in the sub-2.5% range in most of the rest of the state. ¬†Much of this is due to the rapidly-declining tax base in this area. ¬†Based upon 2014 tax year preliminary assessments, that trend appears to be continuing.

If you are concerned your tax bill is too high, let us counsel you on how to achieve tax savings in your real estate portfolio.

 

Our legal practice includes a healthy portion of property tax valuation work — challenging excessive valuations of real property by County Auditors to ultimately reduce the tax burdens for our clients. ¬†In that practice area, we¬†occasionally represent real estate developers¬†who hold developed residential and commercial lots, and or condominiums that are¬†have similar characteristics.

One generally accepted appraisal method for such property that¬†is accepted as a valuation technique generally (by buyers, lenders, etc.) is the “bulk sales” valuation method. ¬†Under the “bulk sales” valuation method, the question is if a series of like properties were sold in bulk today, rather¬†than one-by-one over time, what price would they yield? ¬†Typically that¬†valuation is lower than a¬†parcel-by-parcel sale.

We see this valuation challenge arise where a developer owns many residential lots, or an entire building full of residential condominium¬†units. ¬†He has a choice of selling each lot and each unit over a period of years, which involves, interest cost, taxes, insurance and maintenance costs until all are liquidated. ¬†The alternative would be to sell the lots of condominium units “in bulk” to a single buyer, and to sell them all at once. ¬†In such circumstance, even if individual sales might yield a purchase price of 15% to 25% higher than a “bulk sale,” the¬†“bulk sale” is preferred to avoid the expense and risk of sitting¬†on the inventory.

The Ohio Supreme Court has ruled that for purposes of valuing property for taxation purposes, it simply will not accept the bulk sales valuation method.  Rather, each individual parcel or condominium unit must be valued separately for tax purposes.

This was recently reaffirmed in Dublin City Schools Board of Education v. East Bank Condominiums, LLC, Slip Opinion, 2014-OHIO-1940.

Please let us know how we can make a difference for you with our real estate tax valuation team.

When closing a real estate transaction, every state requires that one or both parties report to the local taxing authority the sales price of the property.  This report is used for two primary reasons: (i) to establish the amount of the transfer tax or conveyance fee for the transaction and (ii) to establish the taxable value of the property for real estate taxation purposes going forward.

In Ohio the sale price is signed by the grantee under the deed, and is reported on a state-mandated conveyance fee form.  In Kentucky, the grantor and grantee must sign an affidavit of consideration attesting to the sales price.  Both forms are prerequisites to getting a deed of record.

Now, before we go any further with this post, it is important to note that the amount reported is not discretionary and not to be treated lightly.  In both Ohio and Kentucky, the reporting form is a sworn statement (i.e., under oath), the falsification of which is a felony.  So we are not suggesting misrepresenting anything on those forms.  But  an honest approach to the consideration question can yield different results depending on the circumstances.

With those items¬†as background, many considerations drive the reported sales price on the conveyance fee form or consideration affidavit: (i) the stated contract price, (ii) federal tax considerations (e.g. basis¬†and capital gains), (iii) the value to be “booked” for a sale, and (iv)¬†appearances for banks¬†and equity partners. ¬†But frequently overlooked by the dealmakers is one of the most significant consequences of the¬†price reported: the real estate taxes for years and years going forward will either be dictated by or strongly influenced by the number appearing on that form.

Many times we find in our property tax valuation work that buyers and sellers thoughtlessly put a high value on those forms, which may include the value of the business operating inside the property, furniture, fixtures and equipment, and other factors unrelated to the actual value of the real estate acquired.

With annual rates of taxation in Ohio ranging between 1.7% to 3.2% of the valuation and annual rates of taxation in Kentucky being around 1.1% annually, the consequence of unnecessarily over-reporting the sales price can be costly year after year after year.

Thus, we carefully counsel buyers to consider stripping¬†¬†from the reported sales price the FF&E, the goodwill, cash and A/Rs of a business being acquired, and¬†other factors that are unrelated to the real estate transaction. ¬†The net effect can be an annualized savings going forward of 1.1 to 3.2 percent of the excised property’s value going forward.

One of the most common questions people ask when considering filing for bankruptcy is whether or not they can keep their house. This makes sense as a house is often the most valuable asset you own and the place you live and raise your family. Many people fall behind on their payments due to an unexpected income reduction due to a job loss or illness. Later, they find a new job and/or their financial situation changes and they need a way to catch up their house payments to stop the bank from foreclosing against their property. Chapter 13 Bankruptcy offers homeowners a way to protect their homes and stop foreclosure lawsuits in their tracks.

When you file Chapter 13 Bankruptcy you receive the protection of the automatic stay. The automatic stops any creditor’s attempts to begin, continue, or complete a foreclosure lawsuit in state court. The automatic stay goes into place immediately after you file and will stop a court ordered sheriff’s sale from proceeding. The automatic stay allows you to breathe easier knowing that your house will not be lost on the courthouse steps.

Chapter 13 offers many benefits that allow you use your income to repay some or all of your debt. You may also have the benefit of paying your unsecured creditors back a reduced amount that is based on your income. Your bankruptcy attorney will propose a Chapter 13 Plan that allows you to pay back your past-due mortgage payments and penalties over the course of 36 to 60 months depending on your income. You are still responsible for making your standard monthly mortgage payment in addition to your new additional Plan payment, but your back payments are spread out over the course of the Plan to make them affordable.

Chapter 13 can be beneficial for you if you have a 2nd mortgage that is not secured against¬†your property because your house is worth less than the balance of your first mortgage. An example is if your 1st mortgage is $100,000 and you have a 2nd mortgage or home equity line of credit for $20,000, and your house is only worth $85,000, you may be able to ‚Äėstrip‚Äô off the 2nd mortgage and only pay back a percentage of the amount owed on the 2nd mortgage. At the end of your Chapter 13 your 2nd mortgage is eliminated and you will only owe the balance on your 1st mortgage. Please consult your bankruptcy attorney to see if you would qualify.

If you successfully complete your Chapter 13 by making all of your plan payments, you debt will be discharged and your mortgage payments will be deemed current. From this time on you can continue to make your normal monthly payments until your mortgage is paid off. You will also have your other eligible debts discharged as well. Chapter 13 is a great vehicle for eligible homeowners to use to save their homes and reduce their debt. Contact Finney Law Firm today for a free consultation to see if Chapter 13 bankruptcy is the right option for you.