By: Stephen D. Richman, Esq.-Senior Counsel, Kohrman,
Jackson & Krantz
Answering the “what,
when, where and why questions” relating to real estate tax complaints in Ohio
is a lot easier than answering “who” can file real estate tax complaints. The
Ohio Supreme Court in Greenway Ohio, Inc. v. Cuyahoga Cty. Bd. of
Revision, Slip Op. No.
2018-Ohio-4244, however, recently provided a little guidance as to
answering the “who question.”
I.
The What/When/Where/Why of Real Estate Tax Complaints in
Ohio
What: Property owners, concerned that their real property
tax values are too high may file a complaint to reduce the same. Those tax values, multiplied by local tax rates result in
the amount that property owners will pay in real estate taxes.
When:
Complaints may only be filed between
January 1 and March 31 (April 1, 2019 for tax year 2018) to contest the prior
year’s tax value. For example, if a complaint is filed in 2019, it relates back
to the tax value of the property as of January 1, 2018. Pursuant to Ohio
statutory law, as well as Ohio Department of Taxation rules, real property in
all Ohio counties is required to be reappraised every six years, and updated
every three years. Normally, owners can challenge a county auditor's valuation
just one time in each three-year cycle (a “triennial”) unless the property was sold in an arm's length transaction, the
property lost value due to a casualty, substantial improvement was added to the
property or there was an increase or decrease of at least fifteen per cent in a
commercial property's occupancy.
Time is
definitely “of the essence” with regard to tax complaints. If a complaint is
filed even one day late, it will be dismissed.
Where/How: Property
values are challenged via a "Complaint Against Valuation" that is
filed with the local Board of Revision (“BOR”). The same complaint form is used
statewide. It can be downloaded from county auditor websites as well as from the Ohio Department
of Taxation's website.
It is important to fill out the form carefully, because incorrect information
can result in the dismissal of a case.
Why: Basically,
complaints are filed to petition for lower property values, because lower
property values means lower property taxes. Common reasons to challenge property values include declining
market values, declining rents/increased vacancies for income-producing
property, obsolescence and casualty damage. In addition, people who recently
purchased a property in an arms-length transaction for less than their county
auditor's value, often have a strong basis for filing a tax appeal (due to case law which provides that the sale price in an
arm’s length transaction between a willing seller and a willing buyer is
usually considered good evidence of value).
What if there is no
recent sale involved? Does it still make sense to challenge your property’s
increased valuation?
The answer is, of
course, it depends. It depends on the amount of additional taxes that will need
to be paid, for how long, and the attorney, appraiser and other fees involved
with a complaint. For example, let’s say the county increased the value
of your property by $20,000. While that number is significant, if your county’s
tax rate as a percent of market value is 2%, your taxes would only increase by
$400/yr. On the other hand, a $100,000 valuation increase on a commercial
property with the same tax rate would result in taxes increasing by $2,000/yr.
Since valuation in Ohio is updated every three years, you could be faced with a
$6,000 increase (in our commercial example) if the year of increased valuation
is the first year of a triennial. If an appraisal costs, say $2,000, and
an attorney will take the case on a contingency basis, the challenge would be
worth it. You basically need to do a cost/benefit analysis for every
situation in order to determine if it makes sense to challenge your property’s
increased valuation.
II. . Who may File a Real Estate Tax Complaint in Ohio
II. . Who may File a Real Estate Tax Complaint in Ohio
§
Property owner;
§
An attorney, licensed to
practice law in the State of Ohio, representing any party properly before a BOR;
and
§
Any other entity named in Ohio Revised
Code Section 5715.19 (A).
Background: At one time, the list of who
could file a tax complaint was limited to attorneys and individual property
owners, as a result of then current court precedent, most notably, Sharon Village
Ltd. v. Licking Cty. Bd. of Revision, 78
Ohio St.3d 479 (1997). In the
aftermath of the Sharon Village decision, the General
Assembly enacted legislation (H.B. 694, effective March 1999) that (among other
things) expressly authorized certain non-attorneys to file tax valuation
complaints on behalf of property owners, namely: (1) spouses; (2) appraisers; (3) real estate brokers;
(4) accountants; and (5) officers, salaried
employees, partners or members of a corporation or other business firm owner of
real property (See Ohio Revised Code
Section 5715.19(A)).
Two sub-issues (regarding who may file): Two sub issues have arisen, however, after the supposed
clarity that H.B. 694 and O.R.C.
5715.19(A) was initially thought to provide. The first sub-issue centers around what a non-attorney agent may do during the tax complaint process,
without being guilty of the unauthorized practice of law. While, at first
glance, H.B. 694 appeared
to provide some practicality and legal cost savings by allowing a number of
non-attorney agents to file real estate tax complaints, the Supreme Court of
Ohio in Dayton Supply & Tool Co., Inc. v.
Montgomery Cty. Bd. of Revision, 2006-Ohio-5852 clarified
that while a corporate officer (or other authorized, non-attorney) may prepare
and file a complaint with a local board of revision, without engaging in the
unauthorized practice of law, the non-attorney cannot do much else. In other
words, corporate officers and other authorized, non-attorneys cannot make legal
arguments, examine witnesses or undertake any other tasks that can only be
performed by an attorney.
The second sub-issue is whether or not O.R.C. 5715.19(A) limits non attorney agents who may file
complaints on behalf of an owner to those specifically listed in the statute;
and if not, what other, non-attorney agents may tax file complaints.
Greenway
Ohio, Inc. v. Cuyahoga Cty. Bd. of Revision: The “second
sub-issue” discussed above was recently analyzed in Greenway Ohio, Inc. v. Cuyahoga Cty. Bd. of Revision.
Specifically,
this case involved whether or not a property manager is among
the non-lawyers authorized under O.R.C.
5715.19(A) to file a valuation complaint on behalf of a property owner.
In Greenway, the CEO of real
estate management company “Property Advisors” prepared and filed (in January,
2016) a tax complaint seeking to lower the value of the property that Property
Advisors managed for the owner (Greenway Ohio, Inc.; “Greenway”). The Orange
City School Board of Education (“BOE”) filed a motion to dismiss the complaint
on the basis that the Cuyahoga County Board of Revision (“BOR”) had no jurisdiction
to hear the matter, since Mr. Sweeney, the CEO of Property Advisors was not a
person authorized under O.R.C. 5715.19(A)
to file a tax complaint on behalf of the owner. The BOR indicated that Mr.
Sweeney was not authorized to file (and accordingly, engaged in the
unauthorized practice of law), however, the BOR issued a decision on the
merits, upholding the then property value of the Cuyahoga County Fiscal Officer.
Greenway then appealed to the Ohio Board of Tax Appeals (“BTA”). Without conducting
a hearing, the BTA determined that Mr. Sweeney was not a person authorized
under O.R.C. Section 5715.19(A) to file a tax complaint, and that therefore,
the BOR had no jurisdiction. The BTA then remanded the case back to the BOR
with instructions to dismiss the complaint. Greenway then appealed to the Ohio
Supreme Court.
The underlying premise of Greenway’s argument is that the list of
persons specified in O.R.C. 5715.19(A) is not an exhaustive list and that a
management company, as an authorized agent of the property owner should be able
to file a complaint on the owner’s behalf. In support of its argument, Greenway
cited a 2010 Ohio Supreme Court case that held for the taxpayer, and also dealt
with a real estate management company (Toledo
Pub. Schools Bd. of Edn. v. Lucas Cty. Bd. of Revision, 124 Ohio St.3d 490,
2010-Ohio-253). The court in Toledo Pub. Schools even acknowledged that the statute’s “list of persons is not intended as a
restriction of those who may file a valuation complaint on behalf of an owner.”
In fact, the Toledo Pub. Schools court stated that the statute’s intent is the
opposite of limiting. The intent of O.R.C. 5715.19(A), according to the Toledo Pub. Schools court is to “widen the pool [of persons authorized to file tax complaints]by
specifying that certain non-lawyers may file on behalf of an owner in spite of
considerations relating to the unauthorized practice of law.”
Notwithstanding this
seemingly supportive language to Greenway’s argument, the court in Greenway easily distinguished the Toledo
Pub. Schools case as not relevant because in Toledo Pub. Schools,
an attorney for the owner’s management company filed the complaint, vs. the
management company’s non-lawyer CEO (as was the case in Greenway), and the statute certainly did not intend to prevent
lawyers from filing complaints. The court in Toledo Pub. Schools came to
this same conclusion by stating: “But
when, as in the present case, a lawyer has prepared and filed the complaint,
the list of persons who may file on behalf of the owner in O.R.C. 5715.19(A) is
not relevant.”
If there is any thought left
as to whether or not the “window is still open” regarding authorized agent, non-lawyers
filing tax complaints who are not
listed in O.R.C. 5715.19(A), the court in Greenway
seemed to close any window it may have opened by concluding that “non-lawyers who are not specified in RC 5715.19(A)
are not authorized to file on behalf of a property owner.”
III. What is the Moral of this Story?
III. What is the Moral of this Story?
Don’t get “knocked out of the gate before the race starts.” Hire a
qualified attorney to file your complaint and do what lawyers are trained to do (i.e.,
make legal arguments, examine witnesses, file appeals and undertake any other
tasks that can be performed only by an attorney).
If a non-lawyer is determined to have engaged in the unauthorized
practice of law, because he/she was not authorized to file a tax complaint, or he/she
validly filed a tax complaint (pursuant to O.R.C.
5715.19(A), but then crossed the “practicing law line”
during the hearing, the complaint can be dismissed, and if dismissed, you won’t
be able to file another complaint until the next tax year.
