HIN, L.L.C. v. Cuyahoga County Board of Revision
138 Ohio St. 3d 223
| Ohio | 2014Background
- A 34-acre parcel in Bedford, Ohio contains a two-story, 78,500-square-foot office building.
- Tops Markets owned the property in 2003; JBK Properties acquired it via a U.S. Bank lease, with a triple-net lease signed November 1, 2003 and deed recorded December 30, 2003.
- In April 2004, HIN, LLC purchased the property from JBK for $7.4 million and recorded the transfer the next day.
- The 2004 sale had been addressed in HIN, LLC v. Cuyahoga Cty. Bd. of Revision (HIN I), which held the December 2003 sale price of $4.9 million was the value for 2004 because it was closer in time to the tax lien date.
- For tax year 2006, the Cuyahoga County auditor set the value at $8 million; the BOR reduced to $7.4 million; HIN sought $4.9 million; the BTA upheld $7.4 million as the value.
- HIN challenged the lease encumbrance and introduced an appraisal, but the court concluded the April 2004 arm’s-length sale price established value and excluded appraisal evidence and lease considerations from contrary impact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the 2004 sale price establish value despite the lease? | HIN argues the sale reflects leased fee, not fee simple. | BTA correctly used a recent arm's-length sale price; lease does not alter value; appraisal not required. | Yes; sale price establishes value; lease and appraisal ignored. |
| Is appraisal or lease encumbrance relevant to value when a recent arm's-length sale exists? | HIN contends appraisal and encumbrance affect true value. | Appraisal evidence and encumbrances are not used to rebut a recent arm's-length sale price. | No; they are not relevant; sale price controls. |
| Does using the 2004 sale price violate the uniform taxation requirement? | Using sale price with encumbrance could violate uniformity. | Uniform rule supports valuing by actual sale price when sale is recent and arm's-length. | No; does not violate uniform taxation. |
Key Cases Cited
- Berea City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269 (2005-Ohio-4979) (outside/appraisal evidence only when no arm's-length sale or nonrecent; recent sale controls value)
- Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516 (2008-Ohio-1473) (arm's-length sale price reflects true value; encumbrance not considered to adjust sale price)
- HIN I, LLC v. Cuyahoga Cty. Bd. of Revision, 124 Ohio St.3d 481 (2010-Ohio-687) (rejected treating lease encumbrances as altering value when sale is arm's-length and recent)
- Dublin City Schs. Bd. of Edn. v. Franklin Cty. Bd. of Revision, 118 Ohio St.3d 45 (2008-Ohio-1588) (sale price with encumbrances can establish value; appraisal not required when sale is recent and arm's-length)
- AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio St.3d 563 (2008-Ohio-5203) (rejects adjusting sale price due to long-term lease encumbrance)
- Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision, 37 Ohio St.3d 16 (1988) (fee simple valued as if unencumbered is not controlling when sale price is recent and arm's-length)
- Meijer Stores Ltd. Partnership v. Franklin Cty. Bd. of Revision, 122 Ohio St.3d 447 (2009-Ohio-3479) (rejects appraisal as rebuttal to arm's-length sale value)
- Dublin-Sawmill Properties v. Franklin Cty. Bd. of Revision, 67 Ohio St.3d 575 (1993) (dissenting view on value assessment; not controlling in majority decision here)