Cattell v. Lake Cty. Bd. of RevisionCattell v. Lake Cty. Bd. of Revision
Judgment: Reversed and remanded.
Kevin Wayne Rumes, 2062 McClaren Lane, Broadview Heights, OH 44147 (For Appellant).
Charles E. Coulson, Lake County Prosecutor, and Eric A. Condon, Assistant Prosecutor, 105 Main Street, P.O. Box 490, Painesville, OH 44077 (For Appellees).
TIMOTHY P. CANNON, J.
{¶1} Appellant, Charles J. Cattell, appeals from the judgment of the Lake County Court of Common Pleas, which affirmed a decision by the Lake County Board of Revision (“BOR“). For the following reasons, we reverse the decision of the trial court.
{¶2} Appellant filed a complaint against the valuation of three parcels of property with the BOR seeking to reduce the auditor‘s appraised valuation of each property. Appellant maintained that, based on his recent purchase of the three
{¶3} After a hearing was conducted, the BOR adjusted the appraised values of the three properties. In a letter dated June 24, 2009, the BOR notified appellant that it had reduced parcel one from $59,220 to $51,180; parcel two from $105,610 to $83,780; and parcel three from $98,630 to $82,800. These findings were made for the 2008 tax year. The BOR notified appellant that he had a right to file an appeal with either the state of Ohio Board of Tax Appeals or with the Lake County Court of Common Pleas.
{¶4} Appellant filed an appeal in the Lake County Court of Common Pleas alleging the BOR erred by not accepting the sale price, pursuant to
{¶5} Appellant filed a timely appeal and asserts the following assignment of error:
{¶6} “The Trial Court erred in allowing and engaging in extra-legal analysis and allowing evidence (including erroneous affidavits) where a statute clearly establishes the proper procedure for assessing property valuation, by the Lake County Board of
{¶7} During the pendency of this case, appellant has maintained that the sale price is the true value for tax assessment purposes of the three parcels of land purchased. Appellant argues that he purchased the subject parcels in an arm‘s length transaction, and, therefore, the sales price of each parcel constitutes their true value for taxation purposes. Appellant notes that each parcel was for sale in an open market for a considerable length of time, was listed on the Multiple Listing Service (MLS), and was available to any qualified purchaser. To support this argument, appellant cites
{¶8} “In determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot, or parcel has been the subject of an arm‘s length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor shall consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes.”
{¶9} Appellees have not argued, either at the trial court or the appellate level, that the sales of the subject parcels were not within a reasonable length of time. Initially, appellees focused their argument on whether the three parcels of land were the subject of an arm‘s length transaction. Specifically, appellees argued that the purchase price was not indicative of the true fair market value, as the three parcels of land were not the subject of an arm‘s length transaction. Appellees cite to the declining housing
{¶10} The trial court issued a decision based on the record and briefs filed by each party and affirmed the decision of the BOR. See
{¶11} With respect to parcel one and parcel two, the trial court stated:
{¶12} “The Court finds that the prices Appellant paid for each of these two properties are not accurate bases for the value of the property. While the transactions may technically have been arms-length in that the parties did not enjoy a special relationship, the Court does not find that these transactions are proper evidence of the properties’ values. In each situation, Appellant purchased the property from a bank, who had purchased the property at Sheriff‘s Sale. The Court finds these prices to be unreliable, as the Court notes that the amount of money Appellant spent to make each property liveable was minimal and the sale prices of comparable homes far exceed the values asserted by Appellee. The Court will therefore not consider the prices Appellant paid for each of these two properties as evidence of the market value of each properties.”
{¶13} With respect to parcel three, the trial court stated:
{¶15} “‘When reviewing an appeal from the board (of revision), a common pleas court must independently weigh and evaluate all the evidence properly before the court, and make an independent determination of the taxable value of the property. Black v. Bd. of Revision (1985), 16 Ohio St.3d 11, 13 ***.
{¶16} An abuse of discretion is the trial court‘s “‘failure to exercise sound, reasonable, and legal decision-making.‘” State v. Beechler, 2d Dist. No. 09-CA-54, 2010-Ohio-1900, at ¶62, quoting Black‘s Law Dictionary (8 Ed.Rev.2004) 11.
{¶17} It is clear that the critical threshold issue to be decided is whether the purchases by appellant were arm‘s length transactions. Appellees argued before the trial court, as they did in their appellate brief, that the sales at issue were distressed sales. At oral argument, however, appellees acknowledged that the sales were, in fact,
{¶18} Appellees maintain that even if the transactions are deemed arm‘s length, this court can consider extraneous evidence if it demonstrates that the sale prices of the properties are not reflective of their true value. As authority for this proposition, appellees have cited and argued the case of Berea City School Dist. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269, 2005-Ohio-4979. However, as discussed herein, it is clear that Berea does not stand for such a proposition.
{¶19} In construing
{¶20} “In accordance with the plain language of
{¶21} The court in Berea overruled Ratner v. Stark Cty. Bd. of Revision (1986), 23 Ohio St.3d 59, 61, a case where the Supreme Court “changed [the] bright-line rule, concluding: ‘Although the sale price is the “best evidence” of true value of real property for tax purposes, it is not the only evidence. A review of independent appraisals
{¶22} In the past few years, the Supreme Court decided AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio St.3d 563, 2008-Ohio-5203; St. Bernard Self-Storage, LLC v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365, 2007-Ohio-5249; and Rhodes v. Hamilton Cty. Bd. of Revision, 117 Ohio St.3d 532, 2008-Ohio-1595, all of which reiterated the holding in Berea.
{¶23} Although there is a presumption that the sale price is the best evidence of the true value, that presumption may be rebutted where there is evidence that the sale was not an arm‘s length transaction. Cummins Prop. Servs. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, at ¶41. (Citation omitted.) Appellees have maintained that appellant‘s purchases of the three properties “were unreliable short sales.” However, these clearly were not “short sales” in the typical sense. In the “short sale” scenario, there is a mortgage holder who allows the sale to take place from the mortgagee to a third party even though the mortgage holder does not receive the full amount due on the mortgage. No such sale took place here. The purchase was made directly from the seller who had openly marketed the properties. The Supreme Court
{¶24} Appellees cited to Zazworsky v. Licking Cty. Bd. of Revision (1991), 61 Ohio St.3d 604, 606, where the Supreme Court listed “abnormal economic conditions” as a factor that can “‘affect the use of the sale price of property as evidence of its true value.‘” In so stating, the Zazworsky Court cited to Ratner v. Stark Cty. Bd. of Revision (1986), 23 Ohio St.3d 59. However, as previously mentioned, the Supreme Court has since overruled Ratner to the extent it “changed the bright-line rule[.]” Berea, supra, at ¶10.
{¶25} The instant case presents no evidence to support appellees’ argument. While the BOR characterizes the sale of each property as a short sale, the properties at issue had already been the subject of foreclosure proceedings. In this case, the bank had purchased all three properties at a sheriff‘s sale. Further, although the homes were purchased by the bank at a sheriff‘s sale, they were listed for sale with a realtor on the open market. Each property was listed on the MLS. Accordingly, each transaction took place on the open market between a willing buyer and a willing seller, neither of which were under duress or coercion. See, Walters, supra.
{¶26} In Walters, supra, at 23, the appellees purchased six vacant lots in a lake resort and recreational area. The appellees purchased said lots at an auction that was published in a newspaper. Id. The appellees purchased these six lots well below the auditor‘s value. Id. Evidence was presented that property values for non-lakefront
{¶27} Based on the evidence presented in the instant case, we determine that the sale of each property was an arm‘s length sale.
{¶28} It appears the trial court gave weight to the fact that appellant made certain “improvements” to the properties subsequent to the relevant sales. This could be significant because
{¶29} As defined by
{¶30} Based on the foregoing, appellant‘s assignment of error is with merit. The judgment of the Lake County Court of Common Pleas is hereby reversed and remanded for proceedings consistent with this opinion.
MARY JANE TRAPP, P.J.,
COLLEEN MARY O‘TOOLE, J.,
concur.