In the case of N. Canton City School Dist. Bd. of Edn. v. Stark Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-1, the Ohio Supreme Court found that a “school board failed to point to any evidence that the sale price was not indicative of the value” in a property valuation case – resulting in the school district losing out on critical tax revenue.
The case involved a valuation complaint by a property owner “seeking to reduce the property’s tax-year-2012 valuation from $1,841,300 to $1,200,000.” Canton at ¶ 6. The school board “filed a counter-complaint seeking to retain the auditor’s valuation.” Canton at ¶ 6.
It is well-established in property valuation cases that the sale price is the best evidence of value when the property has been subject to “a recent arm’s length transaction.” Canton at ¶ 11. Generally speaking, an “auction or forced sale” is not considered an arm’s length transaction and “is not evidence of the property’s value.” Canton at ¶ 11. In such cases, the party supporting the sale price must present “evidence showing that the sale occurred at arm’s length between typically motivated parties.”
The Ohio Supreme Court found that the property owner “put forth substantial evidence before the BOR to show that its purchase of the property” occurred at arm’s length as “the property had been aggressively marketed by a qualified professional, that there was interest in the property from a number of buyers and at least a half-dozen offers, that the buyer was unconnected with the receiver or former property owner, that the buyer had not been aware of the sheriff’s sale, that the highest and best offer was accepted, and that the court found the sale price to be ‘commercially reasonable.’” Canton at ¶18. In contrast, “the school board failed to point to any evidence that the sale price was not indicative of the value or that the transaction was not at arm’s length.” Canton at ¶ 18. As a result, the school board lost out on $600,000 in property valuation.
The case serves as a reminder that school districts derive substantial revenue from property taxes. As a result, McGown & Markling recommends that all school districts actively take steps to protect their property valuation – especially when property owners are seeking to reduce property values.
McGown & Markling has experience representing school districts in a variety of property tax valuation disputes, and we are prepared to provide your school district with a free cost-benefit analysis to determine whether it is in your school district’s best interest to challenge one or more decrease complaints. For example, it makes absolutely no sense to waste scarce resources on legal fees if the potential tax decrease is of nominal value, there are political and policy ramifications in challenging the valuation of certain residential and commercial properties, and there are circumstances when certain property valuations actually should be decreased.
Please contact either Matthew Markling or Patrick Vrobel to schedule your free property valuation cost-benefit analysis today.
To read this case, please click here.
Authors: Matthew John Markling and Patrick Vrobel.
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.