North Canton City School District Board of Education, Appellee,
Stark County Board of Revision et al., Appellees; LFG Properties, L.L.C., Appellant.
Submitted September 12, 2017
from the Board of Tax Appeals, Nos. 2013-6181 and 2013-6222.
Alton & Horst, L.L.C., and Robert M. Morrow; and Mary Jo
Shannon Slick, for appellee North Canton City School District
Board of Education.
Sater, Seymour & Pease, L.L.P., and Karen H.
Bauernschmidt, for appellant.
1} This appeal concerns the valuation for tax
purposes of a property that was sold following a foreclosure
proceeding. The primary issue before us involves the
application of the "forced sale" provision of R.C.
5713.04. As we have applied the provision, a forced sale
gives rise to a presumption that the sale price is not the
property's true value. See Olentangy Local Schools
Bd. of Edn. v. Delaware Cty. Bd. of Revision, 141 Ohio
St.3d 243, 2014-Ohio-4723, 23 N.E.3d 1086, ¶ 40. That
presumption can be rebutted, however, by evidence that an
arm' s-length transaction occurred. Id. at
¶ 43. When the presumption is overcome, the sale price
is used as the property's value. Id. at ¶
2} In this case, the Board of Tax Appeals
("BTA") applied the presumption, despite
uncontradicted evidence demonstrating that the transaction
was at arm's length. We reverse the decision of the BTA
and remand the case with the instruction that the $1, 200,
000 sale price be used as the property's true value for
The Property Is Marketed and Sold Following
3} The property is a 36-unit apartment complex in
North Canton. After the complex went into foreclosure, the
common pleas court appointed a receiver over the property,
and Huntington National Bank obtained a judgment of about $1,
700, 000 against its borrower. The property was set for
sheriffs sale with a minimum bid of $1, 400, 000. There were
no bids, and the property did not sell.
4} The receiver then marketed the property through a
national real estate brokerage firm, Hendricks &
Partners. The firm sent out marketing materials to many
developers, including a mass-mailing flyer that showed a list
price of $1, 325, 000 and a pro forma statement of income and
expenses for operating the apartment complex. In addition,
the property was advertised on two national
commercial-real-estate websites. The marketing materials made
no mention of the sheriffs sale that failed to sell the
5} Ultimately, Hendricks & Partners received 17
inquiries from potential buyers, and at least a half-dozen
offers to purchase were submitted, ranging from $820, 000 to
$1, 200, 000. The highest and best offer was $1, 200, 000,
submitted by LFG Properties, L.L.C. There was no relationship
between LFG Properties and the receiver or the former
property owner. The receiver presented the offer to the
court, and the court approved the sale, finding that it was
"commercially reasonable." The property was
transferred to LFG Properties in June 2011.
6} LFG Properties filed a valuation complaint with
appellee Stark County Board of Revision ("BOR")
seeking to reduce the property's tax-year-2012 valuation
from $1, 841, 300 to $1, 200, 000. North Canton City School
District Board of Education ("school board") filed
a countercomplaint seeking to retain the auditor's
valuation. At the BOR hearing, LFG Properties was the only
party to present evidence. After considering the evidence,
the BOR noted that there was evidence in the record that a
distress sale occurred. It found, however, that the
presumption of involuntariness was rebutted with "strong
testimony" by LFG Properties, and "good evidence
[was] presented" showing that the property was marketed
over time. The BOR found that the June 2011 sale represented
the property's fair market value at the time of the sale.
It then adjusted that sale price by $101, 500 to account for
repairs that were made by LFG Properties after the sale,
thereby establishing a total value of $1, 301, 500.
7} LFG Properties and the school board both appealed
to the BTA. The BTA rejected the BOR's reliance on the
2011 sale price as an indicator of value, found that the sale
was a forced sale, and reinstated the auditor's
valuation. LFG Properties appealed to this court.
The BTA Erred in Failing to ...