Ratner v. Stark County Board of Revision

491 N.E.2d 680, 23 Ohio St. 3d 59, 23 Ohio B. 192, 1986 Ohio LEXIS 605

• Court: Ohio Supreme Court
• Decided: April 11, 1986
• Docket: No. 85-737
• Status: Published

Opinions

Wright, J.

The taxpayer argues that the BTA valuation of the mall property is unreasonable and unlawful because it does not reflect fair market value as of January 1, 1981.

This court has held that “[t]he fair market value of property for tax purposes is a question of fact, the determination of which is primarily within the province of the taxing authorities, and this court will not disturb a decision of the Board of Tax Appeals with respect to such valuation unless it affirmatively appears from the record that such decision is unreasonable or unlawful.” Bd. of Revision v. Fodor (1968), 15 Ohio St. 2d 52 [44 O.O.2d 30], syllabus. In the instant case, the BTA relied on Columbus Bd. of Edn. v. Fountain Square Assoc., Ltd. (1984), 9 Ohio St. 3d 218, to reject the evidence presented by the taxpayer’s appraisers. The BTA incorrectly interpreted Fountain Square to compel a holding that true value is synonymous with sale price.

We have consistently held that “[t]he best evidence of the ‘true value in money’ of real property is an actual, recent sale of the property in an arm’s-length transaction. * * *” Conalco v. Bd. of Revision (1977), 50 Ohio St. 2d 129 [4 O.O.3d 309], paragraph one of the syllabus. See, also, Consolidated Aluminum Corp. v. Bd. of Revision (1981), 66 Ohio St. 2d 410, 414 [20 O.O.3d 357]; Meyer v. Bd. of Revision (1979), 58 Ohio St. 2d 328, [12 O.O.3d 305]; Fountain Square, supra, at 219. 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 evaluating the cash equivalency of the sale price is appropriate where it is shown that the sale price does not reflect true value. Consolidated Aluminum Corp., supra; Fountain Square, supra, at 219. Evidence presented by the taxpayer’s experts clearly rebutted the presumption that the sale price reflected true value.

In Fountain Square, this court indicated that evidence of favorable financing alone is insufficient to show that the contract sale price does not reflect true value. Id. The appellant in Fountain Square produced no evidence other than the terms of the sale to indicate that the sale price did not reflect the true value of the property. In the instant case, the taxpayer presented testimony from two appraisers using traditional valuation methods to establish that the contract sale price did not reflect true value. Although the actual sale price provides strong evidence of market value, specific transaction prices including financing terms should be examined to determine if the transaction reflected market value. Considering the substantial below-market financing assumed by the taxpayer in the purchase of Mellett Mall, the contract sale price alone is not conclusive as to market value.

Neither the board of revision nor the taxpayer urges that the provisions of R.C. 5713.03 are absolutely determinative of this appeal. R.C. 5713.03 provides that the sale price of any tract, lot, or parcel of real estate, which has been the subject of an arm’s-length sale between a willing seller and a willing buyer within a reasonable length of time, shall be considered its true value for taxation purposes.

This court has never adopted an absolutist interpretation of this statute. Our decisions and those of other jurisdictions with similar statutes have approved of considering factors that affect the use of the sale price of property as evidence of its true value. Such factors might include: mode of payment, sale-lease arrangements, abnormal economic conditions and the like. Benedict v. Hamilton Cty. Bd. of Revision (1959), 170 Ohio St. 62 [9 O.O.2d 458]; Ramsey v. Bd. of Revision (1943), 141 Ohio St. 366 [25 O.O. 476]; Janss Corp. v. Bd. of Equalization (1970), 93 Idaho 928, 478 P. 2d 878; Allied Chem. Corp. v. Union Cty. Bd. of Supervisors (Ky. 1974), 511 S.W. 2d 196; Alfred J. Sweet, Inc. v. Auburn (1935), 134 Me. 28, 180 A. 803; Moran v. Grosse Pointe Twp. (1947), 317 Mich. 248, 26 N.W. 2d 763; Rek Invest. Co. v. Newark (1963), 80 N.J. Super. 552, 194 A. 2d 368; Plainfield v. State Bd. of Tax Appeals (1941), 127 N.J. Law 5, 20 A. 2d 651; Bd. of Equalization v. Heights Real Estate Co. (1964), 74 N.M. 101, 391 P. 2d 328; People, ex rel. Owens, v. Schmiedel (1942), 264 App. Div. 742, 34 N.Y.Supp. 2d 493, affirmed (1943), 290 N.Y. 900, 50 N.E. 2d 298; Appeal of Secy, of Banking (1946), 355 Pa. 226, 49 A. 2d 337. See, also, Annotation (1979), 89 A.L.R. 3d 1126, 1135-1139.

Although the sale price may be used to establish the fair market value of the property in question, because of the state constitutional requirement that taxation be uniform, the sale price without adjustments for abnormally low interest rates could not be used to increase the assessment while at the same time using a much lower valuation for comparable property that has been sold without such favorable financing.

In determining true value for property, the board of revision and the BTA must at least consider and review evidence presented by independent real estate appraisers that adjusts the contract sale price to reflect both the price paid for real estate and the price paid for favorable financing. Based on the foregoing, the decision of the BTA is reversed and the cause is remanded for further proceedings in accordance with this opinion.

Decision reversed and cause remanded.

Sweeney, Holmes and C. Brown, JJ., concur. Celebrezze, C.J., Locher and Douglas, JJ., dissent.