Summary
In Fountain Square Assocs., however, we suggested that an appraisal might be used to determine a value different from an actual sale price "where it is shown that the sales price is not reflective of true value."
Summary of this case from Terraza 8, L. L.C. v. Franklin Cnty. Bd. of RevisionOpinion
No. 83-1061
Decided February 22, 1984.
Taxation — Best evidence of "true value in money" of real property — Actual, recent sale in arm's-length transaction — R.C. 5713.03.
APPEAL from the Board of Tax Appeals.
On December 4, 1980, appellee, Fountain Square Associates, Ltd., purchased, in an arm's-length transaction, seven parcels of real property improved with an office building complex located in the city of Columbus.
Appellee paid a total consideration for the property of $8,855,000 consisting of $1,505,000 in cash, the assumption of a promissory note secured by a first mortgage with a principal balance of $3,532,906.60, and a new promissory note secured by a second mortgage executed by appellee to the seller in the principal amount of $3,817.093.40. Transfer taxes to Franklin County were paid on the amount of $8,855,000.
On January 29, 1981, appellant, Columbus Board of Education, filed a "Complaint as to the Assessment of Real Property" with appellee, the Franklin County Board of Revision, seeking to increase the appraised value of the subject property to $8,855,000 to reflect the recent sale price. On July 23, 1981, the board of revision entered its orders valuing the property at $8,854,970.
Upon appeal to the Board of Tax Appeals, appellee submitted an appraisal which determined the value of the property by reducing the sales price to reflect the cash equivalency value of the notes, that is, the price for which the notes could have been sold on the date the property was purchased. The Board of Tax Appeals accepted appellee's appraisal and, by order dated June 17, 1983, found that the fair market value of appellee's property was $7,435,000, determined by adding the cash paid to the cash equivalency value of the notes.
The cause is now before the court upon an appeal as of right.
Messrs. Teaford, Rich Dorsey, Mr. Jeffrey A. Rich and Mr. Matthew T. Fitzsimmons, for appellant.
Schottenstein, Zox Dunn Co., L.P.A., Mr. Robert H. Schottenstein and Mr. Daniel J. Kayne, for appellee Fountain Square Associates, Ltd.
Appellant argues that the valuation of appellee's property set by the Board of Tax Appeals is unreasonable and unlawful for the reason that it ignores the recent sales price.
R.C. 5713.03 provides, in part:
"* * * 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. * * *" (Emphasis added.)
We have consistently adhered to the rule 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, 333 [12 O.O.3d 305].
Appraisals based upon factors other than sales price are appropriate for use in determining value only when no arm's-length sale has taken place ( id. at 333), or where it is shown that the sales price is not reflective of true value ( Consolidated Aluminum Corp. v. Bd. of Revision, supra, at 414).
The fact that appellee obtained favorable financing does not render the sales price unrepresentative of true value. Thus, it was unreasonable and unlawful for the board to accept appellee's appraisal rather than the recent sales price in valuing the subject property.
Accordingly, the decision of the Board of Tax Appeals is reversed and the valuation as determined by the board of revision is reinstated.
Decision reversed.
CELEBREZZE, C.J., W. BROWN, SWEENEY, LOCHER, HOLMES, C. BROWN and J.P. CELEBREZZE, JJ., concur.