Background
Attorney Mark Gillis filed complaints asking the Delaware County Board of Revision to increase the tax-year 2022 values of three apartment properties owned by Northlake Summit LLC, Powell Grand Communities LLC, and Rushmore OH Partners LLC. He alleged that each property had recently been sold in an arm’s-length transaction for a price exceeding the auditor’s valuation by both 10% and the applicable $500,000 statutory threshold.
The county board declined to change the values, and Gillis appealed to the Ohio Board of Tax Appeals. Although Gillis had not presented proof of the qualifying sales before the county board, the BTA allowed discovery. Gillis obtained purchase agreements and settlement statements and presented those materials, appraisal evidence, and expert testimony. The BTA increased all three property values, and the owners appealed.
The Court’s Holding
In a 2-1 decision, the Fifth District affirmed. The majority held that the 2022 version of R.C. 5715.19(A)(6) required the facts supporting a qualifying sale to exist when a third-party complaint was filed, but did not require the complainant to possess or immediately produce proof of those facts at filing. Because Gillis alleged facts that, if proven, satisfied the statute, the BTA could permit discovery and receive additional evidence that he could not obtain during the county-board proceedings.
The court also upheld the BTA’s findings that the transactions were arm’s-length sales of the apartment properties despite being structured as transfers of LLC membership interests. The agreements and settlement statements showed an intent to transfer the income-producing real estate, and the owners presented no evidence supporting an allocation of any part of the prices to personal or intangible property. Presiding Judge King dissented, reasoning that the statute’s “shall not file” language required competent proof of a qualifying sale before the county board and that BTA discovery could not cure the alleged jurisdictional defect.
Key Takeaways
- A third-party complainant under the applicable 2022 statute could plead facts establishing a qualifying sale and prove them later through BTA proceedings.
- The BTA could admit evidence obtained through discovery when the complainant lacked the evidence and could not obtain it during the county-board proceedings.
- An entity-interest transfer may qualify as a sale of real estate when the transaction documents demonstrate that transferring the entity was the mechanism used to convey the property.
Why It Matters
The decision permits third-party property-valuation complaints to proceed beyond the filing stage when they adequately allege the required jurisdictional facts, even if supporting transaction documents are initially controlled by the property owner. It also confirms that the BTA’s discovery process can supply evidence unavailable during the more informal county-board proceedings.
For entity-structured real-estate transactions, the ruling reinforces that substance controls over form. Owners seeking to exclude personal property, intangible assets, or business value from a transaction price must present evidence supporting that allocation.