Hi, How Can We Help You?

Category Archives: Business & Civil Litigation

Ohio real estate brokerage law: Liens for Realtors in commercial transactions

Author By Casey A. JonesPosted on

How do I obtain an Ohio commercial real estate broker lien?

Attorney Casey Taylor

First, let’s be clear: There is no lien right for real estate brokers for property consisting solely of between one and four residential units. (O.R.C §§1311.85 and .86).

However, licensed real estate brokers do have lien rights in transactions involving commercial properties, i.e., anything other than between one and four residential units.  (O.R.C §§1311.86).

The lien rights extend to brokerage contracts for the provision of services for selling, purchasing, and leasing.  (O.R.C §§1311..86(A) and (B)).  They do not appear to cover the provision of property management services.

What is a lien?

In one sense, a lien does not get you anything more than the contract rights you already have: You have a signed listing agreement, you have earned your commission, you can sue in a court of competent jurisdiction, and you can thus get paid the amount of money you are owed.

But as a practical matter, lien rights are tremendously powerful in “turning the tables” on a property owner, giving quick, inexpensive and powerful leverage to the Realtor to resolve a commission dispute.

Why is a lien important?

Leverage often is the “whole ballgame.”  So often, (a) debtors will avoid debts they clearly owe just because they can, for purposes of the time-value of money (by delaying the payment, they can use your money in the interim) and (b) the reality is that most creditors will not go to the trouble and expense of hiring and paying an attorney to collect the sums owed to them.

Litigation can cost as little as $20,000 per case, up to hundreds of thousands of dollars for a vigorously-contested action.  So, the question for a Realtor claiming a commission is: Can I “check” or “checkmate” a property owner (seller or landlord) into recognizing, dealing with and paying my claim without the two years and tens of thousands of dollars in legal fees needed to vindicate that right?

A lien is a powerful tool — it encumbers real property

A lien is an encumbrance on real property.  In most cases, real property encumbrances have the same priority of the order of filing, i.e., the first-filed is paid first from the sale proceeds, the second, second and so forth.  (Ohio mechanics liens are the major exception to this rule, dating back to the date of first work on a project.)

This gives the lien holder two distinct advantages, many times powerful advantages: (a) their claim is secured against the real estate (i.e., the owner cannot further squander the equity in the property by a sale or mortgage) (b) the claimant has placed a cloud on the title with what may still be a disputed claim, effectively preventing the owner from selling or mortgaging the asset until the earlier of (i) the statutory expiration of the lien or (ii) the judicial disposition of the claim and the lien rights.

Thus, as a practical matter if the property owner wants to sell his property or take out a new mortgage or refinance an existing mortgage, he will have to “deal with” the Realtor’s claims before doing so.

A broker’s lien is unilateral — it does not require the owner’s signature or consent

Contrary to what many clients ask of us in a simple contract or tort claim (“please lien their property”), in most circumstances a lien cannot be placed against real property until either (a) the owner signs a voluntary instrument such as a mortgage or (b) the conclusion of litigation, which usually takes years.  In the meantime, a defendant can sell and mortgage the property, or otherwise encumber it, and then squander the asset without concern for the plaintiff’s claims.  (This is constrained by concerns about fraudulent conveyance issues that will be discussed in another blog entry later.)

The right to place a unilateral lien against real estate is very narrow, being limited to government liens (such as tax liens, assessments, environmental liens, etc.) and mechanics liens (for work done on real property and materials delivered to real property for incorporation therein).

Commercial brokerage lien rights

O.R.C. §1311.86 provides such unilateral lien rights for the collection of a commission in commercial transactions in specific circumstances set forth in the statute.  Being a unilateral filing, means that the Realtor claiming the lien simply signs and files a piece of paper in the Hamilton County Recorder’s office.  It does not require a signature (on the lien filing) of the property owner.

Statutory requirements

Because the lien arises from the statute, strict compliance with the statutory mandates will be required.  F. W. Winstel Co. v. Johnston, 103 Ohio App. 525, Paragraph 1 of the Syllabus (1st Dist. 1957).         These are set forth in O.R.C. §1311.86:

  • It is for written brokerage contracts only (O.R.C. §1311.86(A) and (B)).
  • It is for “for services related to selling, leasing, or conveying any interest in commercial real estate” (O.R.C. §1311.86(A)) and “for services related to purchasing any interest in commercial real estate.” (O.R.C. §1311.86(B)).
  • “The lien is effective only if the contract for services is in writing and is signed by the broker or the broker’s agent and the owner of the lien property or the owner’s agent.”   (O.R.C. §1311.86(A) and (B)).
  • The lien is for the broker only, not his salespersons.  (O.R.C. §1311.86(C)(1).
  • The lien amount is either the brokerage commission due, or if due in installments only that portion due on conveyance.  (O.R.C. §1311.86(C)(2) but in the case of commercial leasing, (O.R.C. §1311.86(C)(3).
  • Only the property subject to the brokerage agreement can be liened.  ((O.R.C §§86(C)(5)).
Lien contents

To perfect a lien, the following steps must be followed:

  • The claimant must prepare, sign and have acknowledged (notarized) an affidavit containing each of the following: (a) name of the broker who has the lien, (b) the name of the owner of the lien property, (c) a legal description of the lien property, (d) the amount for which the lien is claimed, (e) the date and a summary of the written contract on which the lien is based, and the real estate license number of the broker. R.C. 1311.87(B)(2).
  • Additionally, the lien affidavit must state that the information contained in the affidavit is true and accurate to the knowledge of the broker. Id.
Lien deadlines

The timeframes within which a commercial broker’s lien must be filed are:

  • For a sale of liened, the Affidavit must be recorded prior to the conveyance of the property. R.C. 1311.86 (B)(3).
  • For a purchase of liened property the Affidavit must be recorded within ninety days after the conveyance of the property. R.C. 1311.86 (B)(4).
  • For liens based upon a leasing commission, the Affidavit must be recorded within ninety days after a default by the owner in payment. R.C. 1311.86 (B)(5).
Notice to property owner

One other requirement not to overlook:  “On the day the lien affidavit is recorded, the broker shall provide a copy of the lien affidavit to the owner of the lien property and, where a contract for the sale or other conveyance of the lien property has been entered into, to the prospective transferee, where known, either by personal delivery or by certified mail, return receipt requested. O.R.C. 1311.86 (B)(6).

Be careful — “Slander of title” claims can be nasty

If one files a lien against real property that is later determine to have been in bad faith, the lien claimant can find himself the target of a suit for a cause of action known as “slander of title.”  Slander of title is the tort of impairing title to someone’s real estate without a reasonable basis therefor. McClure v. Fischer Attached Homes, 2007-Ohio-7259, ¶ 21, 882 N.E.2d 61 (Clermont Co. C.P. 2007), citing Green v. Lemarr, 139 Ohio App. 3d 414, 433 (2d Dist. 2000).

The really bad part of a slander of title claim is that it can include an award to the property owner of an award of his attorneys fees and a punitive damages amount. Additionally, the commercial brokerage lien statute specifically allows for the prevailing party to recover its attorney’s fees. O.R.C. 1311.88(C) (“[A] court may assess the nonprevailing parties with costs and reasonable attorney’s fees incurred by the prevailing parties.”). However, in cases involving general slander of title claims (i.e., outside of the commercial brokerage lien context), the attorney’s fees have been limited to the those “necessary to counteract a disparaging publication,” and did not include those incurred in prosecuting the slander of title. Cuspide Props. v. Earl Mech. Servs., 2015-Ohio-5019, ¶ 40 (6th Dist. 2015).

Thus, we recommend moving forward with the filing of an affidavit for a commercial broker’s lien cautiously, only where the broker is certain of the merits of his position and even then still willing to withstand the possible claim for slander of title from an owner.

Conclusion

The Finney Law Firm is privileged to have many real estate brokerage clients, including commercial Realtors.  The commercial lien right is a very powerful one, and one that we think is under-utilized in commission disputes.

Consider one of our attorneys to assist you in such a dispute, including the use of the right to a commercial lien.

Ohio commercial transactions: Improving your position as a “lender”

Author By Christopher P. FinneyPosted on

Frequently, clients desire to lend money, seller-finance the sale of their business or other asset, buy and then lease out a building, or engage in some other business transaction because they are motivated by favorable business terms the transaction provides on its surface: A high rate of interest, a good return under a lease, or a more promising sale price than otherwise the seller would obtain, for example.

This entry asks a prospective private lender to think twice about the risks associated with this activity and to take as many steps to protect himself as possible under the circumstances.

Who is the “lender” and who is the “borrower”

For purposes of this entry, there are many circumstances in which a party is a “lender” and another is the “borrower.”

  • Obviously, a simple monetary loan in which there is a lender and borrower is one such transaction.
  • Another occurs where an investor either owns a building and desires to rent it, or purchases one for leasing purposes.  In addition, as a part of a leasehold transaction, the landlord may be putting into the premises significant sums in “tenant buildout costs.”   Here, the renter is “using” the landlord’s money, his credit, and his asset, in exchange for monthly (read: deferred) payments.  This is a form of “loan.”
  • When a seller is selling his busines, his building or another asset, and does anything other than take back 100% of the purchase price at the time of conveyance, he is a “lender.”  (And the worse situation is where the seller is taking a subordinate position to a lender who gets a first mortgage or other lien on the assets acquired.  In such situation, the liklihood of the seller getting his “loaned” funds is significantly impaired, and the chance of default significantly higher.)
  • Even co-signing a loan or a lease, or guaranteeing the debt of another, is “lending” your credit to the co-borrower.
Four important factors to consider

But consider these factors before “lending” your money, your asset, and your credit to a third party:

First, ask yourself: “Why can’t this buyer get conventional financing?”  Banks are in the business of assessing and taking the risks associated with lending.  If this “borrower” does not qualify for a bank loan, why should you be in the business of being a lender?  Have you really fully assessed the risks of lending to this “borrower.”

Banks know experientially and actuarially the “warning signs” that predict loan defaults.  Among these are an inability to come up with an adequate down payment, a poor credit score, a history of litigation, and other warning signs.  I spoke with one lender recently, and they said they will never lend to people who fail to pay their taxes — ever.

Second, in my experience, a buyer of an asset is much more likely to raise defenses and counterclaims against a seller than the buyer would be able to as against a third party lender: Fraud in the inducement of the sale, property defects, misrepresentations in the business accounts, and simple contract breach.  Buyers will raise any and every excuse and defense against paying money they owe.

Third, the more desperate the “borrower” is, the more likely he is to agree to generous transaction terms: a high rate of interest, a high sale price, or some other above-market remuneration.  And — I say this based on experience — borrowers who have no intention and no ability to pay back the “loan” are the most willing to agree to generous lending terms.

Fourth, if you are going to leap (into the position of being a lender), at the very least look first: do the kind of due diligence that a lender would — a credit check, a background check, reference checks, and a simple check of court clerks sites and bankrupcy court history for obvious signs of fiscal distress.

The ABCs of improving your position as a lender

So, you have made the decision to “lend.”  What steps can you take to improve your position and increase the liklihood of getting your money paid back, with interest?

A. Certainly ask for a personal guarantee of any “loan” to a corporate entity.  Accepting simply a corporate signature, whether of a note maker, a tenant or the buyer of an asset, is asking for trouble, unless that company’s creditworthiness has been thoroughly ascertained

B.  Don’t be shy about asking for the personal guarantee of the principal’s (or principals’) wife (or wives).  If the borrower is earnest about putting their name, their assets and their creditworthiness behind a promise, and they have asked you to extend credit to them — then shouldn’t their wife also stand behind the obligation?  Stating it differently, the most common and most obvious dodge of debtors avoiding their creditors is to place their assets in the name of their wife.  Don’t let them avoid their obligations to you so easily.

C. Are there third parties who can guarantee the debt?  A business partner?  A parent?  Who is interested in the success of this borrower’s business such that they would be willing to stand behind its obligations?

D.  Look for assets to lien.  Does the “borrower” (or his wife) own a house, stocks, jewelry, accounts receiveable, or equipment or inventory in their business?  Are those assets presently free from any  first lien against them?  If so, and if the borrower is earnest about paying back your debt, then he should not have qualms with providing a security interest against those assets to stand behind the loan.  (Note: Please consult an attorney about how to properly take a lien in various assets; it can be tricky.)

E. Would some patience or a reduced price yield either a cash buyer or enable the buyer you have to go and get a bank or other third party loan?  If so, it may be wise to take one of those options.

Conclusion

Lending is an ultra-hazardous activity that should not be undertaken lightly.

There are exceptions where the seller’s main motivation is not necessarily getting payback of the loan: a parent helping a child; a business or building owner who is getting a great sale price for the asset, and perhaps much of it in cash; or simply a weak market with few buyers. And so long as our clients enter into a transaction understanding the risks of being a “lender,” we are fine with that decision.

But we see many clients seduced by more favorable terms from a borrower or seller-financed buyer who desperately needs their cash versus a stingier cash buyer.

Our suggestion: Think about taking the money and running instead.

The risks inherent in being a lender is why they say: “Cash is king.”

Commercial dispute resolution: In litigation, a picture is indeed worth a thousand words

Author By Christopher P. FinneyPosted on

With the advent of the camera phone, the ubiquitous device in everyone’s pocket, there is no longer an excuse for failing to document “things” for posterity.  And such forethought from our clients can prove decisive in a legal battle.

Examples where photos are helpful

The best example of the value of real-time photos is in construction disputes.  We find it is regular practice of owners, architects, engineers, contractors, and materialmen to take photos at each stage of the work completed, which helps to establish the quality of the work, the conformity of the work to the plans, and the stage of completion at a particular point in time, and perhaps document the development of defects in material or workmanship as they are installed.   (This then, of course, helps to pinpoint the blame.)  The forensic or retrospective value of photos at each stage of construction can be invaluable.

Another example of the value of photos is in commercial and residential landlord/tenant in disputes.  In those disputes, the condition of the property as delivered to tenant or as surrendered to landlord is frequently contested.  My sharper clients have taken the time to document the condition of the property both at the beginning and end of the relationship with their camera phone. Those photos can make a liar of a defendant (or plaintiff) and permit a party to establish his minimum elements of a case he is presenting.

The existence of photos also could be used in an automobile accident situation, a dispute over the quality of goods delivered or to prove a person was in a particular place at a point in time.

Another example for me personally is that I just hate to get parking tickets, yet many times those darned parking meter are malfunctioning.  When this happens, I take a business card, note on it “out of order” and slip it into the “credit card slot” on the meter while my car is parked there.  Before slipping the card into the slot, I take a picture of the meter (they all have identifying numbers on them now) and the “out of order” card.

Admissibility and use of photos

Photos are, of course, generally going to be admissible as evidence in a trial or in alternate dispute resolution. So often at trial, I hate to say, one party or the other is outright lying to the judge.  A photo can clear up the inconsistency in statements pretty effectively.  The judge or jury should be thrilled to have such (nearly) incontrovertible evidence versus deciding which party is lying.

Number of photos

The memory capacity for photos on your telephone is almost unlimited, and it takes mere seconds to snap several pictures.  Think about thoroughly preserving the record for posterity (or trial).  Make the time to take several (indeed dozens) of shots — narrow and wide angle, and from every perspective —  to preserve the moment for later reference.

Conclusion

Get with the times.  Use this incredibly effective tool to enhance your position in dispute resolution.  Or, saying it differently, I get frustrated when a client could have made their case stronger simply by whipping out that phone and documenting and saving information for a later date.  This is especially true when the client knows the matter is heading into litigation.

Appellate advocacy: Some wisdom from a former U.S. Solicitor General

Author By Christopher P. FinneyPosted on
Robert H. Jackson, the only man to serve in all three roles as U.S. Attorney General, U.S. Solicitor General, and U.S. Supreme Court Justice

The Solicitor General of the United States is the attorney for the government who presents briefs and oral arguments before the U.S. Supreme Court.  The person who holds this position, thus, makes more frequent — and more important — appellate arguments than just about anyone.

Often, the U.S. Solicitor General is later appointed to the United States Supreme Court, the earlier job being both a proving ground for that important position, and a place from which the holder can become known to the President of the United States, who makes such appointments.

Thus, I got a chuckle out of this quote from former Solicitor General Robert H. Jackson, who himself was appointed to the U.S. Supreme Court by President President Theodore Roosevelt.  (As a side historical note, Jackson is the only man to have held all three jobs as U.S. Attorney General, U.S. Solicitor General and Supreme Court Justice.)

“I used to say that, as Solicitor General, I made three arguments of every case. First came the one that I planned–as I thought, logical, coherent, complete. Second was the one actually presented–interrupted, incoherent, disjointed, disappointing. The third was the utterly devastating argument that I thought of after going to bed that night.”

This is, of course, precisely what appellate advocacy is like.

Commercial Leases: “No right of offset,” what does that mean?

Author By Bradley M. GibsonPosted on

For both landlords and tenants, there is curious and confusing phraseology in many if not most commercial leases relative to the payment of rent:

Rent will be paid without any set-off, counterclaim, deduction or recoupment whatsoever.

That sounds like (and is) a lot of legalese, but what does that mean?

It is, in fact, an important provision of commercial leases.  What it means is simply that rent is due from the tenant without delay or reduction based upon claimed breaches of the lease by landlord.  Thus, if the tenant thinks he has defenses to the payment of rent, or claims against the landlord, he must bring them in a separate court action and not use the tactic of offsetting rent — and delaying an eviction — based upon meritorious or frivolous claims of landlord breach.

The provision is not unnecessarily unfair to one side or the other.  Rather, it is a business term for negotiation between the parties.

From a landlord’s perspective, he is surrendering possession of the Premises to tenant and tenant should, month in and month out, pay him for that possession.  If the tenant is “starving” the landlord of rent, while the landlord has to pay his mortgage, taxes, maintenance and insurance, it is a painful and stacked deck against the landlord.  Further, while each month the tenant is getting the benefit of the bargain by occupying the premises, the tenant may prove uncollectible after months or years of litigation.  Further, landlord does not want to find himself in the position of pursuing rent — all the way through a trial — if the defenses of the tenant are entirely fictitious and manufactured just to buy time against an eviction for a rent default.

From the tenant’s perspective, if the landlord has made his building unoccupiable by severely burdensome practices — noise, dust, odors, lack of access or parking, non-operational elevators, bugs, vagrants, etc. — then why should he tender payment every month only to have to litigate in a separate forum to get some or all of that money back?  Further, a landlord can similarly bleed a tenant dry by extracting rent during the tenancy while failing to maintain his building.  And a landlord may prove judgment-proof as well at the end of litigation.

As a result of the weighing of the interests of the landlord and the tenant, there could be compromise language to sometimes standard form lease “no offset” language — for extreme circumstances that “put a tenant out of business.”  But prying that door open even slightly to give the tenant an “argument” against eviction could lead to months or years of costly litigation against a tenant who otherwise would be paying rent monthly.

# # #

Our firm practices extensively in the area of commercial lease drafting and litigation to enforce the same in Ohio and Kentucky.  We invite you to use our professionals to assist you with your investment properties.  Isaac Heintz leads our practice as it relates to commercial lease drafting and Brad Gibson heads our litigation group for its enforcement or defense.

At our core we are a Cincinnati real estate law firm, but we offer depth of experience in a broad array of areas of law

Author By Christopher P. FinneyPosted on

As we have grown, the vision of the Finney Law Firm is sharpening for our clients and the public: A broad array of services offered in one firm, each practice area delivered in a quality fashion.

At our core, we are a real estate firm, with experienced transactional attorneys, a title insurance company that insures residential and commercial titles, and commercial litigators who can address virtually every aspect of disputes relating to real estate: Eviction, foreclosure, title disputes, easement disputes, construction disputes and mechanics lien claims, as well as complex real estate litigation.

Beyond that, we offer quality estate planning and probate administration and our transactional team rounds our its services with corporate formation and development, including acquisitions, dispositions and financing.

Isaac T. Heintz, Kevin J. Hopper, and Eli Krafte-Jacobs, along with paralegals Tammy Wilson and Misty L. Winkler, and Richard P. Turner at the title company, lead our transitional team day in and day out.

Our litigators are well-known for our public interest practice — handing legislative and regulatory matters aggressively, confronting government officials who would illegally interfere with their life, their business and their fortune.  Three times we have ascended to the U.S. Supreme Court, and three times we won the relief we sought with 9-0 victories there.   We apply this same sophistication and vigor to commercial litigation, personal injury, wrongful death and medical malpractice matters.

Bradley M. Gibson, Stephen E. Imm, Julie M. Gugino, and Casey A. Taylor along with paralegal Brandy E. Fitch are our quality litigation team.

Finally, we are proud to recently have expanded our litigation services to include labor and employment law with experienced litigator Stephen Imm.

When a client asks “do you do that,” I am proud to respond “yes, and we do it well.  Let me introduce you to …..”

Let us know how we we can help with your business or personal opportunity or challenge.  It is with you in mind that we have assembled this team of quality practitioners.

Ohio corporate law: First District Court of Appeals: Fifty percent owners of closely held corporations may owe heightened duty to co-owners

Author By Finney Law FirmPosted on
Hamilton County Common Pleas Judge Steven E. Martin

In a case expected to be appealed to Ohio’s Supreme Court, Hamilton County’s First District Court of Appeals upheld the ruling of Common Pleas Judge Steven Martin in Vontz v. Miller, et al., 2016-Ohio-8477, that the fifty percent owner of a closely held corporation owes her co-owner a heightened fiduciary duty of “utmost good faith.”

Two siblings share ownership of a beer and wine distributorship – both owning fifty percent of the shares of the company. Thus, argued Miller, neither has a controlling ownership. However, in this instance, the company’s board consisted of Vontz, Miller, and Miller’s husband and two children. Thus, while Vontz is a fifty percent shareholder, the board is dominated by Miller.

Vontz, in an effort to balance control of the company, had sought to call a shareholder meeting to elect a new board. Miller refused. Vontz then brought suit against his sister and her family.

Judge Martin issued an injunction to force a shareholder meeting. Miller and her family appealed. Arguing, in part that Miller, as a fifty percent owner (i.e. less than a majority owner) did not owe a fiduciary duty to her brother who also owned exactly fifty percent of the company. Absent a fiduciary duty to her brother, Miller should not be required to attend or otherwise acquiesce to a shareholder meeting.

The court found that where, as here, one owner dominated the board and refused to adhere to corporate formalities (e.g. holding shareholder meetings where that owner’s family could be removed from the board), then the heightened fiduciary does attach – despite the semantic arguments over whether there can ever be a “controlling shareholder” where two owners each hold fifty percent ownership:

Because Miller so dominated the corporation that she was in control to the exclusion of Vontz, the unusual facts of this case demonstrated that Miller was the controlling shareholder, even though she owned only 50 percent of the voting shares.

…

Under her heightened duty of good faith and loyalty, she had an obligation of fairness to Vontz. Her duty required her to act for his benefit by protecting his right to vote for the election of new directors. She breached that duty because, as Vontz clearly demonstrated, he was unable to exercise his voting power due to a freeze-out by Miller.

The Court of Appeals, while ordering modifications to some of the particulars of Judge Martin’s ruling, upheld the substance of Martin’s ruling.

Closely held corporations bring with them unique challenges, particularly when the owners are family as well as business partners. Finney Law Firm, can help you avoid these pitfalls ahead of time and navigate through them if a challenge has already arisen.

Ohio contract law: Parties can contract out of liability for negligence – One more reason to read the contract!

Author By Finney Law FirmPosted on
Preble County Common Pleas Court Judge David Abruzzo

It is a common maxim that you are always liable for your own torts. Meaning, if someone is injured as the result of your own negligence, you will be liable, even when acting through a corporation or limited liability company.

A recent 12th District Court of Appeals case out of Preble County (Whitson v. One Stop Rental Tool and Party, et al. CA 2016-03-004) illustrates one major caveat to the maxim: parties to a contract can agree to hold the other party harmless for negligence, nonetheless, “contract clauses that relieve a party from its own negligence, while generally upheld, are not favored by the law and are to be strictly construed.”

Richard rented a bounce house from One Stop Rental Tool and Party. While Richard was unloading the bounce house from his pickup truck, the strap he was pulling broke and Richard fell out of the truck, onto the ground, suffering serious injuries.

Richard and his wife sued One Stop alleging negligence, loss of consortium, and malicious conduct (alleging that One Stop disregarded the probability that Richard would be injured in such a manner).

The rental agreement included a Release that read in relevant portion:

I understand and acknowledge that the activity to be engaged in through my rental of an inflatable, interactive amusement device, brings with it both known and unanticipated risks to guests, my invitees, and myself. Those risks include, but are not limited to fallings, slipping, crashing, and colliding and could result in injury, illness, disease, emotional distress, death and/or property damage to myself or my guests and invitees. I voluntarily release, indemnify, hold harmless and discharge One Stop Tool Rental, Inc. from any and all liability claims, demands, actions or rights of actions, whether personal to me or to a third party which are related to[,] arise out of or are in any way connected with my rental of the unit, including those allegedly attribute[d] to negligent acts or omissions. I agree to reimburse any reasonable attorney’s fees and costs which may be incurred by One Stop Rental Tool Rental, Inc. in the defense of any such liability claim, demand, action or right of action.

And a Hold Harmless Clause:

HOLD HARMLESS AGREEMENT. Customer agrees to assume the risks of, and hold Dealer harmless for, property damage and personal injuries, including death and dismemberment, caused by the equipment and/or arising out of Dealer’s negligence.

Preble County Common Pleas Judge David NAbruzzo, a no nonsense judge whom we have had the pleasure of appearing before, granted summary judgment against Richard, finding that the release and hold harmless clauses barred his claims, but allowing the wife’s loss of consortium claim to proceed.

The Court of Appeals noted that, “Richard did not read either document before signing them.”

Business owners should take this opportunity to review your contracts to determine if a hold harmless clause or mutual release clause are necessary; and make sure that such clauses will survive being “strictly construed” by the court. For consumers, this should serve as a reminder to read and understand the contract before signing.

Ohio Supreme Court to hear oral argument in two sale and leaseback cases

Author By Finney Law FirmPosted on

The Ohio Supreme Court has ordered oral argument in two cases involving the valuation of real property sold as part of a sale and leaseback transaction. The cases, Terraza 8, LLC v. Franklin County Board of Revision, 2015-2063; and Board of Education of the Columbus City Schools v. Franklin County Board of Revision, 2015-2105 (State Farm) have been fully briefed (including an amicus brief filed by the Institute for Professionals in Taxation supporting the property owner).

As discussed here, Ohio’s legislature has amended the law to reflect the changes in commercial finance involved in sale and leaseback transactions. Simply put, a sale and leaseback involves the sale of commercial real estate at a higher than market value with the seller then leasing back that property at an above market rate lease commensurate with the sale price. The excess of the sale price is used to finance the purchase of the business who originally owned the real estate.

Consider this hypothetical: ABC Restaurant Co. is being purchased by XYZ private equity firm, XYZ arranges to sell ABC’s real estate to 123 Financing company for approximately three times its actual value and use the difference to purchase all of the shares of ABC Restaurant Co. stock, XYZ (now the sole shareholder of ABC) then enters into a 20 year lease for that same real estate back with 123 for an annual rent that is 7% of the sale price (with scheduled increases over the life of the lease).

The pricing of the real estate is based on the income the restaurant operations throws off, it has no relation to the actual value of the property as real estate. At the end of the lease, 123 Financing Co. still owns the real estate and has collected roughly 150% of its purchase price in lease payments.

Under the prior law, the county auditor would automatically adopt that inflated sale price as the “true value” and the property taxes on the restaurant would triple or more.

Under the new law, the auditor should disregard the sale price and determine the “true value” of the property “as if unencumbered” that is as if it was not subject to the non-market based lease. The result should be that the properties’ values remain roughly the same as they were before the sale and leaseback transaction.

Some County Auditors and Boards of Revision, and the Ohio Board of Tax Appeals itself, have thus far been unwilling to appreciate the magnitude of the change in the law and continue to value sale and leaseback properties using the old method. The Ohio Supreme Court has an opportunity to clarify the law for Ohio’s businesses and tax officials.

Oral argument will be held in the Terraza 8 case on April 5, 2017 and in the State Farm case on May 3, 2017. Finney Law Firm will continue to provide updates on these important cases.

Experienced litigator Steve Imm deepens and broadens our service to clients

Author By Christopher P. FinneyPosted on

Today, we announced the addition of experienced attorney Steve Imm to our firm.  Steve is a litigator with 30+ years of experience, and a deep focus on labor and employment law.

You may read more about Steve’s qualifications here.

We are thrilled to have Steve join our firm, and with the depth of experience he brings to “Make a Difference” for our clients.

1 … 11 12 13 14 15 … 22