In HIN, LLC v. Cuyahoga County Board of Revision, 2010-Ohio-687 [PDF], the Supreme Court was called upon to decide how to determine the taxable value of a parcel where two sales occur reasonably close to the tax-lien date.

The subject property was sold in an arms-length transaction in December 2003 for $4.79 million, and again in an arms-length transaction in April 2004 for $7.4 million. The increased value in the latter sale was attributable to a long-term lease signed by US Bank in December 2003–before the January 1, 2004 tax-lien date, but after the purchase price for the December 2003 sale was agreed upon. The BTA determined that the the December 2003 sale price was closer in time to the tax-lien date, and therefore more accurately reflected the value of the parcel, even though that sale price did not account for the value of the US Bank lease.

The Supreme Court agreed, holding that that R.C. 5317.03 mandates the use of the price closest in time to the tax-lien date as the true value of the parcel:

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.

The provision, however is subject to two exceptions–the sale price shall not be considered the true value if the parcel “loses value due to some casualty,” or if “[a]n improvement is added to the property.” The Court does not address whether the US Bank lease should be considered an “improvement,” and if not, why not.

The Court also held that for purposes of R.C. 5713.03, the date of a sale is determined by the date on which the real property conveyance fee statement is filed in the auditor’s office.