Real Estate Cases

Conditional Use Permit - Incomplete Application

Anderson v. Vandalia (2nd Dist-2005), 159 Ohio App.3d 508

City council improperly granted a fraternal organization’s request for a conditional use permit where Board of Zoning Appeals recommended permit approval on an incomplete application that failed to include the required narrative statement and requisite written findings.

Resident property owner had standing to challenge the permit because his property was adjacent to the land at issue.

Foreclosure On Unrecorded Mortgage

ABN AMRO Mtge. Group, Inc. v. Jackson (2nd Dist.-2005), 159 Ohio App.3d 551

Foreclosure on an unrecorded mortgage was upheld where intervening purchaser was sufficiently notified of the foreclosure action by valid lis pendens (notice created by lawsuit).  The foreclosure action identified the property’s permanent parcel number, street address, recording information and subjection of the property to other liens.

Prescriptive Easement Not Lost by Request for Permission

Wood v. Village of Kipton, (2005), 160 Ohio App.3d 591, 828 N.E.2d 173

Property owners filed declaratory judgment suit against village in order to quiet title to road which bisected their property.  Appellate court declared that the village had gained a prescriptive easement before the owners had acquired the property because the road had been used openly, notoriously, continuously, and adversely for at least 21 years.   The easement was not lost by village’s subsequent request for permission to use property for road. 

Regulatory Taking Test Amended

Lingle v. Chevron U.S.A. Inc. (2005), 125 S. Ct. 2074

In an action challenging a statute that established a rent cap on company-owned service stations, the United States Supreme Court declared that the test of whether government regulation of private property “substantially advances” legitimate state interests is no longer appropriate to apply in a “takings” challenge of a governmental regulation because that test focuses on a due-process issue.

Real Estate Tax Rates

Effective with the 2005 tax year, the 10 percent rollback tax reduction rate will be repealed for property primarily used in a business activity such as commercial and industrial properties. Property not within the business activity definition includes, farming, and leasing or developing of certain family dwelling properties. The 10% real estate tax rollback was enacted by the Ohio General Assembly in 1971 partially, in an effort to offset the effect of the personal income tax enacted by the state the same year. The new tax law will also eliminate the personal income tax, phasing it out over a five-year period.

Commercial Activity Tax

The Commercial Activity Tax (CAT) imposes tax on business with a substantial nexus in Ohio, and unlike the Corporation Franchise Tax, which will be phased out, CAT applies to individuals, corporations, and pass-thru entities like limited liability companies. Under CAT, businesses will be required to pay a minimum $150 in taxes for annual gross receipts above $150,000 and less than $1 million and will be taxed at 0.26% for gross receipts in excess of $ 1 million. There is no tax on gross receipts under $150,000. CAT will be phased in over the next five years but it is required that a taxpayer register for CAT by November 15, 2005, or 30 days after reaching the $150,000 minimum.

Construction Cases

Arbitration - Inadequate Construction Project Funding

Universal Contracting Corp. v. Aug (Hamilton App. 2004), 2004-Ohio-7133

Arbitrator awarded damages to contractor for corporation’s breach of duty where corporation misrepresented its ability to fund the project.

Arbitrator’s award precluded contractor’s subsequent lawsuit against officer of corporation who provided the false information.

Architect Liability/Parties to Contract

Epicentre Strategic Corp. v. Perrysburg Exempted Village School Dist., 2005 U.S. Dist. LEXIS 4320.

Architect was dismissed from contractor’s suit against school district for breach of contract where no contractual relationship existed between the contractor and the architect and any “nexus” established by the contractor would only be relevant in a claim for negligence, not breach of contract.

Architect/Subcontractor Liability for Equipment

Tackett v. Gas Energy, Inc. (Dec. 21, 2004), 2005-Ohio-6979

Injured parties sought damages for negligence and product liability.

Architect was not liable for injuries caused by malfunctioning chiller where supplier neglected to provide installation specifications and architect was under no duty to review or correct supplier’s installation specifications.

Subcontractor similarly was not liable for negligent installation where there was no evidence that subcontractor installed the specialized equipment or was responsible for its installation.

Matter was remanded to trial court to determine supplier’s liability.

Lost Profits for Improperly Rejected Bid

Cementech, Inc. v. City of Fairlawn (2005), 2005 Ohio 1709, 827 N.E.2d 819

When unsuccessful bid was improperly rejected, contractor sought injunctive relief and money damages, which were denied except for bid preparation costs.  Appellate court awarded lost profits to the contractor because injunctive relief was no longer available, the city had abused its discretion in the bidding process, and it did not violate public policy.

Substantial Completion and Payment Under Construction Contract

Fields Excavating, Inc. v. Western Water Co. (Dec. 30 2004), 2004-Ohio-7143

Substantial completion does not entitle a contractor to final payment and its retainage if the terms of the contract provide otherwise.

Contractor was not entitled to interest accrued from the date of substantial completion where contract expressly stated that payment could be withheld until all claims against the project had been settled.

Surety Obligations Under Modified Payment Terms

Water Works Supplies, Inc. v. Grooms Construction Co., Inc. (Mar. 14, 2005) Highland App. No. 04-CA-12, 2005-Ohio-1292

Alterations to payment arrangements between contractor and supplier did not negate surety’s obligation under payment bond where language of the bond unambiguously indicated that surety waived its right to assert any change of contract terms as a defense.

Surety was not relieved of its obligation under payment bond despite modifications of the payment terms of the contract.