[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Lunn v. Lorain Cty. Bd. of Revision, Slip Opinion No. 2016-Ohio-8075.]




                                        NOTICE
     This slip opinion is subject to formal revision before it is published in an
     advance sheet of the Ohio Official Reports. Readers are requested to
     promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
     South Front Street, Columbus, Ohio 43215, of any typographical or other
     formal errors in the opinion, in order that corrections may be made before
     the opinion is published.



                         SLIP OPINION NO. 2016-OHIO-8075
  LUNN ET AL., APPELLEES, v. LORAIN COUNTY BOARD OF REVISION ET AL.,
                                     APPELLANTS.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
     may be cited as Lunn v. Lorain Cty. Bd. of Revision, Slip Opinion No.
                                   2016-Ohio-8075.]
Taxation—Real-property-valuation—Although property owner satisfied initial
        burden to show recent arm’s-length sale, opposing parties offered rebuttal
        evidence challenging arm’s-length character of purchase and owner
        offered no evidence to overcome rebuttal evidence—Board of Tax Appeals’
        decision reversed.
  (No. 2014-1669—Submitted August 30, 2016—Decided December 13, 2016.)
              APPEAL from the Board of Tax Appeals, No. 2013-2661.
                             _______________________
        Per Curiam.
        {¶ 1} This real-property-valuation case involves a single-family residence
in Elyria owned by appellee Betty L. Lunn. She challenged the Lorain County
                                SUPREME COURT OF OHIO




auditor’s valuation of the property for tax year 2012, alleging that her February
2011 purchase was a recent arm’s-length sale that established a lower true value.
The Lorain County Board of Revision (“BOR”) retained the auditor’s valuation,
finding that she had provided insufficient evidence of the sale. The Board of Tax
Appeals (“BTA”) reversed and valued the property according to the sale price. The
auditor and BOR (collectively, “the county”) jointly appealed to this court.
        {¶ 2} The county first argues that Lunn, who did not appear at the BOR
hearing, failed to meet her burden of proof with competent and probative evidence
of an arm’s-length sale. We reject this argument in view of the evidence Lunn gave
the BOR and the absence of any dispute concerning her purchase. We hold that the
BTA acted reasonably and lawfully when it found that Lunn satisfied her initial
burden to show a recent arm’s-length sale under former R.C. 5713.03,
Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II, 2665, 2722.1
        {¶ 3} The county also argues that even if Lunn met her initial burden, it
rebutted her claim by showing that an insolvent real estate mortgage investment
conduit (“REMIC”) sold the property to Lunn post-foreclosure. We agree with this
aspect of the county’s argument and hold that Lunn’s purchase was a “forced sale”
under R.C. 5713.04. We reverse the decision of the BTA because Lunn failed to
overcome the presumption, arising under R.C. 5713.04, that the REMIC’s
postforeclosure sale was not indicative of the property’s true value.
                             Facts and Procedural History
        {¶ 4} The auditor valued the subject property at $85,170 for tax year 2012.
Lunn complained that its true value was $22,000—the price she paid for it in
February 2011. In response to her complaint, appellee Elyria City Schools Board




1
 This former version of R.C. 5713.03 applies here because this case involves tax year 2012. See
Lowe’s Home Ctrs., Inc. v. Washington Cty. Bd. of Revision, 145 Ohio St.3d 375, 2016-Ohio-372,
49 N.E.3d 1266, ¶ 24.




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of Education (“BOE”) filed a countercomplaint seeking to retain the auditor’s
valuation.
        {¶ 5} The BOR notified the parties that it would hold a hearing on their
claims. Before the hearing, Lunn sent the BOR copies of several documents related
to her purchase, including a parcel report from the auditor’s website, a conveyance-
fee statement, a partial settlement statement, a partial limited warranty deed, a
partial purchase agreement, and documents related to the realtor’s listing. Several
of these documents indicated that she had purchased the property for $22,000 in
February 2011.
        {¶ 6} At the BOR hearing, a member of the board noted that Lunn had
submitted documents concerning her purchase, and the attorney for the BOE
acknowledged the documents and Lunn’s $22,000 purchase. Although the BOE
questioned the weight of Lunn’s evidence, no party argued that it was inadmissible,
and no one disputed that the February 2011 sale had occurred. Nevertheless,
because neither Lunn nor her attorney attended the hearing, the BOR found that she
had produced insufficient evidence to support her claim and retained the auditor’s
valuation.
        {¶ 7} Lunn appealed to the BTA but did not file a brief or attend the BTA
hearing. The county, however, presented the testimony of an expert witness, Paul
B. Bellamy, J.D., Ph.D., who explained that Lunn had purchased the property in
February 2011 from U.S. Bank, National Association, which sold it as trustee for a
REMIC, and that the REMIC had acquired the property for $33,000 in January
2011 as a result of a sheriff’s sale. He opined that the $22,000 sale to Lunn a month
later did not represent the true value of the property for tax year 2012. He also said
that based on restrictions created under federal tax laws, a REMIC cannot act as a
“typical seller.”
        {¶ 8} The BTA, noting that the parties did not dispute the February 2011
sale price, reversed the BOR’s decision and established $22,000 as the true value




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of the property. The BTA stated that “[a]bsent an affirmative demonstration such
sale is not a qualifying sale for tax valuation purposes, we find the existing record
demonstrates that the transaction was recent, arm’s-length, and constitutes the best
indication of the subject’s value as of [the] tax lien date.”
         {¶ 9} The county appealed to this court.2
                                            Analysis
                                 Lunn met her initial burden
         {¶ 10} Based on the nature of her claim, Lunn had to show that her purchase
was both recent to the tax-lien date and arm’s length in nature. See Am.Sub.H.B.
No. 260, 140 Ohio Laws, Part II, at 2722; Columbus City School Dist. Bd. of Edn.
v. Franklin Cty. Bd. of Revision, 90 Ohio St.3d 564, 566, 740 N.E.2d 276 (2001);
Snavely v. Erie Cty. Bd. of Revision, 78 Ohio St.3d 500, 503, 678 N.E.2d 1373
(1997). If she could prove these facts and if they went unrebutted, the county would
be required to treat the sale price as the property’s true value for tax year 2012.
Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d
516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 13. Absent such a showing, however, the
county was justified in rejecting the use of the sale price.
         {¶ 11} The county does not dispute that Lunn’s purchase of the property
occurred within a reasonable length of time of the tax-lien date. The remaining
factual question, therefore, is whether the sale occurred at arm’s length “between a
willing seller and a willing buyer.” Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II,
at 2722. This court has held that “[a]n arm’s-length sale is characterized by these
elements: it is voluntary, i.e., without compulsion or duress; it generally takes place




2
 The BOE filed an appellee brief urging this court to reverse the BTA’s decision. Because the BOE
did not file a notice of appeal and S.Ct.Prac.R. 16.03(B)(1) does not allow an appellee brief to seek
reversal, we strike the BOE’s brief sua sponte. See Cincinnati School Dist. Bd. of Edn. v. Hamilton
Cty. Bd. of Revision, 78 Ohio St.3d 325, 327, 677 N.E.2d 1197 (1997).




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                                January Term, 2016




in an open market; and the parties act in their own self-interest.” Walters v. Knox
Cty. Bd. of Revision, 47 Ohio St.3d 23, 546 N.E.2d 932 (1989), syllabus.
       {¶ 12} The BTA reduced the valuation because the parties did not dispute
that Lunn had purchased the property for $22,000 and, according to the BTA, no
evidence showed that the transaction was not at arm’s length. The BTA, in effect,
presumed that the sale had occurred at arm’s length and required the county to
prove otherwise. In its first proposition of law, the county challenges the BTA’s
application of that presumption, arguing that it cannot arise when the taxpayer fails
to appear at the board-of-revision hearing to authenticate supporting documents and
be subject to cross-examination.
       {¶ 13} On appeal, we must decide whether the BTA’s decision was
“reasonable and lawful,” R.C. 5717.04. Because the county’s first proposition
involves a judicially created presumption, it initially presents a legal issue that we
consider de novo. See Akron City School Dist. Bd. of Edn. v. Summit Cty. Bd. of
Revision, 139 Ohio St.3d 92, 2014-Ohio-1588, 9 N.E.3d 1004, ¶ 10-11. But we
will defer to the BTA’s findings concerning the weight of evidence so long as they
are supported by the record. Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. Bd. of
Revision, 122 Ohio St.3d 134, 2009-Ohio-2461, 909 N.E.2d 597, ¶ 27.
       {¶ 14} We have recognized a rebuttable presumption that a submitted sale
price “has met all the requirements that characterize true value,” including that the
sale was made at arm’s length. Cincinnati, 78 Ohio St.3d at 327, 677 N.E.2d 1197.
To benefit from this presumption, the proponent of a sale must satisfy a relatively
light initial burden and need not “definitive[ly] show[ ] * * * that no evidence
controvert[s] the * * * arm’s-length character of the sale.” Cummins, 117 Ohio
St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, at ¶ 41. Indeed, we have recognized
the presumption when the proponent of a sale provided only a deed and
conveyance-fee statement reflecting the sale, see, e.g., Worthington City Schools




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Bd. of Edn. v. Franklin Cty. Bd. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932,
918 N.E.2d 972, ¶ 28, or just a deed and purchase agreement, Cummins at ¶ 7, 41.
       {¶ 15} We hold that the BTA acted reasonably and lawfully when it
presumed that Lunn’s purchase occurred at arm’s length, because Lunn met her
initial burden with evidence of the sale. Lunn submitted to the BOR a parcel report
from the auditor’s website, a conveyance-fee statement, a partial settlement
statement, a partial limited warranty deed, a partial purchase agreement, and
documents relating to the listing of the property, which showed that she had
purchased the property for $22,000 in February 2011. Although Lunn’s documents
were not authenticated by testimony, the Rules of Evidence do not strictly apply in
administrative tax proceedings, Orange City School Dist. Bd. of Edn. v. Cuyahoga
Cty. Bd. of Revision, 74 Ohio St.3d 415, 417, 659 N.E.2d 1223 (1996). And more
significantly, neither the county nor the BOE objected to the evidence Lunn
submitted. In fact, at no point during the proceedings below did the parties dispute
that Lunn had paid $22,000 for the property in a recent sale.
       {¶ 16} In so holding, we reject the county’s proposition that a taxpayer-
complainant must appear at the board-of-revision hearing to satisfy its initial
burden. “How a party seeking a change in valuation attempts to meet its burden of
proof before a board of revision is a matter for that party’s judgment.” Snavely, 78
Ohio St.3d at 503, 678 N.E.2d 1373. A party may elect not to appear at a board-
of-revision hearing and instead rely on other evidence supporting its claim,
although doing so risks a finding by the board that its evidence is inadmissible or
unpersuasive. See id. That is not the case here, however, because no party
challenged the admissibility of the evidence Lunn submitted, the BOR accepted it,
and it met the minimum evidentiary threshold previously recognized by this court.
       {¶ 17} Because Lunn met her initial burden, it was presumed that the sale
“met all the requirements that characterize true value,” Cincinnati, 78 Ohio St.3d
at 327, 677 N.E.2d 1197. The BTA correctly found that it was the opposing parties’




                                         6
                                January Term, 2016




burden to offer rebuttal evidence challenging the element of arm’s-length character.
Cummins, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, at ¶ 13. The
county’s efforts in that regard are at issue in the second and third propositions of
law, which we address below.
            The county rebutted the arm’s-length character of the sale
       {¶ 18} Because Lunn met her initial burden, her purchase price had to be
accepted as the property’s true value unless the county or BOE demonstrated a
“reason to disregard the sale price as an indicator of value,” Dublin City Schools
Bd. of Edn. v. Franklin Cty. Bd. of Revision, 118 Ohio St.3d 45, 2008-Ohio-1588,
885 N.E.2d 934, ¶ 16. To that end, the county presented evidence to the BTA
concerning the seller (a REMIC) and circumstances surrounding the sale. The
county contends that the sale was a forced sale under R.C. 5713.04.
       {¶ 19} In general terms, a REMIC is an entity that issues mortgage-backed
securities and has favorable pass-through federal tax status. See 26 U.S.C. 860A
through 860G. As happened in this case, when a debt obligation held by a REMIC
defaults, the REMIC may acquire real property through a sheriff’s sale, see 26
U.S.C. 860G(a)(8). The Internal Revenue Code provides that a REMIC generally
may hold title to foreclosed property without jeopardizing its status as a pass-
through entity until the end of the third taxable year following the taxable year in
which it acquired the property. Id.; 26 U.S.C. 856(e)(2). While holding real
property, a REMIC must remain a passive owner and may not lease or improve the
property. 26 U.S.C. 860G(a)(8) and 856(e)(4). The evidence shows that the
REMIC at issue in this case was insolvent and sold the property to Lunn for $22,000
just one month after acquiring it at a sheriff’s sale for $33,000.
       {¶ 20} Although we have not previously considered whether a
postforeclosure sale by a REMIC is a forced sale under R.C. 5713.04, we addressed
similar circumstances in Schwartz v. Cuyahoga Cty. Bd. of Revision, 143 Ohio St.3d
496, 2015-Ohio-3431, 39 N.E.3d 1223, a case involving a postforeclosure sale from




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the United States Department of Housing and Urban Development (“HUD”). In
Schwartz, we held that “a sale of foreclosed property by HUD is generally regarded
as a transaction that is not a voluntary sale between typically motivated market
participants.” Id. at ¶ 28. We noted that such a transaction is a forced sale under
R.C. 5713.04 and that the “sale price is presumptively not evidence of the
property’s value.” Id. at ¶ 28-29.
       {¶ 21} We see no reason to treat this postforeclosure REMIC sale
differently. To maintain its beneficial tax status, a REMIC must remain passive in
its ownership of foreclosed property, and it ordinarily will be compelled to sell as
quickly as possible. Here, the REMIC sold the property for $11,000 less than the
price it had paid just a month earlier. Those “terms would likely be unacceptable
to a typically motivated seller,” Columbus City School Dist. Bd. of Edn. v. Franklin
Cty. Bd. of Revision, 134 Ohio St.3d 529, 2012-Ohio-5680, 983 N.E.2d 1285, ¶ 31,
and demonstrate an “atypical pressure to sell * * * that negates the arm’s-length
character of the transaction,” id. at ¶ 30. The facts in this case lead us to conclude
that the BTA acted unreasonably when it disregarded the county’s evidence and
failed to treat the postforeclosure sale as a forced sale under R.C. 5713.04.
       {¶ 22} Because Lunn purchased the property through a forced sale, she had
“the burden to prove that the sale was nevertheless an arm’s-length transaction
between typically motivated parties and should therefore be regarded as the best
evidence of the property’s value.”       Olentangy Local Schools Bd. of Edn. v.
Delaware Cty. Bd. of Revision, 141 Ohio St.3d 243, 2014-Ohio-4723, 23 N.E.3d
1086, ¶ 43. Lunn presented nothing to support her claim besides the documents
she sent the BOR, and those documents do not prove that the sale was arm’s length
in nature. She therefore failed to satisfy her “heavier burden,” id., to prove that the
forced sale was indicative of the property’s true value, and the BTA erred in setting
the property’s true value at $22,000.




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                                      Conclusion
          {¶ 23} Although Lunn triggered a rebuttable presumption that her purchase
of the subject property met all the requirements that characterize true value by
presenting unchallenged evidence of the sale, the county successfully rebutted that
presumption by showing that the transaction was a forced sale under R.C. 5713.04.
At that point, a second rebuttable presumption arose, this time operating against
Lunn. We reverse the decision of the BTA and reinstate the BOR’s valuation
because Lunn offered no evidence to overcome the presumption that the sale was
not arm’s length in nature.
                                                                   Decision reversed.
          O’CONNOR, C.J., and O’DONNELL, LANZINGER, KENNEDY, and FRENCH, JJ.,
concur.
          PFEIFER, J., dissents, with an opinion joined by O’NEILL, J.
                                 _________________
          PFEIFER, J., dissenting.
          {¶ 24} I would affirm the Board of Tax Appeals’ determination that based
on the record before it, the February 2011 sale of the subject property “was recent,
arm’s-length, and constitutes the best indication” of the property’s value.
          {¶ 25} Although expert witness Dr. Paul Bellamy testified that the sale to
appellee Betty L. Lunn was not at arm’s length, he did not testify concerning the
proper valuation. Accordingly, I would defer to the next most recent sale, a mere
month before Lunn purchased the property. That transaction involved a sheriff’s
sale that was open to the public and, therefore, available to any willing bidder. That
is a better indication of value than the auditor’s appraisal, which clearly does not
take account of the fact that no one is willing to spend more than $33,000 to
purchase the property.
          {¶ 26} Accordingly, I dissent.
          O’NEILL, J., concurs in the foregoing opinion.




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                              _________________
       Dennis P. Will, Lorain County Prosecuting Attorney, and John P. Kilroy,
Assistant Prosecuting Attorney, for appellants.
                              _________________




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