Leases often require business tenants to pay the real estate taxes for the premises. However, tenants do not have the right to challenge the property value(s) and amount of taxes if they are too high. A bill (Modify Property Tax Valuation Complaint Law – House Bill 751) recently introduced in the Ohio House of Representatives would permit business tenants to challenge the values and amount of property taxes paid for its leased premises. Currently, even if a property tenant is required to pay all of the property taxes assessed against the leased property, that tenant cannot independently challenge the applicable tax value and amount of taxes. House Bill 751 would permit business real estate tenants to challenge property valuations for tax purposes where that tenant is liable for the payment of such taxes.
This bill serves as a reminder regarding the rights a business tenant can negotiate into a commercial lease. If the landlord will agree, a tenant can include a lease provision that if requested, the landlord will challenge the tax value of the leased property. Such a lease provision may, and for the benefit of landlord, should require that the tenant pay all reasonable expenses of such a tax challenge.
Dana Rose practices primarily in the areas of real estate, nonprofit organizations, business and commercial matters.