Q:      My condominium is new right now, but what happens when the roof needs repairs, the driveways need resurfacing, and the siding is fading? Is the condo association responsible for the expense, and if so, where does the association get the money to make the repairs?

A:        Ohio law requires the unit owners’ association to adopt and amend budgets and to collect assessments for common expenses from unit owners. Unless the condominium organizational documents say otherwise, the code also requires the association to set aside no less than 10 percent of its annual budget to repair and replace major capital items. The owners may decide to waive the 10 percent set-aside each year with the approval of a majority of the unit owners. Typically, money put into reserves is used to fund the long-term maintenance of the condominium, including the roofs and roads. 

            If, however, the association does not have the necessary reserves for a major repair, it can pass a special assessment to fund the repairs. Ultimately, the owners must bear the financial costs for major repairs, either through the board’s planning for adequate reserves or by special assessments as the need arises. In recent years, reserve studies have been used to more rationally determine the amount of reserves necessary for future maintenance projects.

Q:       I am going to be a first-time condominium owner. What should I know about the closing process?

A:        First, consult with your attorney, who will help you draft your purchase contract. Your closing really starts with the contract. If the contract is not right, the entire transaction will be difficult. Buying a condo is different from buying a single family house, and the closing agent is not always looking out for your best interest. Having a knowledgeable attorney assist you should be a priority. Before closing, your attorney will review with you all of the crucial documents that govern your condominium, including the declaration, bylaws and rules of the association. He or she will review the closing statement and inspection reports for the property, and make sure you are getting what you bargained for. Your purchase contract should be contingent on your satisfactory review of these documents, including financial statements and the balance sheet for the association. Your attorney will review the title work with you and advise you about the proper insurance you should have for your unit. Once you are at the closing table, the title company will explain the closing statement, and you will be asked to sign multiple documents including the lender’s note and mortgage, which your attorney should review with you. At closing, you will receive the keys to the unit and be asked to put the utilities in your name. You should be able to close your purchase in about an hour if all of the reviews of the closing documents have been done in advance. 

Q:       We have an unruly tenant in our condominium community who is renting the condominium.  Is there any way to remove that tenant without involving the owner of the rental unit?
A:        As an owner of a condo unit, you own real estate, and you may be able to rent the unit instead of living in it, just like any other piece of residential real estate.  However, with tenants sometimes come problems.  Since 2004, Ohio law has allowed the association to evict unruly tenants without permission from the unit owner.  There is only one step that must be taken in addition to the normal eviction process, and it involves notifying the owner before the eviction is filed. The process is quick, but it can be expensive if the tenant puts up a fight. The most common reasons for eviction of a tenant are the tenant’s violation of the association rules, such as maintaining too many pets, or harboring a vicious dog, parking in restricted areas and creating noise violations associated with loud parties. If the condominium association prohibits leasing, the tenant also may be evicted because the owner has rented the property in violation of the rules. 

This “Law You Can Use” legal information column was provided by the Ohio State Bar Association (OSBA). It was prepared by Charles T. Williams, Esq of Williams & Strohm, LLC, located in Columbus. For more information on a variety of legal topics, visit the OSBA’s website at www.ohiobar.org. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

Q:       A company has asked for access to shale deposits on our land. Would we be taxed on money we receive from allowing access?

A:        Almost certainly, yes. Royalty, bonus or other income paid to landowners in exchange for access to resources on their land is generally categorized as ordinary income. Depending on filing status and total income amount, taxpayers typically do need to report these earnings to the IRS.

Q:       We’ve been asked to sign a natural resource extraction agreement. How would we report payments from that lease agreement?

A:        Natural resource extraction agreements involve “delay rental,” “royalty” and “lease bonus” payments. Landowners who receive these payments are “royalty owners” who typically do not have a working interest in the extraction operations. This income is reported on Part I of Schedule E (Form 1040), Supplemental Income and Loss. Landowners who do have a working interest in the extraction operations must file using Schedule C (Form 1040), Profit of Loss from Business.

Q:       If we get a bonus in addition to lease payments, how would we report that income?

A:        Taxpayers who lease their property so a company can extract natural resources may receive a lease bonus. The bonus may be paid in a lump sum or over several years. The company leasing the land should provide you with a Form 1099-MISC, Miscellaneous Income, noting the amount of bonus payments as “Rents” in Box 1. Taxpayers usually report lease bonus income as rent on Schedule E.

Q:       How would we report periodic payments for our share of profits from the natural resources?

A:        The company may periodically pay you for your share of profits generated from your property’s natural resources. These “royalty payments” must be based on natural resource production on a recurring or intermittent basis, according to your lease terms. The company should give you a Form 1099-MISC, noting the payments as “Royalties” in Box 2. Most taxpayers report royalty payments they receive as “royalty income” on Schedule E.
            Both rental and royalty income (or loss) is also calculated on Schedule E, transferred to Form 1040, Line 17, to be combined with other sources of income.

Q:       Do we get tax credit for the depletion of our resources?

A:        Possibly. Depletion is the “using up” of natural resources through mining, drilling, quarrying of stone or cutting of timber. The IRS allows a “depletion deduction” so taxpayers who own economic interests in natural resources can reduce their taxable income and account for the reduction of reserves.

            Depending on the type of resource, you may have the option to use either “cost” or “percentage” depletion. If you qualify for both options, use the method that yields the greater deduction. For federal tax purposes, the percentage depletion rate varies according to the mineral being produced. Taxpayers claim depletion and other allowable deductions on the “Expenses” section in Part I of Schedule E. See IRS Publication 535, Business Expenses, for more information.

Q:       If we had a working interest in the extraction operations, would we get any deductions?
A:        Possibly. If you have working interests in extraction operations, you may be able to offset your natural resource income by deducting expenses such as overhead, dry holes and certain legal and administrative fees and county health department water testing fees. You also may deduct business expenses such as depreciation, tangible or intangible costs, utilities, as well as car, truck and travel expenses related to resource extraction. Severance tax and operation expenses must be detailed on an Authorization for Expenditures (AFE) statement provided by the exploration company.

           

Q:       Must I report the free gas the company is offering?

A:        It depends. If the company returns natural gas extracted from your property to you, the value of the gas received is probably nontaxable. However, free natural gas from the company may be taxable if the gas you receive is not from your retained ownership interest. Generally, ownership of raw gas extracted by a leasing company is based on the lease terms and state law.

Q:       Is federal tax withheld from natural resource income?

A:        Typically, no, so you may want to make estimated tax payments. See Publication 505, Tax Withholding and Estimate Tax, for more information. Income from leasing mineral property and royalty payments for extraction of natural resources can be significant, so familiarize yourself with the tax rules to avoid an unexpected tax bill. See Publication 525, Taxable and Nontaxable Income, and the Instructions for Form 1040, Schedule E and Form 1040, Schedule C.

The information for this “Law You Can Use” column was provided by the Internal Revenue Service (www.irs.gov). It was prepared by the Ohio State Bar Association. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

Q:       I am divorced and my ex-wife is listed as the “residential parent for school placement purposes” in our parenting plan.  My son’s school will not allow me to see his school records since my ex-wife’s name is the only name on the records. Can the school refuse to let me see my son’s records?

A:        No. Unless the school has been presented with a court order that says you have no right to access to your child’s school records, the school is required by law to give both you and your wife the exact same access to your child’s records, even if you are not your son’s residential parent. Assuming your parenting plan has no such restriction, the school was wrong in not allowing you access to your son’s school records.

Q:       Does this rule apply to both public and private schools?
A:        Yes. Both public and non-public schools must comply with Ohio’s “records access law.” Only a court can restrict a parent’s right of access to most records regarding a child, including school records. In order to restrict the access, the court must make a specific finding as to why a parent’s right of access should be limited and the circumstances under which the parent can obtain access. For example, if the court decides it is not in the child’s best interests for the non-residential parent to have access to school guidance counseling records, then the court would have to specifically state its reasons for that decision in its court order. In such a case, the court order would specifically deny the non-residential parent access to school guidance counseling records, but would still allow the non-residential parent access to the child’s grades or other records.   Only with a copy of that court order can the school legally restrict your access to any of your child’s records.

Q:       Does this rule only apply to “shared parenting” plans, or does it also apply to any kind of parenting arrangement when parents are divorced?

A:        This applies to any kind of parenting arrangement, even if the non-residential parent sees his or her child on an extremely limited basis.

Q:       What kinds of records does the “right of access” cover?

A:        There is a very long list of the kinds of records the “right of access” covers. Except when a court specifically denies a parent access to particular records through a court order, a parent has access to “any record, document, file or other material containing information directly related to a child.”

Q:       My ex-wife always takes our children to the doctor. When I called the doctor’s office for information about a medicine my son is taking, the receptionist said my ex-wife would have to sign a release of information form before she could share any information from my son’s record. Can the receptionist do that?

A:        No. Your “right of access” to your child’s records applies to a long list of public and private businesses that are obligated to give you access, including doctor’s offices,  schools, child care facilities (day care centers), hospitals, doctor’s offices, dentist’s offices, psychologists, school counselors, and most state agencies. In the statute, the list is much longer.

 

Q:       Might a doctor’s office violate the HIPAA privacy laws by giving my ex-wife access to our child’s medical records?

A:        Generally, no.  Although there are limited exceptions, a doctor’s office does not violate HIPAA by giving a parent access to his or her child’s medical records, since a minor child’s “personal representative” is allowed to have access. If a doctor’s office does claim that it cannot release records because of HIPAA, then that office should be prepared to establish that one of those limited exceptions applies. In such a case, you may wish to involve your legal counsel to help you obtain the records you seek.             

 This “Law You Can Use” column was provided by the Ohio State Bar Association (OSBA). It was prepared by Columbus attorney Bobbie Corley O’Keefe of Carlile Patchen & Murphy LLP. The column offers general information about the law. Seek an attorney’s advice before applying this information to a legal problem.    

            Recruiting professional football players is a tough and thorough process. Those who provide advice to players regarding contract negotiation must comply with the National Football League Players Association (NFLPA) Regulations Governing Contract Advisors.  These regulations are designed to ensure that agents and their clients are well served. Recent rule changes, including the repeal of the “junior rule,” impact the way athletes go about choosing an agent (contract advisor).

Q:       What is a contract advisor?

A:        A sports contract advisor provides representation services to players (including rookies) by conducting individual contract negotiations and/or assisting in or advising them about such negotiations with the member clubs of the National Football League (NFL). Under the NFLPA Regulations Governing Contract Advisors, potential contract advisors must first apply to the NFLPA, and must agree to comply with NFLPA regulations. Also, they must give the NFLPA information about their qualifications, pay fees, attend NFLPA seminars, educate player-clients and remain sufficiently educated regarding NFL governing documents.

Q:       What rules have applied to contract advisors in recent years?     

A:        To address abuses arising from player/contract advisor relationships, the NFLPA instituted two rules, which were in effect from 2007 to 2012. One, known as the “junior rule,” prevented an NFLPA-regulated contract advisor from speaking with a potential player-client until three years had passed since the player’s graduation from high school. The second (related) rule allowed contract advisors to pay for recruiting help as long as the name of the person or entity assisting in the recruiting efforts was disclosed to the player-client, and the client signed off on this arrangement in a standard representation agreement to be filed with the NFLPA.

Q:       Why did the NFLPA change these rules?

A:        An increasing number of “runners,” business managers, and others were responding to these rules by recruiting athletes, which constituted a violation under the existing rule, on college campuses across the nation. Further, the “runners” were found to be giving improper benefits to college players, causing loss of eligibility and university sanctions. For example, during Heisman trophy winner Reggie Bush’s time at the University of Southern California, Bush’s family received improper benefits from such a “runner.”  Such recruitment behavior clearly violated the NFLPA regulations.

            To curb these abuses, the NFLPA, working in tandem with the NCAA, decided that contract advisors who were certified under the regulations were best suited to advise college juniors about entering the NFL. Because certified contract advisors are subject to sanctions, the NFLPA can punish any contract advisor who violates the regulations. The junior rule was abolished because contract advisors and players who followed this rule were being unfairly disadvantaged by rule-breakers, and because the NFLPA was concerned that players might be illegally recruited at increasingly earlier ages.

Q:       What regulations currently affect contract advisors and players?

A:        In March 2012, the NFLPA repealed the junior rule, edited the second (related) rule and added a third rule. Contract advisors can now pay only other contract advisors to assist in recruiting potential clients. Those contract advisors assisting in recruiting efforts must not only be certified, but must be in good standing with the NFLPA. Since June 2012, the NFLPA has allowed certified contract advisors to contact student-athletes, even those who have not yet reached the end of their junior year in college. Players still are not allowed to sign with contract advisors until three years after their high school graduation, because that would effectively terminate their eligibility in that sport. However, they may now consult with contract advisors and receive information about the draft, including information about how to avoid actions that might threaten their eligibility. Players can discuss questions about their future with contact agents who are both prepared to provide information and advice and do not violate NFLPA rules by offering such enticements as money or free plane rides.

Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association.  This article was prepared by Nathan B. Cohen, a third-year law student at Capital University, with the guidance of Justin Hunt, a licensed attorney familiar with this topic.  Articles appearing in this column are intended to provide broad, general information about the law.  Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.