Property Tax Binding Arbitration : Lowering Your Property Taxes through Alternate Dispute Resolution
Property Tax Binding Arbitration : Lowering Your Property Taxes through Alternate Dispute Resolution
By Jonathan W . Lehrmann
Texas has one of the highest property tax rates in the country . Property taxes are based on the value of land and buildings the assessed value of which may rise with the growing real estate market . However , there are avenues for owners to challenge assessments that they consider too high .
Appraisal districts are the entities responsible for appraising the value of property within their district . While districts may send assessors to investigate specific properties for an individualized inspection , mass appraisals are commonly relied upon . Using data from recent property sales , districts frequently calculate average property values for classes of property based upon factors such as size , use and construction type . The appraisal districts then make adjustments to account for certain property-specific details . While this process is more efficient and costeffective than individualized inspections , it lacks the precision of a process that scrutinizes each property individually .
If a property owner believes the appraisal district has overstated the value of the property , the owner can protest the decision to the appraisal review board (“ ARB ”). However , owners often remain dissatisfied even after ARB renders a decision . Before 2005 , an owner ’ s only option after an unsuccessful ARB determination was to appeal to a state district court , which meant the property owner had to file and prosecute a lawsuit . Depending on the valuation amount at issue , lawyer fees and expenses could exceed any ultimate tax savings . However , property owners can now appeal to an independent arbitrator , so long as the dispute falls under Property Tax Code 41.41 ( a )( 1 ) or ( 2 ), which governs a property owner ’ s right to dispute appraisal values as inaccurate or unequal to similar properties .
In order to qualify for arbitration , a property owner must be current on taxes on the subject property and must file a Request for Binding Arbitration within 45 days of receiving ARB ’ s decision . At arbitration , the owner must prove by a preponderance of evidence , that : 1 ) the appraisal is at least 10 percent higher than the median appraisal of a reasonable and representative sample of other properties in the district ; 2 ) the appraisal is at least 10 percent higher than the median appraisal of a sample of properties in the appraisal district consisting of a reasonable number of other properties similarly situated to , or of the same kind or character , of the property in dispute ; or 3 ) the appraisal exceeds the median appraised value of a reasonable number of comparable properties that have been appropriately adjusted to match the property in dispute . It is important for property owners to be diligent in choosing the number and type of sample properties relied upon and in adjusting for discrepancies between the sample property and the subject property .
Arbitration is binding , and no further avenue of appeal exists if the property owner elects arbitration . Conversely , an appeal to district court eliminates the option of arbitration . Thus , a property owner must choose between arbitration and district court . While both will provide the property owner with a resolution to the appraisal issue , arbitration may be faster , less expensive , and more likely to provide a decision-maker that has experience with appraisal of real property .
For more information regarding Tax Property Binding Arbitration , you may refer to the Texas Comptroller of Public Account ’ s website , or consult with an attorney experienced in property tax appraisal matters .
This article is general in nature . If you need assistance in working your way through employment issues , you should contact an experienced labor and employment attorney .
Jonathan W . Lehrmann is an associate with Harris , Finley & Bogle , P . C . and licensed to practice in Texas . He can be reached at jlehrmann @ hfblaw . com or at 817-870-8709 .
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