In the state of Texas, the county Appraisal Review Board (ARB) has a lot of power when it comes to your property taxes. They are responsible for sitting before and judging hearings related to the appraisal of personal or real property. If you have a problem with the valuation of your property from the County Appraisal District (CAD), then you will need to go before the ARB.
Of course, the ARB certainly isn't infallible. The board is composed of people who make mistakes in their protest evaluations. With some 17% increase in protests in Harris County alone in 2014, the chance for the ARB to make a mistake increases dramatically.
But, what are your options if you feel that the ARB has given you an unfair valuation of your business property? Before 2005, you really only had one option: filing an appeal with the local district court. Filing an appeal with the district court is typically an option that’s available to all property owners.
The other option, approved in 2005, is binding arbitration. With this option, your case is taken before a qualified arbitrator instead of a district judge. It essentially takes the burden of deciding your property’s market value out of the hands of government entities. The decision reached by the arbitrator is binding and neither the property owner nor the CAD can pursue any further legal action. Of course, both parties have a say in who their arbitrator will be, but the arbitrator is the only person who can influence the final decision on your property’s value and potentially reduce your property taxes.
So, how exactly do you go about achieving binding arbitration? In order to enter into binding arbitration, you need to fill out a "Request for Binding Arbitration" (Form AP219) from the Texas Comptroller within 45 days of receiving the order of determination from the ARB. The form needs to be filed with your local CAD and it also needs to include a verified form of payment such as a money order or a cashier's or teller's check. The property owner must pay $500 as a deposit for the arbitrator, but, if the property owner wins the case, they will get 90% of their deposit back and the CAD will be forced to pay the arbitrator.
Of course, not everyone qualifies for binding arbitration, especially as it relates to commercial property. The Texas Comptroller of Public Accounts provides 5 reasons for applying for binding arbitration. Each of these 5 reasons must be present for binding arbitration to continue.
Reason 1: The ARB has Heard Your Protest
This is an obvious reason, but it’s one that’s worth noting. You cannot enter into binding arbitration with the CAD unless your protest hearing has taken place with the ARB first. The ARB needs to make an order of determination about your property in order for binding arbitration to be applicable. Pursuing binding arbitration before the ARB has heard your protest will prove to be fruitless.
Reason 2: The ARB’s Order of Determination
The order of determination from the ARB is essentially the ruling about the valuation of the property and your property protest. For binding arbitration to be applicable, the order of determination has to deal with either the house’s appraisal value or unequal appraisal. So, if your protest involves an appraisal that is too high or an appraisal that is unequal by comparison to other, similar properties, then you can enter into binding arbitration. You cannot enter binding arbitration if your protest involved the denial of exemptions or any other reason aside from the two mentioned above.
Reason 3: Property Doesn't Exceed $1 Million
Binding arbitration is only available to commercial property owners if the disputed property is valued at less than $1 million. Residence homesteads can be valued at over $1 million, and property owners can still enter into binding arbitration. If you own a business, then your property must be worth less than $1 million (as determined by the ARB) to qualify for binding arbitration.
Reason 4: Taxes Have Been Paid On Time
If the property in question has delinquent taxes, then it will not be eligible for binding arbitration. Even if the delinquent taxes were the result of a previous owner, you may not enter into binding arbitration.
Reason 5: No Appeal with District Court
Binding arbitration is only applicable in situations where the property owner has not filed a lawsuit in a district court regarding the matter. If you file a lawsuit, then binding arbitration cannot be pursued.
If you meet all of these criteria, then you can apply for binding arbitration. For more information on binding arbitration, contact O'Connor & Associates today!
Posted in: Protest Property Taxes Keywords: Texas Property Tax Questions, Texas Property Tax Protests, Harris County Appraisal District, binding arbitration, Reduce Property Tax Texas, commercial property texas