Two Options to Appeal an Appraisal Review Board's Decision: Binding Arbitration or Judicial Appeal
Beginning this year, Texas property owners who are protesting their property taxes and do not achieve a satisfactory reduction on their home's assessed value at the Appraisal Review Board (ARB) hearing, now have the option to request binding arbitration instead of judicial appeal.
Prior to the passage of the binding arbitration bill in 2005, property owners were limited to filing a lawsuit in district court if they disagreed with the ARBs determination. Filing a judicial appeal or lawsuit in state district court can be an overwhelming and expensive process for most homeowners and small commercial property owners.
The following advantages and disadvantages of binding arbitration and judicial appeal will help you to decide the best approach when appealing an ARBs decision in regards to property taxes:
Advantages of Binding Arbitration
- When compared to a judicial appeal, advantages of binding arbitration include a lower cost, informal process, speedier resolution and the loser-pays provision. The property owner pays a $500 deposit when requesting binding arbitration, $50 of which is retained by the Comptroller's Office regardless of the outcome for administrative costs. If the property owner "wins" the dispute, the owner will be refunded $450, and the appraisal district is required to pay the arbitrator's fees. If the arbitrator's assigned value is not nearer to the owner's opinion of value than the appraisal district's value, the arbitrator is paid from the property owner's $450 deposit.
- The property owner does not have the burden of proof at a binding arbitration hearing.
- The homeowner protests in front of an independent arbitrator rather than ARB members who are selected and paid by the appraisal district.
Disadvantage of Binding Arbitration
- You can appeal only on market value and not unequal appraisal, and it only applies for accounts with an assessed value of $1 million or less.
Advantages of a Judicial Appeal
- Homeowners with an assessed value from $750,000 to $1,000,000 or higher may be able to hire a consultant or an attorney on a contingency basis.
- Homeowners can appeal either on unequal appraisal or market value.
Disadvantages of a Judicial Appeal
- It would cost about $2,000 to $5,000 for a homeowner to pursue judicial appeal.
The expense is typically too much compared to the possible tax savings for the average homeowner. (For example, based on a median home value of $150,000, a 3 percent tax rate and a 10 percent reduction, a homeowner could save $450 during a judicial appeal.) It is evident the 10 percent reduction would not even cover the filing fees listed above.
- In addition to the high costs to have a judicial appeal, the process is also more formal and time-consuming than binding arbitration.
Texas property taxes are substantial and unavoidable. You can minimize your property taxes by appealing annually and considering all levels of the appeal process. Minimizing your property taxes is an iterative process.
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Questions?
E-mail O'Connor & Associates, or call 1-877-4-TAXCUT.
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Property Tax Tips
- Protest every year, and use all steps in appeal process when necessary
- Protest both market value and unequal appraisal
- Obtain data to prepare for hearing
- Be aggressive; demand results
About O'Connor & Associates
As Texas' largest property tax consulting firm, O'Connor & Associates has the expertise and the manpower to help you lower your property taxes. Last year O'Connor reduced our clients' assessed values by $1.1 billion, cutting their taxes by more than $33 million. This year our firm's appeals against properties in more than 100 counties increased by 66% to 70,000 protests. O'Connor charges no flat fee and no cost to the client unless property taxes are reduced. To hire O'Connor & Associates to reduce your property taxes, please visit www.cutmytaxes.com.
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