In our previous blog posts, we went over how to prepare your evidence for a property tax appeal and what to expect at a hearing with the appraisal review board (ARB). This should cover the vast majority of property tax appeals, as you can usually get a reduction at informal or formal levels. But what happens if you fail at these levels, or if you win but get an insufficient settlement? The final step that you have is legal action against your local county appraisal district (CAD). These are in the form of lawsuits or other types of arbitration known as post-administrative appeals.
These steps are far more complex than the other ones, as they require not only a legal team, but expert witnesses, researchers, and usually your own independent appraisal. And those are only the minimum requirements. Even if you have done well on your own so far, now is the time to get a property tax consultant. Even if you have gone all the way on your own, there is still time to find a partner like O’Connor.
Why Use Post-Administrative Appeals?
These legal actions that we are going to discuss are exclusively for high-dollar properties. This typically means commercial or industrial properties, though it can also mean large and expensive single-family homes as well. You aren’t contesting a few thousand dollars here, but possibly millions. You are trying to achieve elite cost reduction for your business, an amount that is worth the time, cost, and effort.
You have come to this part of the journey either because the ARB rejected your argument, or because they agreed, but gave you a settlement that was below what you believe you deserved. If you got a small victory with the ARB, that means that you at least have a solid foundation to build on. If you were rejected entirely, that means you will need to accrue even more evidence to be prepared for your legal case. No matter what brought you here, you will need to build your team to be successful.
Assembling a Team
Your days as a lone wolf are officially over. No matter how well you did on your own in the lower appeal process, you must now turn to a team of experts to help you on your way. This is a legal matter, and you do not want to go pro se in this situation. You will need a tax or litigation attorney to represent you in court or arbitration to start things off. It is through this attorney that you will learn how to build your case further. For some types of lawsuits, such as binding arbitration, this might be the only step you need to take.
If you want to go for a judicial appeal; however, you will need to treat it more like a civil or criminal case. This means that you will need expert witnesses to testify on your behalf. You will need researchers to put together evidence to bring to court. Since most judicial appeals are predicated on overvaluation, you will also need a professional appraiser to find the true value of your property. Putting together your team can certainly feel like a full-time job, but getting the right people is a necessity.
Binding Arbitration
Traditionally, post-administrative appeals have only been for businesses, apartment buildings, industrial properties, and large swaths of land for farms or ranches. Due to the spiraling cost of homes, single-family residences are becoming more common in these lawsuits. Binding arbitration is intended for personal property worth less than $5 million and is tailor-made for single-family homes. In fact, the $5 million cap can only be overridden by a property having a homestead exemption. Binding arbitration was created to be an alternative to judicial appeals for those that did not have the budget to pursue that route.
You will be required to pay a deposit to the arbiter that is deciding your case. You will get this money back if you are successful, but it will be forfeited if you are found to be lacking. This amount can range from $400 to $1,500, depending on the size of the case. Either side of the post-administrative appeal may settle before the case goes forward, and this is often a better deal for all involved. If neither side blinks, then the case is heard.
The arbiter is either an attorney or another licensed specialist when it comes to properties and real estate. It is they who will ponder the evidence presented by both sides before rendering judgement. The arbiter will determine if the value of the property is closer to the value you claim or that of the CAD. Once they rule, the decision is final, meaning there are no appeals left to use, and the CAD cannot pursue further action as well.
State Office of Administrative Hearings
The State Office of Administrative Hearings (SOAH) is the newest of the post-administrative appeals, and also the rarest and most esoteric. First created just over a decade ago, SOAH cases are reserved for single-family homes worth over $1 million. This is meant to address the growing reality of staggering housing prices in Texas, especially those of a luxury nature. Intended for mansions and other such estates, the SOAH is seldom used. There were only 96 SOAH appeals in 2023, with most counties never seeing a single one.
SOAH hearings are similar to binding arbitration, albeit with an administrative judge instead of an attorney or expert. It has some trial-like qualities as well. While you could participate in a hearing without an attorney, one is highly recommended. Due to the rarity of this type of case, finding an attorney experienced in them can be an adventure on its own. Like binding arbitration, you will have to make a deposit.
Judicial Appeals
Judicial appeals are the Cadillac of post-administrative appeals. These are actual lawsuits that appear before the district court. Originally, they were the only type of appeal left after the ARB but were found too costly and involved for most taxpayers, leading to the creation of binding arbitration and later the SOAH. Judicial appeals are intended for commercial properties, industrial facilities, apartment buildings, utility institutions, and massive ranches. This is where millions or even thousands of millions of dollars hang in the balance.
While you could get by with just an attorney or a small team for other post-administrative options, judicial appeals require the entire team mentioned above. This is a costly endeavor, and it could take years to appear before a court or judge. When the docket is finally cleared and both sides appear before the court, it is then that the legal team and experts pay off.
Judicial Appeal Settlements
Except, these court dates rarely come. Instead, cases are usually settled out of court, and almost always in favor of the plaintiff. Only one in over every hundred judicial appeals actually go to trial. In 2023, 92.29% of all judicial appeals were settled in favor of the taxpayer. While this is certainly anti-climactic, it is also a boon for any plaintiff that is finally seeing all their hard work pay off.
This makes judicial appeals a virtual slam dunk for protestors, but it carries with it an enormous cost of entry. This is, cynically, almost certainly the point. Very few taxpayers can pay for a legal team, organize a judicial appeal, and wait years to see the results. This is something typically held back for the biggest of property owners, meaning the barrier for entry is so high that only a select few have access to it. This is why binding arbitration and the SOAH were created. But it also demonstrates that a well-prepared taxpayer can steamroll their CAD if they have the resources and will to do so.
Post-Administrative Appeals in a Nutshell
All three types of post-administrative appeals are certainly worth the effort, though each has costs and hoops that must be jumped through. When exposed to the light, it is clear that the inflated prices imposed by CADs cannot stand on their own. This should be a motivator for both lesser appeals and lawsuits. It is clear that even the largest of taxpayers are leaving money on the table if they do not explore all of their options. Post-administrative appeals are certainly not for everyone, but they do give a vital remedy for those with the time and resources to do so.
O’Connor Can Help
As demonstrated with judicial appeal settlements, if you can get to the big dance, you will almost certainly win. It is reaching the top of the mountain that is the hard part. This is where O’Connor can step in. We have been fighting CADs in the courts for 50 years and have the knowledge and connections needed to get the best results. As one of the largest property tax consulting firms in the United States, we have seen it all.
The biggest challenge and cost is putting your legal team and experts together. We at O’Connor can run point for you and build the team in-house. We have the attorneys, expert witnesses, and researchers needed to get your post-administrative appeal to where it needs to go. Our offices will coordinate everything for you. The best part is that you will not pay any of these legal fees yourself. No fees for filing, attorneys, witnesses, or anything else. Nothing. We will take care of the costs for you and will only charge a portion of your tax savings if you win.
We can even step in if you are already in the process. Perhaps the ARB rejected your argument, and you have no idea what to do next. Get in touch with us, and we can build your team for a judicial appeal, or we can represent you in binding arbitration or with the SOAH. We are happy to give you a second chance on your journey to the best property tax appeal possible.
