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Remedy for Unequal Appraisal

Cantrell McCulloch, Inc.

Remedy for Unequal Appraisal

In a practice known as “sales chasing”, appraisal districts often increase the appraised values of properties that have recently sold to their sales price. However, adjusting a property’s appraised value to its sales price greatly undermines the overriding concern of equity by creating a dual standard of valuation: one for properties that have recently sold and one for those that have not. Fortunately, the Texas Property Tax Code, as amended by the enactment of Senate Bill 841, features a remedy for the practice of sales chasing.

Also known as the Taxpayer’s Bill of Rights, Senate Bill 841 was intended to facilitate tax remedies for property owners. Probably the most significant change to the law is that taxpayers may contend inequality of appraisal under Section 42.26(a)(3), which was added to subsections (1) and (2) in 1997. Subsection (3), which became effective on January 1, 1998, provides that “The district court shall grant relief on the grounds that a property is appraised unequally if the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.”

Prior to the enactment of Section 42.26(a)(3), the statutory means for taxpayers to prove inequality of appraisal were often cost prohibitive. Under the old statute, taxpayers were required to obtain an independent appraisal of the market values for a sample of comparable properties. Recognizing that the remedies under Subsections (1) and (2) were too expensive and difficult to prove to provide taxpayers with a meaningful remedy, subsection (3) dispenses with the requirement of an independent appraisal for each of the comparables, giving taxpayers a less expensive alternative for proving inequality of appraisal. Instead, it requires only a comparison of the appraised market values as determined by the appraisal district on the certified appraisal roll. The only independent analysis required is in adjusting the appraised values to put the properties on equal footing.

As upheld by the Court of Appeals of Texas (14th District) in Harris County Appraisal District v. United Investors Realty Trust, the plain language of the statute allows a protest without proof of the market value of comparable properties. Hence, if a conflict exists between taxation at market value and equal and uniform taxation, equal and uniform taxation prevails.

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