PROPERTY TAX BINDING ARBITRATION FOR PROPERTY OWNERS – FREQUENTLY ASKED QUESTIONS
Tax Code Chapter 41A gives property owners meeting certain criteria the option of requesting binding arbitration as an alternative to filing an appeal of an appraisal review board (ARB) decision to state district court. Below is a list of frequently asked questions regarding this program and what is required for property owners to qualify.
Binding arbitration creates a forum in which both parties to a dispute present their positions before an impartial third party. Generally, in binding arbitration, an independent, neutral arbitrator hears and examines the facts of an appeal and makes a decision that is binding on both parties. More specifically, binding arbitration, in the context of property value disputes, creates a forum in which both parties to a dispute present their positions before an impartial third party, who renders a specific award that is enforceable by law and may only be appealed as provided by Civil Practices and Remedies Code §171.088, for purposes of vacating an award. To file you must be submit a $450 to $1,550 filing fee in the form of a cashier’s check, payable to the Texas Comptrollers Office. If the value awarded by the Arbitrator is closer to your value than the value set by the Appraisal District, you will receive a refund less $50 that the State keeps for administrative charges.
Who qualifies for arbitration?
A property owner may request binding arbitration if:
- the property in dispute is real property;
- the county appraisal review board (ARB) has issued a determination on the appraised or market value of the property;
- the disputed property’s value as determined by the ARB does not exceed $5 million or is over $5 million and Homesteaded;
- taxes have been timely paid; and
- a lawsuit has not been filed in district court on the same matter.
What appraisal disputes do not qualify for arbitration?
Binding arbitration is not available if:
- the ARB has not heard the protest and issued an order;
- the order of determination concerns a correction to the appraisal roll under Tax Code 25.25;
- more than 60 days have passed since the property owner received the ARB order;
- the dispute concerns anything other than whether the correct value has been assigned to the property, such as failure to grant an exemption or productivity appraisal;
- the property value dispute concerns property other than real property, such as inventory, vehicles and other personal property; or
- the property is not homesteaded and is valued at more than $5 million as determined by the ARB order.
An ARB is a neutral, impartial group of individuals appointed by an appraisal district board of directors or a local administrative district judge to resolve formal disputes between taxpayers and the appraisal district.
ARB hearings typically run from June to August. The ARB listens to both sides and rules on property owner protests. An ARB issues an order determining the outcome of a property owner’s protest.
Are there restrictions on when I can file for binding arbitration?
A request for binding arbitration with deposit must be filed with the appraisal district within 60 days of the property owner receiving the order of determination. Please do not file the request with the Comptroller of Public Accounts – you will probably miss the 60-day deadline.
Have property owners always been able to arbitrate a dispute with the appraisal district?
Since 1991, judges of state district courts were allowed to appoint arbitrators in certain cases. Binding arbitration was allowed if the property owner and the appraisal district both agreed to the process and nonbinding arbitration was permitted without the consent of the appraisal district. The 2005 Texas Legislature changed the law to expand the arbitration process. The law now allows certain property owners who are dissatisfied with a value decision of an ARB to request binding arbitration without filing a lawsuit in district court.
How do I request binding arbitration?
The property owner must complete Comptroller Form AP-219, Request for Binding Arbitration, and file the form and the required payment with the County Appraisal District within 60 days of receiving the order of determination. The form must be accompanied by a money order or a check issued and guaranteed by a banking institution, such as a cashier’s or teller’s check, made payable to the Comptroller of Public Accounts in the amount required based on the type of property and the ARB’s determination of the property’s market or appraised value. Personal checks, cash or any other form of payment not mentioned above cannot be accepted by the appraisal district.
Please do not file the request with the Comptroller’s office – you will probably miss your 60-day deadline. The Comptroller’s office cannot process the request without the appraisal district’s certification. The Comptroller’s office cannot forward your request to the appraisal district and must return the request and payment to you. The Comptroller’s office is not responsible for misfiled applications.
You should receive Comptroller Form AP-219, Request for Binding Arbitration, and a notice of the property owner’s rights with the order of determination issued by the ARB. If you do not receive Comptroller Form AP-219, Request for Binding Arbitration form and think you qualify for arbitration, contact your county appraisal district.
Additional Resources
Form AP-219, Request for Binding Arbitration
What is binding arbitration for contiguous property?
Binding arbitration for contiguous tracts of land is an appeal that allows a property owner who has two or more pieces of contiguous tracts of land to be heard in a single arbitration. To qualify, the properties must be contiguous to one another, be tracts of land and belong to the same property owner. When applying for arbitration for contiguous tracts of land, the owner should identify on the arbitration application that he or she is requesting arbitration for contiguous tracts of land and identify all contiguous tracts to be considered for arbitration.
What happens after the property owner submits the request to the appraisal district?
The appraisal district must certify the application and forward the request and the money order or cashier’s check to the Comptroller’s office within 10 days. An appraisal district must reject any request that does not include the correct deposit. Some appraisal districts may contact you concerning your request during this period.
Does it cost anything to arbitrate my dispute?
To request binding arbitration, the property owner must include a cashier’s check or money order payable to the Comptroller of Public Accounts in the required amount based on the type of property and ARB’s determination of the property’s market or appraised value. The deposit must be delivered with the application by certified first-class mail or hand delivery to the appraisal district; not to the Comptroller’s office. Regardless of the outcome, including withdrawal of your request or denial of your request, the Comptroller’s office retains $50 of the deposit for administrative costs.
If the property owner wins the dispute (the arbitrator sets a value for the property nearer to the owner’s opinion of value than the ARB’s determination as shown on the request form), the property owner will be refunded his or her deposit less the Comptroller’s $50 fee for administrative costs. The appraisal district is then 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 deposit. If the arbitrator charges less than the full deposit, any remainder will be refunded to the property owner.
The chart below indicates the amount of property owner deposit required and the amount of arbitrator fee allowed based on the type of property and the ARB’s determination of the property’s market or appraised value.
(Effective Sept. 1, 2017)
| Arbitration Deposit and Arbitrator Fee Schedule | |||
| Property Type |
Appraised or Market Value |
Deposit |
Arbitrator Fee |
|
Residence homestead |
$500,000 or less |
$ 450 |
$ 400 |
|
Residence homestead |
More than $500,000 |
$500 |
$450 |
|
Not residence homestead |
$1 million or less |
$500 |
$450 |
|
Not residence homestead |
More than $1 million but not more than $2 million |
$800 |
$750 |
|
Not residence homestead |
More than $2 million but not more than $3 million |
$1,050 |
$1,000 |
|
Not residence homestead |
More than $3 million but not more than $5 million |
$1,550 |
$1,500 |
Note: Tax Code Section 41A.05(b) allows the Comptroller’s office to retain $50 of the deposit to cover administrative costs.
Additional Resources
Starting with arbitrations received by the Comptroller’s office on or after Sept. 1, 2017, arbitrators are automatically assigned to an arbitration upon acceptance of the request by the Comptroller.
Arbitrations are assigned first to those arbitrators living in the county where the arbitration originated. If there are not any arbitrators living in the county, or if all arbitrators in the county decline the assignment, the assignment is made from a statewide list of all arbitrators.
Arbitrators are not eligible to be assigned to arbitrations in those counties where, within the preceding five years, they have:
- represented a property owner for compensation in a proceeding under the Tax Code in the appraisal district in which the property that is the subject of the appeal is located;
- served as an officer or employee of that appraisal district; or
- served as a member of the appraisal review board for that appraisal district.
You should immediately inform the Comptroller’s office in writing or by email about any discrepancies or outdated information concerning an individual on the arbitrator registry.
Does the Comptroller’s office have the authority to intervene in arbitrations?
The Comptroller’s office is prohibited by rule from giving advice or direction on a matter relating to a pending arbitration. Comptroller staff members are responsible for assigning arbitrators, maintaining the arbitrator registry, processing the requests for binding arbitration, remitting payment to the arbitrator when appropriate and/or refunding part of the property owner’s deposit, if applicable.
What if I change my mind and decide not to arbitrate? Can I get my money back?
Once an arbitration request is accepted by the Comptroller’s office, you will enter a 45-day settlement period with the appraisal district before an arbitrator is assigned to the case. An arbitration case may be withdrawn during this 45-day settlement period by notifying the Comptroller’s office and the appraisal district in writing. The Comptroller’s office provides Form 50-830, Notice of Arbitration Withdrawal, that may be used for this purpose.
If your case is withdrawn during the 45-day settlement, you will receive a refund of your deposit, less the Comptroller’s $50 administrative fee.
If your case is withdrawn after it has been assigned to and accepted by an arbitrator, the arbitrator is entitled to charge up to the full fee amount for the arbitration. You will only receive a refund of the remaining deposit, if any, after payment of the Comptroller’s $50 administrative fee and the arbitrator’s fee.
You must request a withdrawal in writing to the Comptroller’s office, the appraisal district and the arbitrator if one has been assigned. An oral request for withdrawal will not be accepted. Requests for withdrawal to the Comptroller’s office can be mailed to P.O. Box 13528, Austin, Texas 78711 or hand delivered to 1711 San Jacinto, Austin, Texas 78701. The requests can also be faxed to the Comptroller’s office at 512-463-8354 or emailed to ptad.cpa@cpa.texas.gov.
Why would an appraisal district reject my request for arbitration?
The appraisal district may reject the request for arbitration if the requisite cashier’s check or money order is not provided by the property owner or the amount of the check is incorrect. This is the only reason the appraisal district may reject a request. All other determinations must be made by the Comptroller’s office. Each request for arbitration must be accompanied by a deposit in the required amount as set out in the Arbitration Deposit and Arbitrator Fee Schedule.
Why would the Comptroller’s office reject my request?
There are a number of reasons why a request for arbitration could be rejected. Some reasons are:
- more than 60 days have passed since the order of determination was received and the appraisal district did not receive the request;
- the property owner’s agent is not qualified to represent the property owner;
- the taxes on the subject property are (or have become) delinquent;
- the disputed real or personal property is appraised at more than $5 million by the order of determination, unless the property is a residence homestead;
- the issue in dispute is not about appraised or market value or equality and uniformity;
- the order of determination was for a correction to the appraisal roll under Tax Code Section 25.25;
- the deposit is not included or the amount of the deposit is incorrect; or
- the property owner or agent does not provide additional information requested by the Comptroller’s office within 10 days of the request.
What happens if my arbitration request is rejected?
The Comptroller’s office will refund the deposit for a rejected request for binding arbitration, minus the Comptroller’s $50 fee.
After the arbitrator is chosen, what happens?
The arbitrator is encouraged to contact both the property owner and the appraisal district by telephone to arrange a date, time and location for the arbitration. The arbitrator must manage the arbitration according to Tax Code Section 41A.08 and Comptroller rules.
The arbitrator is required to provide a set of procedures that will be used in the arbitration proceedings. The arbitrator will also follow certain provisions of the Tax Code and the Civil Practices and Remedies Code.
After hearing both sides, the arbitrator must render a decision and complete Comptroller Form 50-704, Arbitration Determination and Award. The arbitrator must mail the form to the Comptroller’s office and may mail, fax or email copies to the property owner and the appraisal district. In addition to the mailed original award, the arbitrator may fax or email a copy to the Comptroller’s office. After the Comptroller’s office receives this form, the Comptroller’s office will send either a payment to the arbitrator or a refund to the property owner, or in some instances both, after retaining the $50 fee for administrative costs.
Who may represent a property owner in a request for binding arbitration?
The parties to arbitration may represent themselves or be represented by an attorney, a licensed real estate broker or sales agent, a certified real estate appraiser, a property tax consultant or a certified public accountant. These agents must have written authorization (Comptroller Form 50-791) signed by the property owner. Note: a lawyer does not have to have this authorization.
Additional Resources
Form 50-791, Appointment of Agent for Binding Arbitration (PDF)
May I arbitrate and appeal the decision in district court?
The arbitration proceedings are binding. An arbitration award may be vacated under limited situations (Civil Practices and Remedies Code Section 171.088). An appeal of the arbitrator’s award in district court cannot be filed if you are simply dissatisfied with the value determination.
What if the arbitrator does not follow Comptroller arbitration rules or other law?
The integrity of the arbitrator registry is very important. Therefore, all parties should become familiar with Comptroller arbitration rules and applicable provisions of the Tax Code and Civil Practices and Remedies Code. The Comptroller’s office is not the licensing or certifying authority for the arbitrators on the registry. The Comptroller’s role is to place an arbitrator’s name on the registry after receipt of an application with accompanying qualifying documentation to be on the registry. Only complaints concerning whether the arbitrator meets the statutory requirements to be on the registry should be directed to the Comptroller’s office. All other complaints should be directed to the appropriate licensing or certification authority.
Am I required to follow the Comptroller’s arbitration rules?
Failure to follow Comptroller rules, relevant provisions of the Tax Code and Civil Practices and Remedies Code, or the arbitrator’s procedures could have negative consequences, including but not limited to the following:
- rejection of the request for binding arbitration;
- loss of deposit; and
- dismissal of the arbitration.
Do I have to physically attend a formal hearing?
The property owner may request to have the arbitration in person, by teleconference or by submitting written documentation to the arbitrator. However, unless the property owner and the appraisal district both agree to arbitration by submission of written documents the arbitration will be conducted in person or by teleconference. An arbitrator may require that the arbitration be conducted in person.
The Comptroller’s office does not have the authority to delay your arbitration. You must contact the arbitrator directly to make this request. Any such arrangement involves the property owner and the arbitrator. The Comptroller’s office is not a party to this decision. Comptroller rules encourage arbitrators to conclude all arbitrations within 120 days of being assigned to be the arbitrator.
Who decides where and when a hearing will occur?
The arbitrator is responsible for arranging the location and time of the arbitration, and will presumably work with the parties involved in that decision. In-person hearings are to take place in the county where the appraisal district office is located and from which the ARB’s determination was issued; however, the arbitration can be conducted elsewhere, if the parties agree.
The chief appraiser may only correct the appraisal roll if the arbitration award is below the order of determination.
What if I disagree with the outcome of the arbitration?
The decision of the arbitrator is final and binding on both parties. By arbitrating the dispute you agreed to abide by the arbitrator’s decision.
For more information contact Rob Wheelock, or visit the Texas Comptroller’s website here.
The following is contact information for the Information Services Team:
Mailing address:
Comptroller of Public Accounts
Property Tax Assistance Division
Attn: Arbitration
P. O. Box 13528
Austin, Texas 78711
Email address: ptad.cpa@cpa.texas.gov
Phone: 800-252-9121
Fax: 512-463-8354