When challenging your property tax assessment, you may encounter the term binding arbitration. Understanding the implications of this option is essential before deciding whether to pursue it. Binding arbitration is a legal alternative to a court appeal, offering a streamlined process outside the courtroom. Here's a straightforward guide to qualifying for binding arbitration, assessing its pros and cons, and making an informed decision.
In most counties, Appraisal Review Board (ARB) members are citizens who aim to serve the public fairly. However, due to entrenched culture, historical practices, and flawed training often influenced by the appraisal district itself, many ARBs fail to conduct hearings as they should.
By law, the appraisal district holds the burden of proof in any ARB hearing. Yet, in practice, this essential principle is frequently disregarded. Property owners have the right to request all evidence the appraisal district intends to present at the hearing. Moreover, any evidence the appraisal district did not provide to the property owner at least two weeks prior to the hearing (upon request) cannot legally be introduced.
The ARB should enforce this rule rigorously to protect property owners' rights, yet this is routinely overlooked. In fact, no appraisal district in the state is known to actively enforce this vital protection.
ARB hearings are legally required to address appeals on both market value and unequal appraisal. Texas law on unequal appraisal has been clear since 2003. Yet, many ARBs still hesitate to fully consider unequal appraisal appeals, depriving property owners of a critical avenue for fair assessment.
This systemic reluctance to uphold property owner rights raises significant concerns about the independence of ARBs across the state. For property owners, this inconsistency can translate to lost opportunities for fair assessments, reinforcing the need for ARB reforms and stricter adherence to legal obligations.
Binding arbitration is a legally binding alternative to filing a lawsuit against the Appraisal Review Board (ARB) decision in district court. An impartial arbitrator examines the evidence from both parties and renders a final decision. While less formal than a court trial, both you and the appraisal district must adhere to the arbitrator's ruling, which cannot be appealed.
As the property owner, you can represent yourself or appoint an agent. You'll present evidence supporting your claim, challenging the appraisal district's valuation. Evidence may include property records, comparable sales, and appraisal reports. Come prepared, as this is your chance to demonstrate why the ARB's assessed value is inaccurate.
To qualify, you must meet specific criteria. Only real or personal property qualifies, and residential homesteads have no maximum value restriction. For other properties, the value must be under $5 million. To initiate arbitration, file Form AP-219 and submit a non-refundable deposit (ranging from $450 to $1,550 based on your property's value) to the Texas Comptroller within 60 days of receiving the ARB's order.
Upon submitting your request, the appraisal district will review your application, and the Comptroller's office will assign an arbitrator within 10 days. Both you and the appraisal district will present your cases in a hearing, where the arbitrator will weigh the evidence and make a final determination. You have 45 days after receiving the ARB's decision to file for arbitration, allowing ample time to gather your evidence.
If you're serious about lowering your tax assessment and willing to comply with a binding, final decision, arbitration could be the direct path to achieve it.
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