 |
Subscribe to the GPD Texas Property Tax announcement list
Property Tax Opinions Released in 2003
Click here to view opinions released in 2004
WHM Properties, Inc. v. Dallas County The presumption of delivery of tax bills and notices afforded to a taxing authority under the Texas Property Tax Code does not arise until the taxing authority establishes that the bill or notice was actually mailed. Evidence of mailing is a precondition to shifting the burden to the taxpayer to prove lack of receipt.In this case, a property owner contended that it was entitled to a refund of interest and penalties assessed on delinquent property taxes due to the failure of the taxing entities to send required notices concerning delinquent taxes to a prior owner. The Tax Code statute in effect at the time provided for cancellation of penalties and interest if taxes were more than five years delinquent and the tax collector failed to send a notice of delinquency. Evidence indicated that the prior owner did not receive a delinquency notice. The taxing units attempted to rely on the presumption of delivery provided by Section 1.07 of the Tax Code. However, the court of appeals pointed out that the taxing units failed to submit any evidence that the delinquency notices had been mailed. The court of appeals ruled that a tax authority must submit evidence of the mailing of a notice before it is entitled to any statutory presumption that the notice was delivered.
Whitehead v. Jasper County Water Control & Improvement District No. 1 Taxing entities are bound by errors contained in their judgments for delinquent taxes.In this case, a delinquent tax judgment was entered on two tracts of land owned by the same taxpayer. At foreclosure, both tracts were struck off to one of the taxing entities. The taxpayer subsequently redeemed one of the tracts by paying the required redemption amount. After transferring title to the tract, the taxing entity discovered an error regarding the location of improvements on the tracts. While it was thought that an office building was located on the non-redeemed tract, it was actually located on the redeemed tract. This error appeared in the original delinquent tax judgment. The taxing entity sought to rescind the taxpayer's redemption claiming a mutual mistake of fact or law. The court held that, by paying the full amount of the redemption required by the Tax Code, the taxpayer was entitled to recover title to the tract, regardless of any error that might have existed regarding location of the improvements. It also held that the taxing entity could not correct the error in the original tax judgment.
Panel members of an appraisal review board are entitled to judicial immunity from lawsuits alleging errors in the manner in which they determined value protest.In this case, a property tax consultant filed a lawsuit against members of a review board panel, claiming that they were negligent in the manner in which they had determined a value protest. Though the panel had recommended a value reduction, the reduction was not to the extent requested by the consultant at the protest hearing. The panel's recommendation was subsequently adopted by the review board, and the property owner did not appeal the value determination. The consultant, however, did sue the panel members alleging he had suffered harm as a result of the panel members' actions, because he was to be compensated on a contingent-fee basis and his fee was not as great since the value recommendation was greater than the value he had requested. The court held that review board members act in a quasi-judicial manner in administrative proceedings, and thus are entitled to judicial immunity from suit and liability for their actions.
Houston R.E. Income Properties XV, Ltd. v. Waller County Appraisal District A court may blend various value methodologies together to determine the market value of a property under protest.In this case, the property owner's expert relied primarily on the income approach and testified that the cost approach and the market approach would not provide accurate determination of market value. The appraisal district's expert utilized all three approaches to valuation, arriving at a different value under each approach. In determining a market value, the trial court indicated that it was blending market approach testimony with income approach testimony to arrive at the market value for the property. The property owner claimed on appeal that blending valuation methods was improper and that the court should have relied on a single approach to value. The court of appeals held that blending was allowed and that the resulting value was within the range of values testified by the experts under the various approaches.
Conseco Finance Service Corp. v. J&J Mobile Homes, Inc. Property tax liens take priority over pre-existing financing liens on personal property.In this case, a mobile home with a pre-existing lien was sold at a tax warrant sale for delinquent taxes. The finance company holding the pre-existing lien alleged that its lien was not extinguished by the tax sale, claiming that Tax Code provisions for extinguishment of pre-existing liens only applied to real property. The court of appeals rejected the argument, holding that the priority of tax liens over most other types of liens applies to both real and personal property.
Koger Equity, Inc. v. Bexar County Appraisal Review Board A property owner is entitled to a hearing and determination of a Section 25.25(d) motion filed after dismissal of its Chapter 41 protest.In this case, the property owner filed a timely Chapter 41 value protest, which was set for hearing. However, when the property owner failed to appear at the scheduled hearing, the value protest was dismissed by the review board. Subsequently, the property owner filed a motion under Section 25.25(d) seeking a late value correction. The review board refused to schedule a hearing on the motion because of the prior protest. The court of appeals held that, because the Chapter 41 protest was dismissed and never adjudicated, the property owner was entitled to pursue a value correction under Section 25.25(d). The court noted that Section 25.25 was subsequently amended to provide for just such a result. Also in the appeal, the property owner claimed that it was entitled to recovery attorney fees pursuant to Section 41.45(f). That statute provides for the recovery of attorney fees by a property owner when it is forced to file a lawsuit to obtain a hearing to which it is entitled. However, the court of appeals held that the statute only covers hearings to which a property owner is entitled under Chapter 41. Because the hearing denied was under Chapter 25, the court held that the property owner was not entitled to any attorney fees.
Denton Central Appraisal District v. CIT Leasing Corp. A protest of lack of notice must be filed prior to the due date for property taxes.In this case, the property owner complained of the failure to receive a notice of appraised value from the chief appraiser. However, because the property owner did not file its Section 41.411 protest until after the due date for property taxes, the court of appeals held that the protest was too late. Section 41.411 allows a property owner to file a protest regarding the failure to receive a notice to which the property owner was entitled. In this particular case, notice was clearly required as it was the first appraised value assigned to the property. However, 41.411 provides that a protest must be filed "prior to the date the taxes on the property to which the notice applies becomes delinquent." The property owner timely paid the assessed taxes such that taxes never became delinquent. However, the property owner did not file its protest until some 10 months later. The court of appeals held that the statute's time provision means that the protest must be filed before the date that the taxes would become delinquent, regardless of whether the taxes actually become delinquent or not. The property owner also argued that, due to the lack of notice, the tax assessment was void due to a lack of jurisdiction of the appraisal district to assign a value to the property. However, the court of appeals held that the notice requirement is merely procedural and not jurisdictional. The court also rejected the property owner's argument that it was denied due process because of the failure to receive notice. The court held that Section 41.411 provides the due process to which the property owner is entitled, but the property owner failed to take advantage of its right by filing late.
Ronald Andrews v. Aldine Independent School District A taxing entity which chooses to pursue its claim for taxes in a probate court is bound by the rules of probate administration.In this case, after the property owner died owing delinquent taxes, the school district filed a claim for the taxes due in the probate court where the deceased's estate was being administered. When the estate's representative took no action on the school district's claim, it was considered rejected by operation of law. When a claim is rejected, a claimant must file a lawsuit within 90 days or the claim is considered barred. The school district did not file the lawsuit. Because of the failure of the school district to timely pursue its claim after the claim rejection in the probate court, the court of appeals held the school district's claim for delinquent taxes to be barred against the estate. The school district argued that its delinquent tax claim should not be barred since it was not required to file a claim in the probate court. The appellate court rejected this argument, noting that though taxing entities may opt out of the probate court procedures in this case the school district had opted in to the procedures by filing its claim. The school district also argued that the barring of the claim was unconstitutional due to provisions against release of taxes. However, the court of appeals held that the probate procedures merely related to tax collection procedures, of which there are many in existence, and thus did not result in a release.
Houston Land & Cattle Co., L.C. v. Harris County Appraisal District A subsequent owner of property has no right to protest a prior owner's failure to receive notice.In this case, the taxpayer purchased five tracts of land with knowledge that delinquent taxes were owed on the property. However, the taxpayer filed a protest with the appraisal district claiming that the assessed taxes and increased values in prior years were void due to the failure of the appraisal district to send required notices to the prior owners. The court of appeals noted that the failure to send a notice of increased value does nullify a change in value, but only as to the property owner entitled to receive the notice. Because the subsequent owner was not entitled to the notices in the years prior to its acquisition of the property, it could not protest the lack of notice or seek to nullify the value increases. The court also noted that the fact that the taxes became delinquent would prevent the prior owner from obtaining any correction under Section 41.411.
The Texas Supreme Court may be willing to consider striking the current school financing system.Shortly before the end of the 2003 regular legislative session, the Texas Supreme Court released an opinion in this case relating to the 14-year-long saga of public education finance cases. While the Court's decision neither invalidates nor overturns the Robin Hood school finance plan, it does send a challenge to the plan by a group of wealthy school districts back to the trial court for a full trial. Though technically the opinion only relates to whether a cause of action was properly pleaded so as to allow for a trial, it would be fair to say that the Supreme Court is signaling its willingness (by at least 8 of the 9 justices) to strike down the current system as violating the Texas Constitution's prohibition against a statewide property tax. In our opinion, the timing and language of this opinion was clearly directed at the Legislature in light of Governor Rick Perry's pledge to call a special legislative session to address public school finance system. With that special session ending with no resolution of school financing, the Legislature might find itself under threat of the Supreme Court striking down the current system without any new system in place. The issue will have to be faced either in a new special session, or it will be the major issue for consideration during the 2005 regular session.
Cypress-Fairbanks I.S.D. v. Glenn W. Loggins, Inc., Trustee A reversionary interest in real property is not extinguished by a foreclosure for delinquent taxes.In this case, the real property had been transferred in the past with a provision that it be used for a particular purpose (in this case, flood control) and that if the use changed in the future then title would revert to the previous owner. The taxing units claimed that the reversionary interest was like a lien or encumbrance on the property and therefore would be extinguished in a delinquent tax sale, similar to other liens and encumbrances. However, the Court disagreed, holding that the reversionary interest was a nontaxable interest that could not be extinguished by a foreclosure sale. Therefore, according to the Court, any purchaser at the foreclosure would take the property subject to the possibility of reversion of title in the previous owner. The Court of Appeals also ruled that taxing units are not liable for court costs, whether in the trial court or on appeal. This means that, in an appeal from a delinquent tax judgment, it is likely that the taxpayer will get stuck with all of the court costs on appeal - even if the taxing units file the appeal as in this case.
Quorum International v. Tarrant Appraisal District This case illustrates the problems inherent in not preserving error in a lawsuit and in not obtaining a ruling from an appraisal review board on an issue.In this particular case, the taxpayer complained of the failure of the chief appraiser and the appraisal district to grant a late-filed freeport application. However, neither the trial court nor the appellate court reached the ultimate issue of freeport. The trial court dismissed the case for lack of jurisdiction for failure to exhaust administrative remedies. And the appellate court affirmed. On appeal, the taxpayer attempted to argue for the application of Section 11.439 of the Tax Code, which allows for a freeport application to be filed any time prior to the review board's approval of the appraisal records. Though the application was filed in June and the appraisal records are normally not approved until nearer the statutory deadline of July 20, the Court of Appeals held that there was no evidence as to when the appraisal records were in fact approved. The Court pointed out that there is nothing that prohibits the review board from approving the records prior to the deadline and it could not go outside the trial court record to determine that the June application was actually prior to the records approval. The Court also held that the taxpayer failed to exhaust its administrative remedies. The taxpayer claimed that it had protested the denial of its freeport application to the review board and thus exhausted administrative remedies. However, the appellate court stated that, because the freeport application was untimely, there was nothing for the review board to consider. The taxpayer attempted to argue that its cover letter accompanying the late application was a request for extension of time to file the application. However, the appellate court held that this was the argument that should have been made to the review board, and since it was not there was a failure to exhaust administrative remedies.
Azad v. Harris County Appraisal District The value of property as a whole and not individual accounts comprising the property must be considered in determining eligibility for 25.25(d) correction.In this case, the taxpayer was denied a correction under Section 25.25(d) of the Tax Code because the entirety of the property at issue (as opposed to the portion on which he filed a protest) did not meet the threshold requirement of being one-third overappraised. The real property at issue consisted of three tracts divided into two accounts by the appraisal district. The taxpayer only protested the value of the two tracts combined in a single account and did not protest the remaining tract in a separate account. The taxpayer attempted to prove the fair market value of the two tracts at issue by subtracting the appraised value of the unprotested tract from his purchase price. Under such a theory, the two tracts would qualify for correction. However, the appraisal district contended that the combined value of all three tracts must considered as the appraised value and used for the one-third comparison against the sale price. The appraisal district contended that the taxpayer should not be allowed to accept the appraisal district's value with regard to a single tract and then use the value of that tract to protest the value of the remaining tracts in the same parcel of real estate. The Court of Appeals agreed and stated that, instead of subtracting the full appraised value of the unprotested tract from the market value, the taxpayer should have subtracted the proportion of appraised value that the unprotested tract represented in relation to the total appraised value. Under such a calculation, according to the Court, the property did not qualify for correction. |
