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Property Tax Opinions Released in 2006Click here to view opinions released in 2005 Click here to view opinions released in 2004 Click here to view opinions released in 2003 Texas Supreme CourtCameron County Appraisal District v. Thora O. Rourk Each taxpayer in class action must exhaust administrative remedies.A group of travel trailer owners filed a class action against the appraisal district contesting the taxability of their trailers. The Supreme Court held that those owners who had pursued their administrative remedies under the Tax Code could pursue their protests, but those owners that did not pursue their administrative remedies must be dismissed from the lawsuit. Texas Courts of AppealWilliam Reinmiller v. Dallas CountyTaxpayer may not dictate application of delinquent tax payments.In attempting to partially pay delinquent taxes, the taxpayer directed the tax assessor to apply the payment first to base taxes and then to penalty and interest. The taxpayer indicated that he wanted such an application in order to stabilize the amount of penalty and interest. Instead, the tax assessor applied the payment to interest and penalty and based taxes, so that additional penalty and taxes continued to accrue on the unpaid base taxes. In the trial court in a subsequent delinquent tax lawsuit, the taxpayer complained of the refusal of the tax assessor to follow his instructions on application of payments. On appeal, the court held that a taxpayer is prohibited by statute from dictating the application of payments. Ronnie Hebisen v. Clear Creek Independent School District Failure to appear at trial of appeal from tax master recommendation waives complaint of adverse ruling.Taxing units filed a suit for delinquent taxes against multiple attorneys occupying an office suite. The tax master recommended that one of the attorneys, Hebisen, not be held liable and that one of the other attorneys be held liable for 1995-2001 taxes. The attorney found liable appealed the recommendation and attempted to limit his appeal. The school district appealed the failure of the tax master to find liability for 2002 and 2003 taxes. Hebisen did not appeal. The district court held a new trial, at which Hebisen did not appear. The court found Hebisen and the other attorneys,including the appealing attorney, jointly liable for 1995-2003 taxes. Hebisen appealed claiming that, because he did not appeal, the district court could not find greater liability against him than recommended by the tax master. On appeal, the court held that, though the appealing attorney attempted to limit the nature of his appeal of the master's ruling, the attempt was ineffective and thus the entire recommendation was being appealed. Additionally, because the school district also appealed, Hebisen should have known there was a possibility that he could be held liable. Because he did not appear at the district court trial and therefore did not raise any objections during trial, he was held to have waived any complaint regarding the judgment taken against him. LaSalle Bank National Association v. Lorae White Land designated for agricultural use under Tax Code cannot be used as security for home equity loan.Property owner executed a home equity loan, in which the stated security was a lien on 10 acres of land. The 10 acres received open space special valuation under the Property Tax Code at the time of execution. A request was made to remove the 10 acres from open space valuation, but the appraisal district indicated that this could not be done until the next year because the roll was already complete. Property owner defaulted on the home equity loan, and the bank sought to foreclose. Property owner sued for declaratory judgment that the lien was invalid. The Texas Constitution prohibits a home equity loan lien on land designated for agricultural use. The appellate court held that, because the land purportedly securing the loan was designated as open space under the Tax Code, the property was sufficiently designated for agricultural use to invalidate the bank's lien. TRQ Captain's Landing L.P. v. Galveston Central Appraisal District Equitable owner and not just titleholder may obtain to tax exemption.Taxpayer limited partnership purchased apartment project in 1998. In late 2003, limited partnership was purchased. Ownership structure was established as follows: CHoDO entity owned a management entity, which in turn was limited partner in taxpayer limited partnership as well as owner of general partner of limited partnership. CHoDO controlled 100 percent of limited partnership through sole ownership of entities.. Upon purchase, CHoDO parent filed for exemption, which appraisal district denied because CHoDO was not owner of property. In trial court, both taxpayer and appraisal district moved for summary judgment and court granted summary judgment to appraisal district on ownership issue. On appeal, court held that CHoDO was equitable owner of property due to full ownership and control of various other entities that either owned property or controlled owner. The court then held that the CHoDO exemption was available to the property because equitable ownership was in the CHoDO parent. One justice dissented from the en banc opinion. Midland Central Appraisal District v. Plains Marketing, L.P. Presentation of protest basis at review board hearing sufficient to exhaust administrative remedies even though basis not specified in notice of protest.Taxpayer filed an appeal with the appraisal review board. Taxpayer claimed that its personal property was exempt from taxation; but the protest notice filed by the taxpayer only alleged market value and equity as protested issues. At the review board hearing, the appraisal district contended that the exemption issue was not before the review board and that only value had been protested. However, the taxpayer did present evidence relating to the exemption issue at the hearing. After the review board denied the protest, the taxpayer appealed. In the trial court, the appraisal district claimed the court lacked jurisdiction to consider the exemption issue because of the failure of the taxpayer to specifically alleged exemption on its protest form. The court of appeals held that, while the taxpayer was required to exhaust its administrative remedies before proceeding to court, it had sufficiently done so in this case. Because the exemption issue was addressed at the review board hearing, it was considered at the administrative level and the order denying the taxpayer's protest constituted an exhaustion of administrative remedies even though the order did not specifically address the exemption issue or the appraisal district's contention that exemption had not been protested. Aaron Rents Inc. v. Travis Central Appraisal District Attorney fee award to prevailing taxpayer in appraisal case is mandatory.Property owner sued appraisal district when district increased 2003 values after certification based on owner's amnesty rendition and appraisal review board denied protest of increase. While the district court held the increased appraisals were invalid, it refused the owner's claim for attorney fees. Owner appealed the attorney fee issue. On appeal, the court held that the owner was not entitled to attorney fees under its declaratory judgment claim since it had protested the increase under the Tax Code. However, the court held that the owner was entitled to fees under Section 42.25, which the court held was mandatory. One justice dissented and would have held the award of fees discretionary. ABN Amro Mortgage Group v. TCB Farm and Ranch Land Investments Holder of unrecorded "first lien" may redeem property after tax lien foreclosure.Taxpayer refinanced the mortgage on his property, but the new mortgage holder failed to file the new deed of trust. Later, the taxpayer borrowed money to pay property taxes and agreed to a transfer of the tax lien to a lien financing company. The lien transfer was recorded, and a year later the mortgage deed of trust was filed. The transferred tax lien was foreclosed, and the property was sold to a third party. The mortgage company attempted to redeem the property, but the third party refused claiming the mortgage company lien was not a "first lien" due to the late filing. On appeal, the court held that the Tax Code does not require the deed of trust to be filed to constitute a "first lien" and the mortgage holder had the right to redeem the property from the tax lien purchaser. The court also held that the filing of the transferred tax lien did not constitute a "first lien" because tax liens are not required to be filed and the filing of the transfer was merely a procedural prerequisite to foreclosure of the tax lien. American Housing Foundation v. Calhoun County Appraisal District CHoDO general partner provisions only apply to properties constructed after December 31, 2001.A limited partnership owning property sought a community housing development organization tax exemption based on the qualification of its general partner as a CHoDO. The Tax Code statute allows for such an ownership structure, but the statute references property "constructed after December 31, 2001." The property was constructed before 2001, but the owner sought to have the statute applied to property constructed both before and after the statutory date. On appeal, the court held the statutory language was clear and the exemption provision only applied to later constructed projects. Citizens National Bank v. City of Rhome Field Appraiser's Guide does not establish character of property as personalty.Taxing units sought to foreclose tax liens on service station equipment. Lienholder claimed that fuel dispensers were realty and not personalty, and thus not subject to tax warrant. To prove the dispensers were personalty, the taxing units relied on the Field Appraiser's Guide issued by the Comptroller's office, which identifies service stations equipment as personal property. On appeal, the court held that the Guide alone, without further supporting evidence, could not establish the property as personalty. The court then held that the lienholder had submitted sufficient evidence to establish the dispensers were attached to the real property so as to constitute fixtures and improvements to the realty and thus were not personalty. Hartman REIT Operating Partnership v. Waller County Appraisal District Income of properties may be used as adjustment factor in equity analysis.Property owner sued on the value of its property claiming inequitable appraisal. At trial, the owner complained that the appraisal district's witness used income of the properties in adjusting values to determined equitable value and claimed that income could only be used to determine market value and not median value. On appeal, the court held that the equity valuation statute does not preclude the use of income information in determining median value. Victory-Phyllis David v. Kaufman County Statutory limit on attorney fees in aid of excess proceeds recovery is "per owner."Property owner died, leaving 13 heirs. When taxes were not paid on property, the property was foreclsoed in a tax sale. Some but not all of the heirs hired an attorney to seek excess proceeds from the sale. The trial court awarded the attorney $3,500 in fees, and one of the unrepresented heirs complained that the fees exceeded the limitation of Section 34.04. That Tax Code provision limits fees for the recovery of excess proceeds to the lesser of $1,000 or 25 percent of the recovery. On appeal, the court held that the $1,000 limit applied "per owner." Therefore, the award did not exceed the statutory limit. American Heritage Apartments, Inc. v. Bexar County Appraisal District Alleged CHoDO must meet specific qualifications of federal law to obtain tax exemption.Taxpayer was denied a community housing development organization property tax exemption. Federal law requires that a CHoDO meet certain qualifications, including having at least one-third of the members of its governing board live in low-income neighborhoods and maintaining a formal process for low-income beneficiaries to advise the organization regarding design, siting, development, and management of projects. Because the taxpayer did not satisfy these federal requirements, the court held that denial of the exemption was correct. Harris County Appraisal District v. Pasadena Property, L.P. Lack of notice of exemption cancellation waived by protest to review board; cancellation voidable, but not void.Appraisal District cancelled the taxpayer's pollution control exemption, but failed to notify taxpayer. When taxpayer received its tax bills, it discovered the loss of exemption and filed a protest with the review board. After the review board denied the protest, owner sued claiming the exemption cancellation was void due to lack of notice. On appeal, the court held the denial was voidable, but not void. The court also held that, by protesting to the review board, the owner waived any claim regarding the lack of notice. The case was remanded to the district court for the owner to prove its continuing entitlement to the exemption. Paula E. Williams v. County of Dallas Lack of certification of delinquent tax statement must be raised in trial court or waived.In a delinquent tax case, property owner complained of taxing units' reliance on delinquent tax statement, alleging statement was not certified and was not timely disclosed in response to discovery requests. On appeal, the court held that the lack of certification was required to be raised at trial and, since not raised, was waived on appeal. The court also held the owner was not unfairly surprised by the failure to disclose the statement since the delinquent tax petition sought all taxes owed as of date of filing as well as subsequent assessments. Roy Day Jr. v. Knox County Appraisal District Delinquent tax judgment may not be attacked by subsequent filing of tax abatement request.Property owner sought to set aside a delinquent tax judgment and tax sale by filing a 65 and over tax abatement after the sale. The court held the abatement request was too late and an improper and untimely attack on the tax judgment. Pete Dominguez Enterprises, Inc. v. County of Dallas Delinquent tax statement must identify defendant as person owing tax to constitute evidence of liability.In a delinquent tax case, the taxing units relied upon tax statements identifying "Pete Dominguez" as the owner instead of "Pete Dominguez Enterprises." The taxing units' attorney assured the trial court that the defendant corporation was the true owner and liable for the taxes. On appeal, the court held that the improper identification in the tax statement, without further evidence, was insufficient to prove a prima facie case of tax liability for the defendant. The court held that the attorney's assurance was not evidence. In re Dennis Drake Appraisal district must show actual conflict to disqualify former attorney.Attorney who formerly represented appraisal district sought to represent taxpayers in suit against district. The district sought to disqualify the attorney because of his past long-term representation of district. On appeal, the court held that the appraisal district must show the prior representation of the district substantially related to the taxpayers' new lawsuit. The court held that the attorney's familiarity with appraisal district procedures, policies, witnesses and documents was insufficient to disqualify the attorney. Hunt County v. Green Tree Servicing, LLC Taxing unit may be sued for failing to turn over excess funds from tax sale.County seized and sold three manufactured homes under a tax warrant. After the sale, the county distributed excess proceeds to the various taxing units. A lienholder sued to recover the excess proceeds, and the county requested dismissal for lack of jurisdiction and based on governmental immunity. On appeal, the court held that the lienholder pleaded a valid taking claim based on the distribution of the excess proceeds. Jim Wells County v. El Paso Production Oil and Gas Company Taxing units may not sue property owners on alleged claim of property tax fraud.Taxing units filed suit against various oil and gas companies claiming a fraudulent scheme to undervalue oil and gas reserves for property tax purposes. The trial court dismissed the taxing units' claims for lack of jurisdiction. On appeal, the court held that taxing units have no independent cause of action against property owners, but must pursue any remedies administratively through the Tax Code and the appraisal districts. Harris County Appraisal District v. (Kempwood Plaza Ltd.) Hartman REIT Operating Partnership Appraisal witness may rely on appraisal district information in determining equitable value.The appraisal district attempted to exclude testimony of the owner's appraisal witness regarding equitable valuation. The appraiser determined his comparable properties and adjustments based on information in the appraisal district's records. On appeal, the court held that an appraisal witness may rely on information in the district's records and need not verify the correctness of such information, since it was the information used by the district in determining values. Attorney General OpinionsAttorney General Opinion No. GA-0485Public-private partnership property might not qualify for tax exemption.To qualify for a public property tax exemption, property must be both used for a public purpose and be publicly owned. In some cases, public entities form partnerships with private entities to own and operate property for a public purpose. This opinion indicates that the mere use of the property for public purposes does not qualify the property for the public tax exemption. Though title to the property is in the partnership and thus the property is not publicly owned in the strict sense, the attorney general indicated that depending on the specific facts the property might be equitably owned by the public entity and thus qualify for the exemption. The test appears to be whether the governmental entity has the ability to require transfer of title to itself. Attorney General Opinion No. GA-0484 Mixed-use vehicle exception to rendition requirements does not provide for tax exemption.Cars and light trucks that are used for both business and personal purposes are not required to be rendered with other business personal property. However, this opinion holds that the rendition exception does not provide for a tax exemption for these mixed-use vehicles. The attorney general indicated that the rendition exception merely prevents the assessment of a rendition penalty for the failure to include the vehicles on the rendition form. Attorney General Opinion No. GA-0474 Homestead preservation district statute overrides CHoDO exemption provision of Tax Code.This opinion addresses issues relating to the impact of Local Government Code Chapter 373A on certain provisions of the Texas Property Tax Code. Passed during the 2005 legislative session, Chapter 373A allows qualifying cities to create homestead preservation districts to increase home ownership and prevent loss of homesteads in disadvantaged neighborhoods. Currently, as noted by the attorney general, the only qualifying city is Austin. Chapter 373A allows the city to create a land trust to own and manage property within the district. Property owned by the trust would be exempt from property taxes, except for local school taxes. The attorney general's opinion indicates that only property owned by the trust and located within the preservation district would have such a tax exemption; property owned outside the district would remain taxable unless exempt under some other statute. Furthermore, if a community housing development organization is designated as the land trust, that CHoDO would not be entitled to the CHoDO exemption provided in the Tax Code for property located in the preservation district. The attorney general opines that Chapter 373A essentially creates an exemption to the CHoDO exemption of the Tax Code. This is important because the Tax Code provides that a qualifying CHoDO is entitled to an exemption from all property taxes, while Chapter 373A provides that the land trust is only entitled to an exemption from non-school property taxes. The attorney general also opined that a county joining in the preservation district cannot commit to the district for more than a one-year term because the statute allows for annual reconsideration of the county's participation. Thus, the county would have to elect in each subsequent year whether to continue its participation. Also, the attorney general opined that funds generated through the district could only be used to purchase, construct and rehabilitate housing, and not for other infrastructure such as public works and improvements in the district. The attorney general also opined that Chapter 373A does not provide for a termination date to be applied to a created district and that income eligibility for those receiving benefits from the district should be determined based on their income in the year that they receive the benefit. Attorney General Opinion No. GA-0443 Tax lien on manufactured home must be filed to perfect if home is personal property.Though a tax lien on a manufactured home attaches on January 1 of each year, the tax lien is not perfected on the home as personal property until notice of the lien is filed with the Manufactured Housing Division of the Texas Department of Housing and Community Affairs. The filing must be made within six months after the end of the applicable tax year. However, if the manufactured home is designated as real property, then no filing is required to perfect the lien. |
