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Texas Faces Lawsuit Over Property Valuation System

by Ken Parsons, Senior Vice President, September 2015


The City of Austin has filed an unprecedented lawsuit against the State of Texas, the Travis Central Appraisal District, and every owner of vacant land and commercial property in the county with the exception of apartments.


The suit contends that the "equal and uniform" provision of the Texas Property Tax Code is unconstitutional. It also charges that the failure of Texas to have a mandatory sales price disclosure law is unconstitutional.


Homeowners Join In


A group of residential owners have filed a motion to intervene in the city's lawsuit. Attorney Lorri Michel explained that the group's main concern is keeping the “equal and uniform” provision for taxation as set forth in the tax code.


"Over 60,000 homeowners in Austin protested their values this year based on equal and uniform. If the city wins that section of the lawsuit, property owners will not be able to protest any of that particular section of the law. This affects every single property owner," Michel said.


Non-Disclosure Attacked


Texas is one of 14 states that do not require or allow the formal disclosure of property sale prices for the purpose of establishing property values. The lawsuit seeks to change that.


"The lack of sales disclosures has made it nearly impossible for appraisal districts to comply with their statutory and constitutional duty to assess all properties at market value so that taxation is equal and uniform," the lawsuit states.


Non-disclosure faces powerful opposition from business leaders and the Texas Association of Realtors. The Texas Legislature has heard arguments many times through the years about changing the non-disclosure laws and has always declined to act.


TCAD's Appraisals Also Targeted


The recent lawsuit comes on the heels of a petition filed by the Austin City Council in June that challenges the Travis Central Appraisal District's valuation of billions of dollars in commercial property and vacant land.


The motion asks a District Court to order a redo of the properties' 2015 appraisals. Click here to read more about this story in the June, 2015 e-POER Report.


Don't Take a Wait-and-See Attitude


Property owners cannot just wait and see what happens with this lawsuit. Until a decision is made on the possible reappraisal, property owners are expected to continue to pay their tax bills in a timely manner. If an Appraisal Review Board order needs to be contested, litigation should be pursued in district court.