What is Regular Binding Arbitration?
As a Texas taxpayer, you have the right to protest the Appraisal Review Board’s determination of your property value, which affects the amount of taxes you pay.
If you fail to reduce your property tax by meeting with the Appraisal Review Board (ARB), you can use a process called regular binding arbitration. It’s a method of avoiding an appeal of the Arbitration Review Board decision in district court and generating a decision that all parties must abide by.
Since litigation is typically more expensive compared to arbitration, both you and the Appraisal Review Board can obtain a decision for a lower outlay than litigation in court.
Below is an overview of the regular binding arbitration (RBA) process, including qualification, filing, settlement, and potential outcomes.
The first step in regular binding arbitration is determining whether the case is eligible or qualified for the process. Qualifications include:
- The property under dispute must be real property.
- The ARB must issue a decision upon appraisal or by fair market value, and all taxes must be paid and up to date.
- The property’s value, according to the ARB, cannot exceed $5 million unless it is a residential homestead.
Most importantly, the property cannot be the subject of a lawsuit filed in the district court for the same matter.
You, as the property owner, must complete and file several documents with the county appraisal district within 60 days of receiving your ARB order of determination to qualify for arbitration. You do not file with the Comptroller of Public Accounts, only the county appraisal district.
Fill out Comptroller Form AP-219, Request for Binding Arbitration. Include a copy of the ARB order of determination you are appealing. Filing requires a deposit by check or money order payable to the Comptroller of Public Accounts.
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The Comptroller’s Office processes the request for RBA, and the case enters a 45-day settlement period. During this time, the parties can settle the case or otherwise determine whether or not the request should be withdrawn before it is assigned to an arbitrator.
When the 45-day settlement period expires, the Comptroller’s office assigns an arbitrator if it has not been notified of a withdrawal of the request.
Potential outcomes of a request for regular binding arbitration include withdrawal, dismissal, and arbitration.
If you and the ARB decide to settle, you can ask for the arbitration request to be withdrawn as long as it’s before the 45-day expiration date. Notify the Comptroller’s office in writing using Form 50-830, Notice of Arbitration Withdrawal.
If you withdraw the request, you receive a refund of your deposit minus a $50-dollar administrative fee retained by the Comptroller’s office. If you request a withdrawal after the settlement period expires and the assignment of an arbitrator, the arbitrator can charge up to the full fee amount for services.
After paying the arbitration fee and the $50 administrative fee, you receive any remaining deposit.
The arbitrator is required by law to dismiss all regular binding arbitration requests if they don’t meet the legal requirements.
Unless you owe delinquent taxes on the property, the arbitrator can charge up to their full allowed fee, and you won’t receive any refund from your deposit. Arbitration cases are dismissed for several reasons, which you can find here.
Arbitration Appointment and Hearing
If the Comptroller’s office does not receive a notice of withdrawal during the 45-day settlement period, it will appoint an arbitrator to hear the dispute. The arbitrator sets the date, time, and location of the hearing. Once the parties complete the hearing, the arbitrator makes a determination within 20 days.
The arbitrator’s determination of whether to lower the value of your property is final and binding for both you and the Appraisal Review Board. It is very important to make a convincing case at this hearing, which is why professional representation is highly recommended.
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You will learn who must pay the arbitrator’s fee after the arbitrator makes a final determination on the case. Arbitration fees are typically $450 to $1,550, depending on the property type and value.
- A residence homestead valued at $500,000 or less requires a deposit of $450, $50 of which is a non-refundable administrative fee.
- A property without a residence homestead valued at $1 million or less requires a deposit of $500, $50 of which is a non-refundable administration fee.
- A property without a residence homestead valued at more than $3 million but not more than $5 million requires a deposit of $1,550, $50 of which is a non-refundable administrative fee.
Suppose the arbitrator determines a value closer to what you believe it should be than the ARB’s appraisal. In that case, the Comptroller’s office refunds your deposit minus a $50 administrative fee. The appraisal district pays the arbitration fee.
Suppose the arbitrator decides on a value closer to the Appraisal Review Board’s value than to what you believe it should be. In that case, your deposit pays the arbitration fee and a $50 administrative fee. The Comptroller’s office refunds any remaining deposit.
Ask for Assistance
In Texas, you have the right to protest the valuation of your property determined by the Appraisal Review Board. By requesting binding arbitration, you streamline the process of re-valuing your property for significantly less financial outlay.
Regular binding arbitration is only available for real property that doesn’t exceed a value of $5 million without a residential homestead exemption. All property taxes must be up to date, and you cannot file a lawsuit for the same issue before or during arbitration.
If you have more questions or would like some expert advice, contact Republic Property Tax.