BRUSNIAK’S 2006 PROPERTY TAX CASE LAW DIGEST

By

John Brusniak, Jr.

(c) 2006 (All rights reserved. Reprinted with permission.)

UNITED STATES SUPREME COURT

A TAXING UNIT MAY NOT EFFECTUATE A TAX FORECLOSURE IF IT IS AWARE THAT ITS NOTICE OF FORECLOSURE WAS NOT DELIVERED TO THE TAXPAYER, PROVIDED THAT AN ALTERNATE REASONABLE METHOD OF NOTIFICATION IS AVAILABLE.

Jones v. Flowers, ___ U.S. ___, 126 S.Ct. 1708 (2006). [OPINION]

Taxpayer owned a residence. He separated from his wife and moved into an apartment, but continued making all mortgage payments. The mortgage company paid all property taxes until the mortgage was paid off. Thereafter, no property tax payments were made. A notice of tax delinquency, with a right to redeem, was mailed to the taxpayer at the property by the taxing unit by certified mail. It was returned to the taxing unit unclaimed. The taxing unit later published in the local newspaper a notice of public sale, and subsequently sold the property to a third party. (These procedures fully complied with state law.) When the third party attempted to evict the residents of the house, taxpayer filed suit contending that his constitutional right to due process was violated by the government’s failure to provide adequate notice to him of the intent to foreclose. The United States Supreme Court agreed and held “that when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so.”

UNITED STATES BANKRUPTCY COURTS

DEBTORS REORGANIZING IN BANKRUPTCY MAY NOT ADJUST THE INTEREST RATE ON A TAX LIEN TRANSFER LOAN; ATTORNEY’S FEES TO ENFORCE COLLECTION OF A LOAN IN BANKRUPTCY ARE RECOVERABLE WITHIN THE LIMITATIONS SPECIFIED IN THE PROPERTY TAX CODE.

In re: Davis, 352 B.R. 651 (N.D. Tex. 2006). [OPINION]

Taxpayer borrowed money from lender to pay property taxes and agreed to pay 18% interest on the loan. As a part of the transaction, the tax lien was transferred to the lender from the tax office. Taxpayer filed for Chapter 13 protection under the Bankruptcy Code and filed a plan seeking to repay the loan at an 8.5% interest rate rather than the contractual 18% rate. The lender filed an objection to the plan, and the court ruled that Section 511 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 provides that interest rates on both tax claims owed to tax offices and tax loans made by private lenders are to be determined under state law, not bankruptcy law. Since 18% interest is allowed under the Property Tax Code for such loans, taxpayers are required to repay loans at the higher rates allowed by state law. The court further found that attorney’s fees, subject to the Property Tax Code’s 15% limitation, are recoverable in bankruptcy proceedings on objections to plans.

TEXAS SUPREME COURT

A CLASS ACTION LAWSUIT AGAINST AN APPRAISAL DISTRICT CANNOT INCLUDE TAXPAYERS WHO DID NOT EXHAUST THEIR ADMINISTRATIVE REMEDIES.

Cameron Appraisal District v. Rourk, 194 S.W.3d 501 (Tex. 2006). [OPINION]

A class action lawsuit was filed against an appraisal district seeking a declaration that taxing travel trailers is unconstitutional and seeking a judgment setting aside all individual tax assessments on trailers. The class included taxpayers who had exhausted administrative remedies and others who had not done so. The Texas Supreme Court held that exhaustion of administrative remedies is jurisdictional and that those persons who had not exhausted administrative remedies were not entitled to participate in the class action suit.

TEXAS JUDICIAL PANEL ON MULTIDISTRICT LITIGATION

PROPERTY TAX LAWSUITS INVOLVING MANY, VARIED PROPERTIES IN MANY COUNTIES MAY NOT BE CONSOLIDATED FOR PRETRIAL PURPOSES UNLESS IT CAN BE DEMONSTRATED THAT THEY INVOLVE COMMON QUESTIONS OF FACT; A PRETRIAL TRANSFER SOUGHT FOR PURPOSES OF CONVENIENCE AND EFFICIENCY MUST TAKE INTO ACCOUNT THE INTERESTS OF THE MULTIPLE DEFENDANTS.

In re: Ad Valorem Tax Litigation, 216 S.W.3d 83 (Tex. Jud. Pan. Mult. Lit. 2006, no pet.). [OPINION]

Taxpayer filed 150 lawsuits against 42 appraisal districts challenging the valuations of a variety of properties including pipelines, terminals, convenience stores and refineries. Taxpayer sought consolidation of the cases for purposes of pretrial claiming that the cases involved common questions of fact and law and that consolidation would eliminate redundant, multiple hearings on common issues (with the potential for inconsistent rulings) and possible multiple depositions of its employee witnesses. The Texas Judicial Panel on Multidistrict Litigation declined the consolidation finding that the valuation of these varied properties, in their varied locations, involved distinctly local factual issues. As a result, the cases did not meet the requirement of commonality of fact. The use, or potential misuse, of mass appraisal techniques and the potential for inconsistent legal determinations did not provide the commonality necessary to authorize consolidation. Consolidation was also not authorized for purposes of convenience because the defendants’ attorneys and witnesses would have been substantially more inconvenienced by the consolidation, than the taxpayer’s attorneys and witness would have been convenienced by the consolidation.

TEXAS COURTS OF APPEALS

ILLEGAL TAX FORECLOSURES CONSTITUTE INVERSE CONDEMNATION. INVERSE CONDEMNATION CLAIMS MUST BE BROUGHT IN THE COUNTY COURT.

Villarreal v. Harris County, 226 S.W.3d 537 (Tex. App.–Houston [1^st Dist.] 2006, no pet.). [OPINION]

Taxing unit sued taxpayer for delinquent taxes and obtained a judgment of foreclosure. Prior to foreclosure, the taxpayer obtained a tax lien loan and paid the judgment in full. Notwithstanding the payment, the taxing unit erroneously foreclosed the property and sold it, at a public sale, to a third party. (The taxing unit subsequently refunded the tax payment to the tax lien lender.) Taxpayer filed suit in district court alleging a wrongful taking of her property in violation of Article I, §17 of the Texas Constitution. The trial court dismissed the suit, holding that it did not have jurisdiction to hear the taxpayer’s claim. The appellate court agreed, finding that the taxpayer’s claim constituted a cause of action for inverse condemnation, and all condemnation claims are required to be filed in the county court.

A CERTIFIED AND SEALED COPY OF A DELINQUENT TAX RECORD OFFERED IN EVIDENCE AT A DELINQUENT TAX TRIAL IS NOT HEARSAY.

Reagans v. County of Dallas, 225 S.W.3d 680 (Tex. App. –El Paso 2006, no pet.). [OPINION]

At a delinquent tax trial, the taxing unit offered into evidence a document entitled “Property Tax Notice.” The document was signed by the deputy tax assessor-collector, and was certified and sealed with the seal of the county. It reflected the identity of the taxpayer, the property being taxed and the amount of taxes, penalties, fees and costs owed. It purported to be a photocopy of a page from the original delinquent tax roll The taxpayer objected on the grounds of hearsay. The appellate court found that the trial court did not abuse its discretion in admitting the document into evidence since the document conformed to the requirements of Section 33.47(a) of the Texas Tax Code.

SECTION 42.09 PROHIBITS TAXPAYERS FROM COLLATERALLY ATTACKING FINALIZED PROPERTY TAX VALUATIONS.

Houston Independent School District v. 1615 Corp., 217 S.W.3d 631 (Tex. App.–Houston [14^th Dist.] 2006, pet. denied). [OPINION]

Taxing unit filed suit to collect delinquent taxes for tax years 1984 through 1999. A judgment of foreclosure was obtained. The owner of the property at the time of judgment sold the property to a third party. That person paid $383,279.52 against the judgment and then quit making payments. The taxing unit, alleging an unpaid balance of $18,864.89 sought to foreclose its lien. The new purchaser obtained a temporary injunction blocking the sale and filed suit alleging either official mistake in the judgment or fraud on the part of the taxing unit because the tax judgment failed to recognize the homestead exemption which was applicable to the property in each of the years in controversy. The taxing unit sought dismissal of the suit on jurisdictional grounds, claiming that the parties had failed to exhaust administrative remedies on the homestead question, that the tax payments rendered the lawsuit moot, and that the parties did not have standing to bring the action. The appellate court, on rehearing, agreed and held that Section 42.09 of the Texas Tax Code provides exclusive remedies for altering tax valuations including those for “recoupment of alleged overpayments of property taxes...not part of the procedures prescribed in the Property Tax Code.”

PARTY APPEALING TAX MASTER’S DETERMINATION IN A DELINQUENT TAX CASE MAY NOT BYPASS THE DISTRICT COURT AND RESERVE PORTIONS OF AN APPEAL FOR REVIEW BY A COURT OF APPEALS; IN A MULTIPARTY CASE, A NON-APPEALING DEFENDANT RISKS UNFAVORABLE CONSEQUENCES BY FAILING TO APPEAR AT TRIAL BEFORE THE DISTRICT COURT.

Hebisen v. Clear Creek Independent School District, 217 S.W.3d 527 (Tex. App. –Houston [14^th Dist.] 2006, no pet.). [OPINION]

Tax office sued to collect delinquent personal property taxes from multiple individuals sharing an office suite. The individuals defended on the grounds that they did not owe the taxes. Trial was held before a Tax Master who ruled in favor of the tax office. One of the defendants filed an appeal, and attempted to limit the grounds of review by the district court. Upon hearing, the district court upheld the Tax Master’s ruling and added two more years of delinquency to the judgment, applying that ruling to all parties in the suit, not just the individual who appealed. The “appealing” defendant sought review from the Court of Appeals of portions of the Tax Master’s determination that were not considered by the district court, claiming that the district court was not required to rule on them because of the limited nature of the appeal. The non-appealing defendant challenged the right of the district court to increase his tax liability since he had accepted the Tax Master’s determination. The court of appeals held that a district court has jurisdiction to consider all matters in an appeal from a Master’s ruling, and that a party may not bypass the district court and seek review from a court of appeals of a Master’s findings. By failing to present those matters to the district court, the party waived his right to seek review of those matters from the appellate court. It further held the district court has the right to review, accept, reject or modify a Master’s ruling, and that it had the right to add subsequent years to the original determination. Had the non-appealing party appeared at trial, he could have objected to the court’s consideration of this evidence as being beyond the scope of the limited appeal. By failing to appear, the non-appealing party waived his rights to complain of the increased amount of the judgment.

A DELINQUENT TAXPAYER MAY NOT DIRECT A TAX OFFICE TO APPLY A PARTIAL PAYMENT TO BASE TAX ONLY, AND NOT TO PENALTIES OR INTEREST.

Reinmiller v. County of Dallas, 212 S.W.3d 835 (Tex. App. –Eastland 2006, pet. denied). [OPINION]

Taxing unit sued to recover delinquent taxes. Taxpayer defended on the grounds of incorrect calculation by the tax office. The taxpayer claimed that he had made payments to the tax office and placed restrictions on his checks instructing the tax office to credit the payments to “base tax only.” He argued that the tax office’s acceptance of those checks constituted an accord and satisfaction. The tax office testified that it had uniformly applied the payments to taxes, penalties and interest. The court rejected the taxpayer’s argument and held that Section 31.073 of the Texas Tax Code prohibits taxpayers from directing the application of their payments.

IF A PARENT COMPANY OF AN OWNER OF AN APARTMENT COMPLEX IS A COMMUNITY HOUSING DEVELOPMENT ORGANIZATION (“CHDO”) AND HAS THE RIGHT TO COMPEL TRANSFER OF THE APARTMENT COMPLEX TO ITSELF, IT IS THE EQUITABLE OWNER OF THE PROPERTY AND MAY QUALIFY THE PROPERTY FOR EXEMPTION FROM TAXATION; THE STATUTORY AMENDMENT REQUIRING 100% OWNERSHIP OF A GENERAL PARTNER BY A CHDO WAS INTENDED TO LIMIT THE PARTIES WHO COULD QUALIFY FOR EXEMPTION.

TRQ Captain’s Landing L.P. v. Galveston Central Appraisal District, 212 S.W.3d 726 (Tex. App. – Houston [1^st Dist.] 2006, pet. filed). [OPINION]

A limited partnership owned an apartment complex. A community housing development corporation (“CHDO”) set up a limited liability corporation and through it acquired a 100% interest in both the general and limited partner of the limited partnership. Title to the complex remained in the limited partnership. The limited liability company filed for a community housing exemption for the property, and was denied. The court held that the exemption should have been granted since the CHDO was the equitable owner of the complex because it possessed the present right to compel the delivery of legal title to itself as the 100% owner of all of the underlying entities. It further ruled that the statutory amendment requiring direct 100% ownership of a general partner by a CHDO was intended to limit, not expand, the number of entities who could qualify for this exemption, and applied only to properties that were constructed after December 31, 2001. Properties constructed before that date qualify for exemption so long as a CHDO owns the general partner either legally or equitably.

A TAXPAYER MAY NOT SEEK RECOVERY OF ATTORNEY’S FEES UNDER THE DECLARATORY JUDGMENT ACT IN AN APPEAL OF AN APPRAISAL REVIEW BOARD DETERMINATION UNLESS THE TAXPAYER IS CHALLENGING THE CONSTITUTIONALITY OF A STATUTE OR RULE OR THAT THE DISTRICT IS IMPROPERLY EXERCISING POWERS RESERVED TO ANOTHER ENTITY; AWARD OF ATTORNEY’S FEES TO A PREVAILING TAXPAYER IS MANDATORY UNDER THE PROPERTY TAX CODE.

Aaron Rents, Inc. v. Travis Central Appraisal District, 212 S.W.3d 665 (Tex. App. –Austin 2006, no pet.). [OPINION]

Appraisal district sent omitted property notice after taxpayer filed belated amnesty rendition. Taxpayer claimed on summary judgment that no property had been omitted, only value and that the valuation was illegal. The district court granted the motion for summary judgment but denied the taxpayer’s claim for attorney’s fees. The court of appeals held that a taxpayer may not recover attorney’s fees under the Declaratory Judgment Act in an appeal of an appraisal review board determination because the Property Tax Code provides a remedy for such matters. However, a taxpayer may recover fees under the Act if the taxpayer is challenging the constitutionality of a statute or rule or claiming that the appraisal district or appraisal review board is exercising powers reserved to another entity. The court held that the award of attorney’s fees to a prevailing taxpayer, in a valuation or equity dispute, is mandatory under the Property Tax Code.

TAX OFFICE IS UNDER NO OBLIGATION TO SEARCH FOR PARTIES CLAIMING TITLE BY ADVERSE POSSESSION; SERVICE BY PUBLICATION OF “UNKNOWN OWNERS” AND APPOINTMENT OF AD LITEM ATTORNEY PROTECTS THE RIGHTS OF ADVERSE POSSESSORS; TO CHALLENGE TAX SALE, ADVERSE POSSESSOR MUST FILE SUIT WITHIN ONE YEAR OF THE DATE THE TAX SALE DEED IS FILED AND THE PARTY MUST TENDER INTO THE REGISTRY OF THE COURT THE FULL DELINQUENCY AMOUNT.

Session v. Woods, 206 S.W.3d 772 (Tex. App. –Texarkana, 2006, pet. denied). [OPINION]

Party claimed title to 2.25 acres by adverse possession and erected a structure and fence. Thereafter, the tax office foreclosed a larger parcel which included this acreage and sold it to another person at a tax sale. The new purchaser entered the property, tore down the fence and threatened to bull doze the structure. More than two years after the tax sale, the adverse possessor filed a trespass to try title suit seeking to have the court declare him to be the owner of the 2.25 acres. He claimed that the delinquent tax judgment did not affect him since he was not a named party to the suit. The court rejected his claim, finding no obligation on the part of the tax office to search for trespassers who might have “inchoate claims” to the property or to serve such claimants. It further held that the judgment of foreclosure was sufficient to reach such claimants because the tax office had sued “unknown owners” of the property by publication and an attorney ad litem had been appointed by the court to represent the interests of the unknown owners. Finally, the court held that the suit was untimely because Section 33.54(a)(1) of the Texas Tax Code requires challenges to tax foreclosure titles to be brought within one year of the date of recordation of the tax deed. The court further held that the adverse possessor had no right to contest the title because he failed to deposit into the registry of the court the full amount of delinquency as required by Section 34.08(a)(1) of the Texas Tax Code.

EXHAUSTION OF ADMINISTRATIVE REMEDIES BEFORE AN APPRAISAL REVIEW BOARD IS JURISDICTIONAL; A DISTRICT COURT HAS JURISDICTION TO CONSIDER A MATTER ON APPEAL NOTWITHSTANDING THE FAILURE TO MARK A GROUND OF PROTEST ON A NOTICE OF PROTEST FORM IF THE APPRAISAL REVIEW BOARD CONSIDERED THE MATTER AND RULED ON IT.

Midland Central Appraisal District v. Plains Marketing, L.P., 202 S.W.3d 469 (Tex. App.–Eastland 2006, pet. denied). [OPINION]

An oil marketing company filed a notice of protest challenging an appraisal of oil on the grounds of excessive value and unequal treatment. At the appraisal review board hearing, the representative of the district noted that the real nature of the dispute was whether the oil qualified for interstate commerce exemption, but that the taxpayer had not marked this ground on its notice of protest. The representative objected to the appraisal review board’s consideration of this unprotested ground. All of the testimony and argument at the hearing pertained to whether the property qualified for the exemption. The appraisal review board denied the protest, and the taxpayer sued in district court for exemption. The appraisal district sought dismissal of the suit on the grounds that the taxpayer had failed to exhaust administrative remedies due to its failure to properly mark the notice of protest form. The court of appeals held that exhaustion of administrative remedies is jurisdictional, and that a taxpayer may not allege one ground at the appraisal review board and then appeal to district court on an entirely separate ground. However, given the fact that the appraisal review board considered the matter and ruled on it, jurisdiction was proper before the district court. The court stated that the appraisal review board had the right to refuse to consider the testimony on the grounds that it was beyond the scope of the written notice of protest or that it could have continued the hearing so as to allow the appraisal district sufficient time to prepare for a hearing on those grounds.

IMPROVEMENTS PERMANENTLY AFFIXED TO LAND BECOME PART OF THE REAL ESTATE AND MAY NOT BE SEIZED BY A TAX WARRANT; USE OF THE COMPTROLLER’S MANUAL AT TRIAL WITHOUT ADDITIONAL SUPPORTING MATERIAL OR TESTIMONY DOES NOT CONSTITUTE EVIDENCE.

Citizens National Bank v. City of Rhome, 201 S.W.3d 254 (Tex. App.–Fort Worth 2006, no pet.).[OPINION]

Taxing unit executed a tax warrant against a gas station seeking to collect delinquent taxes. Among the items seized were the station’s fuel pumps. A bank, which had loaned money on the real estate, sought an injunction preventing the seizure of the pumps. At trial, the taxing units produced as its evidence an excerpt from the Comptroller’s Manual which defined fuel pumps as commercial personal property and an unidentified photograph. The bank presented extensive testimony as to the manner in which the fuel pumps were permanently attached to the property. The court held that personal property which is permanently attached to the real estate becomes part of the real estate and may not be seized by a tax warrant. It further held that the use of the Comptroller’s manual without any additional supporting application or authority did not constitute any form of evidence.

A LIEN NEED NOT BE RECORDED TO QUALIFY AS A FIRST LIEN FOR PURPOSES OF A RIGHT OF REDEMPTION SUBSEQUENT TO A TAX LIEN LOAN FORECLOSURE; THE RECORDATION OF THE TAX LIEN LOAN PRIOR TO THE RECORDATION OF A DEED OF TRUST DOES NOT QUALIFY THE TAX LIEN LOAN AS A “FIRST LIEN.”

ABN AMRO Mortgage Group v. TCB Farm and Ranch Land Investments, 200 S.W.3d 774 (Tex. App.–Fort Worth 2006, no pet.). [OPINION]

Taxpayers refinanced mortgages and entered into new deed of trust. Subsequently, the taxpayers borrowed money to pay their property taxes and the property tax lien was transferred from the tax office to the lender. The lien transfer was recorded. Thereafter, the deed of trust was recorded. (The recordation of the deed of trust occurred more than a year after the mortgage was executed.) The taxpayers defaulted on their payments on the tax lien loan, and the property was foreclosed and was sold to a third party. The mortgage company attempted to redeem the property by tendering the correct redemption amount to the third party. The third party rejected the tender, contending that the mortgage company did not have the right to redeem the property because it was not a first lienholder, and that the right of redemption was limited to the taxpayers and first lienholders. The court held that the mortgage company qualified as a first lienholder because the statute did not require liens to be recorded to qualify as first liens. It also held that the tax lien loan recordation did not make it a first lien because the tax lien is a statutory lien which is given automatic priority. The recordation of the tax lien loan is merely a procedural condition precedent to the foreclosure of the tax lien.

UTILIZING A COMMUNITY HOUSING DEVELOPMENT ORGANIZATION ENTITY AS A GENERAL PARTNER IN A LIMITED PARTNERSHIP TO QUALIFY THE ENTITY FOR EXEMPTION APPLIES ONLY TO PROJECTS CONSTRUCTED AFTER DECEMBER 31, 2001.

American Housing Foundation v. Calhoun County Appraisal District, 198 S.W.3d 816 (Tex. App.–Corpus Christi 2006, pet. denied). [OPINION]

A limited partnership composed of a community housing development general partner and a “for profit” limited partner constructed an apartment complex in 1996. It sought a Community Housing Development exemption for the project in 2003. The court held that the provision qualifying limited partnerships for exemption through the use of a qualifying nonprofit general partner was expressly limited to projects constructed after December 31, 2001, and did not apply to projects constructed prior to that date.

A CHIEF APPRAISER’S FAILURE TO DELIVER NOTICE OF CANCELLATION OF AN EXEMPTION TO A TAXPAYER RENDERS THAT DECISION VOIDABLE; A TAXPAYER WAIVES A CLAIM OF LACK OF NOTICE BY VOLUNTARILY PROTESTING THAT DETERMINATION AND APPEARING BEFORE AN APPRAISAL REVIEW BOARD TO CHALLENGE THE DENIAL OF THE EXEMPTION.

Harris County Appraisal District v. Pasadena Property, LP., 197 S.W.3d 402 (Tex. App. –Eastland 2006, pet. denied). [OPINION]

A chief appraiser cancelled a taxpayer’s existing pollution control exemption, but failed to deliver notice of the cancellation to the taxpayer. The taxpayer learned of the cancellation when the taxpayer received its tax bill. The taxpayer filed a notice of protest with the appraisal review board under the provisions which allows challenges of “any other action of the chief appraiser ...that applies to or adversely affects the property owner.” (The taxpayer did not protest the failure of the chief appraiser to deliver the notice.) The appraisal review board conducted a hearing and denied the taxpayer’s request for reinstatement of the exemption. Taxpayer filed suit claiming that the failure to deliver the notice of cancellation rendered the chief appraiser’s decision void. The court of appeals disagreed, ruling that the failure to deliver the notice rendered the determination voidable, but not void. The taxpayer was afforded an opportunity to complain of the cancellation prior to the tax bill becoming final. This opportunity satisfied the requirements of due process. Additionally, the taxpayer waived its right to complain about the chief appraiser’s failure to deliver the notice of cancellation by voluntarily protesting the cancellation of the exemption and appearing at the appraisal review board hearing.

TO QUALIFY FOR A COMMUNITY HOUSING DEVELOPMENT ORGANIZATION EXEMPTION, AT LEAST ONE-THIRD OF THE MEMBERS OF THE ORGANIZATION’S BOARD OF DIRECTORS MUST BE COMPRISED OF LOW INCOME INDIVIDUALS; ADDITIONALLY, THE ORGANIZATION MUST HAVE A FORMAL PROCESS FOR LOW INCOME BENEFICIARIES TO ADVISE IT ON VARIOUS MATTERS; THE EXCLUSIVE PURPOSE OF THE ORGANIZATION MUST BE TO MAKE HOUSING AVAILABLE TO LOW OR MODERATE INCOME INDIVIDUALS; THE ORGANIZATION IS NOT REQUIRED TO RENT 100% OF ITS UNITS TO LOW OR MODERATE INCOME INDIVIDUALS.

American Heritage Apartments, Inc. v. Bowie County Appraisal District, 196 S.W.3d 850 (Tex. App.–Texarkana 2006, pet. denied). [OPINION]

Taxpayer sought a Community Housing Development Organization exemption for its apartment complex. The evidence showed that none of the members of the organization’s board of directors lived in low income areas. It further demonstrated that the organization did not have a formal process by which beneficiaries of the low income housing program could advise the organization regarding the design, siting, development and management of the complex. (It did have a comment and complaint process available to the tenants.) Additionally, the complex rented units to individuals who were not of either low income or moderate income status. The court held that the failure to have low income individuals filling at least one-third of the seats of the organization’s board of directors and the failure to have a formal advisory process, as required by federal law, was fatal to the qualification for exemption. The court also ruled that the organization was not required to rent 100% of its units to low or moderate income individuals so long as the organization’s exclusive purpose was to provide housing for such persons.

THE $1,000 STATUTORY LIMIT ON FEES FOR AIDING IN THE RECOVERY OF DELINQUENT TAX SALE EXCESS PROCEEDS IS A “PER OWNER” LIMITATION.

Davis v. Kaufman County, 195 S.W.3d 847 (Tex. App.–Dallas 2006, no pet.). [OPINION]

Property owner died intestate leaving thirteen heirs. Taxes were not paid on the property, and it was foreclosed. The foreclosure sale yielded excess proceeds of $28,024.91. An attorney filed a motion to disburse excess proceeds on behalf of four of the heirs. The court awarded her $3,500 in attorney’s fees for her work. These funds were to be paid from the excess proceeds. Another heir, not represented by the attorney contested the award arguing that the statutory limit on such fees was the lesser of 25% of the excess proceeds ($7,006.23 in this case) or $1,000. The court of appeals upheld the award noting that the $1,000 limit was a “per owner” limitation. Since the attorney represented four of the co-owners, the award was within the permissible boundaries of the statute.

FORMER APPRAISAL DISTRICT ATTORNEY MAY REPRESENT TAXPAYERS UNLESS APPRAISAL DISTRICT CAN DEMONSTRATE THAT ATTORNEY POSSESSED FACTUAL DATA THAT WOULD CONSTITUTE A THREAT TO CONFIDENCES PREVIOUSLY REVEALED.

In re Drake, 195 S.W.3d 232 (Tex. App.–San Antonio 2006, mandamus denied). [OPINION]

After 22 years of representing an appraisal district, an attorney terminated his relationship with the district and sought to represent a taxpayer in suits against the district. The appraisal district sought disqualification of the attorney, alleging violations of the Disciplinary Rules pertaining to confidences revealed to the attorney. The court disagreed, ruling that the district was required to prove that factual matters had arisen during the course of the prior representation which were so substantially related to the facts of the new lawsuits as to indicate that a genuine threat existed that confidences previously revealed to the attorney would be divulged. Matters pertaining to the trial of valuation disputes, familiarity with the inner workings of the appraisal district, preferences for expert witnesses and knowledge of documents which could be obtained through the public information process pertaining to prior litigation do not provide a basis for attorney disqualification.

STATEMENT AUTHENTICATED BY DEPUTY TAX ASSESSOR AND CONTAINING SEAL OF COUNTY CONSTITUTES ADMISSIBLE EVIDENCE IN DELINQUENT TAX TRIAL; COPY OF DELINQUENT TAX STATEMENT ATTACHED TO PETITION SATISFIES SUBSEQUENT DISCOVERY DEMAND EVEN IF ADDITIONAL SUMS ARE INCLUDED IN STATEMENT AT TRIAL; FAILURE TO PLEAD NONOWNERSHIP AND TO OBJECT AT TRIAL ON THAT GROUND WAIVES THE ISSUE.

Williams v. County of Dallas , 194 S.W.3d 29 (Tex. App.–Dallas 2006, pet. denied). [OPINION]

Taxing unit sued to collect delinquent taxes. At trial, it presented as its sole evidence a photocopy of the delinquent tax roll, attested to by the deputy tax assessor and sealed by the official seal of the county. The taxpayer objected to its admissibility. On appeal, the court found that the evidence met the criteria for certified, self authenticating governmental evidence as required by the Texas Rules of Evidence. Additionally, the document satisfied Section 33.47 of the Texas Tax Code which authorized the use of such evidence. As a result, the court upheld the judgment against the taxpayer finding that government had produced prima facie evidence of the tax delinquency. The taxpayer also objected to the document because it had not been produced by the government in response to a request for disclosure. The court held that an earlier copy of the document which had been attached to the Original Petition notifying the taxpayer that the government would be seeking all subsequent unpaid taxes was sufficient to satisfy the discovery demand notwithstanding the inclusion of additional tax amounts in the document introduced at trial. Finally, the court ruled that the taxpayer’s complaint that judgment against her was inappropriate because the evidence demonstrated that the property was owned by the estate of another person was waived because the taxpayer failed to object on that ground at trial and because the taxpayer did not raise the affirmative defense of nonownership in her pleadings.

TAXING UNITS DO NOT HAVE COMMON LAW RIGHT TO SUE TAXPAYERS FOR ALLEGEDLY FRAUDULENT CONDUCT WHICH AFFECTS TAX VALUATIONS; TAX CODE PROVIDES TAXING UNIT WITH REMEDIES FOR SUCH CONDUCT.

Jim Wells County v. El Paso Production Oil and Gas Co., 189 S.W.3d 861 (Tex. App.–Houston [1^st Dist.] 2006, pet. denied). [OPINION]

Taxing units filed a common law suit against oil companies alleging fraud and conspiracy to manipulate oil and gas markets in order to underpay their ad valorem taxes. The suit was dismissed on a plea to the jurisdiction, and the taxing units appealed. The court upheld the dismissal finding that governments have no common law right to collect taxes, and that their rights to do so are controlled by a comprehensive legislative scheme. That scheme provides remedies for the taxing units to protest such fraudulent conduct to an appraisal review board and to thus seek the recovery of the omitted property.

CERTIFIED TAX STATEMENT NAMING PERSON OWING TAXES OTHER THAN THE DEFENDANT IN DELINQUENT TAX TRIAL DOES NOT CONSTITUTE EVIDENCE OR RAISE PRIMA FACIE PRESUMPTION.

Pete Dominguez Enterprises, Inc. v. County of Dallas, 188 S.W.3d 385 (Tex. App.–Dallas 2006, no pet.). [OPINION]

Taxing unit sued “Pete Dominguez Enterprises, Inc.” to collect delinquent taxes. At trial, it introduced over defendant’s objection as its sole evidence a certified tax statement stating that “Pete Dominguez” was the owner of the taxed property. On appeal, the court held that the certified statement was not evidence of liability by the corporate entity, and the taxing unit’s failure to introduce additional evidence to connect the parties was fatal to its case. As a result, no prima faciecase was established and judgment for the defendant taxpayer was granted.

EXPERT TESTIMONY IN A TAX EQUITY CASE IS RELIABLE IF AN EXPERT WITNESS USES A REASONABLE SAMPLE OF PROPERTIES AND MAKES OR CONSIDERS APPROPRIATE ADJUSTMENTS; RELIANCE ON AGE ERROR IN AN APPRAISAL DISTRICT RECORDS DOES NOT AFFECT THE VALIDITY OF THE REPORT; AN APPRAISER IS NOT REQUIRED TO VERIFY THE ACCURACY OF THE APPRAISAL DISTRICT’S DATA.

Harris County Appraisal District v. Kempwood Plaza, Ltd., 186 S.W.3d 155 (Tex. App.–Houston [1^st Dist.] 2006, no pet.).[OPINION]

At trial, appraisal district challenged the reliability of an expert witness report in a tax equity dispute pertaining to a shopping center. In preparing the report, the appraiser initially selected all shopping centers on the appraisal district’s appraisal roll which were within a certain code and building class. The appraiser thereafter further limited his selections to properties which were between 60,000 and 200,000 square feet. (The subject property was approximately 112,000 square feet.) The appraiser adjusted the comparables for location, age and size before reaching a conclusion as to value. In response to a barrage of appraisal district complaints, the court ruled: (a) the appraiser’s comment at trial that he had not performed an appraisal nor followed the standards of USPAP was irrelevant because the appraiser had explained his methodology; (b) the appraiser had no obligation to verify the accuracy of the appraisal district’s data. (The court approved of the appraiser’s viewing of the subject property and comparables.) (c) the appraiser’s use of the age of the property as reflected on the appraisal roll, as opposed to its actual age, was appropriate given that there was no evidence that the appraisal district utilized the actual age of the property in its valuation; (d) the appraiser was allowed to use experience and judgment in making adjustments, and that mathematical precision was not required in making adjustments; (e) the appraiser’s failure to consider market sales, rents and occupancies in making location adjustments was irrelevant because such factors were taken into account by the building code assigned by the district; (f) the use of one higher classed property as a comparable was not a significant error since it would have only raised the median level of appraisal; and (g) the use of comparables which were divided among multiple owners, while troubling, was within the trial court’s discretion.

TEXAS ATTORNEY GENERAL OPINIONS

CANCELLATION OF RENDITION REQUIREMENT FOR BUSINESS VEHICLES DID NOT CREATE AN EXEMPTION FOR THEM.

Op. Tex. Att’y Gen. No. GA-0484 (2006). [OPINION]

The legislature added Section 22.01(k) to the Texas Tax Code. This section provides that owners of motor vehicles utilized for both business and personal purposes are not required to render them for taxation. This provision does not create an exemption for those vehicles from taxation. It merely eliminates the obligation to render them for taxation.

A CHDO OPERATING WITHIN A HOMESTEAD PRESERVATION DISTRICT IS ONLY ENTITLED TO EXEMPTION FROM CITY AND COUNTY TAXES FOR ITS PROPERTY LOCATED WITHIN THE DISTRICT; CITIES CREATING HOMESTEAD REINVESTMENT ZONES MAY NOT ESTABLISH TERMINATION DATES FOR THE ZONES; A COUNTY MAY NOT CONTRACT TO DEPOSIT ITS TAX INCREMENT FUNDS INTO A HOMESTEAD REINVESTMENT ZONE FOR A PERIOD OF GREATER THAN ONE YEAR AT A TIME; TAX INCREMENT FUNDS IN A ZONE MAY ONLY BE UTILIZED FOR HOUSING OR ZONE RELATED EXPENDITURES; HUD STANDARDS MAY BE UTILIZED IN CALCULATING INCOME ELIGIBILITY FOR PARTICIPATION IN A ZONE; THE INCOME QUALIFICATION STANDARDS ONLY APPLY IN THE INITIAL YEAR OF ELIGIBILITY FOR RESIDENCE IN A ZONE.

Op. Tex. Att’y Gen. No. GA-0474 (2006). [OPINION]

A Community Housing Development Organization operating within a Homestead Preservation District is entitled to exemption from city and county taxes for its property located within the district. (It is not entitled to exemption from school district property taxes.) Cities creating Homestead Reinvestment Zones may not establish termination dates for the zones. A county may not contract to deposit its tax increment funds into a Homestead Reinvestment Zone for a period of greater than one year at a time. Tax Increment Funds in a Homestead Reinvestment Zone may only be utilized for housing or zone related expenditures. U.S. Department of Housing and Urban Development standards may be utilized in calculating income eligibility for participation in a Homestead Reinvestment Zone. The income qualification standards only apply in the initial year of eligibility for residence in a zone.

A TAX LIEN ON A MANUFACTURED HOME ATTACHES ON JANUARY 1 OF EACH TAX YEAR AND IS PERFECTED BY FILING NOTICE OF THE LIEN WITHIN SIX MONTHS OF THE END OF THE TAX YEAR; A TAX LIEN IS NOT REQUIRED TO BE FILED WITH THE DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS IF THE HOME HAS BEEN DESIGNATED AS REAL PROPERTY.

Op. Tex. Att’y Gen. No. GA-0443 (2006). [OPINION]

A tax lien on a manufactured home attaches on January 1 of each tax year. If the property is designated as personal property, the tax lien is not perfected until a statement of the lien is filed by the Manufactured Housing Division of the Texas Department of Housing and Community Affairs. Such filing must be made within six months after the end of the tax year. No filing is required to perfect a lien on a manufactured home which has been designated as real property by the taxpayer.