Property tax appraisal litigation in Texas is a high-stakes area of real estate and tax law, especially for commercial property owners, developers, and investors. With property values and corresponding tax burdens rising across Texas, effective legal strategies are essential for fair taxation.
At Michael Saegert, Attorney at Law in Houston, Texas, we have decades of experience advocating for clients through appraisal disputes, from informal protest hearings to full-blown district court litigation. We’re here to walk you through the key legal strategies in property tax appraisal litigation cases and explain the procedural steps involved.
How Property Tax Appraisal Works in Texas
Before discussing litigation strategies, it’s important to understand the basics of the Texas property tax system.
Texas doesn’t have a state property tax. Instead, property taxes are imposed at the local level by counties, school districts, cities, and special-purpose districts. Each taxing unit relies on the appraised value of property as determined annually by the county appraisal district (CAD) to levy taxes.
The Texas Constitution requires property to be appraised at its “market value” as of January 1 of each year. However, disputes frequently arise when property owners believe the CAD has overvalued their property, misclassified it, or failed to apply equal and uniform standards of property tax appraisal.
When to Litigate
Property owners who disagree with their appraised value have a right to protest through an Administrative Review with the Appraisal Review Board (ARB). However, if the ARB doesn’t grant adequate relief, the owner may pursue litigation in state district court under Chapter 42 of the Texas Property Tax Code.
The window to file a lawsuit is short — typically within 60 days of receiving the ARB order — so acting quickly is essential. At this stage, having legal counsel who understands the nuances of property tax litigation is critical.
Legal Strategies in Property Tax Appraisal Litigation
Successfully contesting an appraisal in Texas requires more than just disagreement with the CAD’s valuation — it demands a strategic legal approach grounded in evidence, statutory interpretation, and procedural precision.
Let’s take a closer look at the most effective legal tactics used in appraisal litigation to help property owners achieve fair and accurate tax assessments.
Challenging Market Value Determinations
The cornerstone of most property tax appraisal litigation is challenging the CAD’s determination of market value. Under Texas Tax Code § 1.04(7), “market value” is defined as the price the property would sell for in an open and competitive market.
Effective litigation strategies include:
Independent appraisals: Commissioning an independent third-party appraisal by a qualified MAI appraiser provides objective evidence that may contradict the CAD’s valuation
Sales comparison approach: Using recent sales of comparable properties to demonstrate overvaluation
Income approach (for commercial property): Especially important for income-producing properties such as apartment complexes, hotels, and shopping centers. If the CAD has failed to consider actual or stabilized income and expenses, this can be grounds for appeal
Cost approach: Sometimes used for newer properties or unique facilities where sales data is sparse
These techniques allow property owners to directly dispute inflated valuations by offering credible, fact-based alternatives that better reflect actual market conditions.
Equal and Uniform Valuation Claims
Texas law requires that property taxes be equal and uniform, not just based on market value. Under Tax Code § 42.26, a property owner can sue if their property is appraised disproportionately to similar properties.
Strategies here involve:
Identifying comparable properties: Analyzing CAD data to locate similarly situated properties appraised at lower values
Statistical modeling: Using regression analysis or coefficient of dispersion techniques to show inequities
Leveraging discovery: Obtaining detailed CAD records on comparable properties to expose inconsistent appraisal practices
This type of challenge can be especially powerful because even if the market value is arguably accurate, unequal treatment can still be a winning argument.
Procedural Defenses and Compliance Challenges
Another effective approach is scrutinizing the CAD’s compliance with legal and procedural requirements:
Failure to meet deadlines: If the CAD missed statutory deadlines or failed to provide proper notice of appraisal, the appraisal may be invalid.
Improper valuation methods: CADs are required to follow appraisal standards outlined by the Texas Comptroller and the International Association of Assessing Officers (IAAO). Violations can undermine the credibility of the valuation.
Exemptions and misclassifications: Property may qualify for exemptions (e.g., religious, agricultural, or charitable use) or may be misclassified (e.g., residential vs. commercial), which can affect its taxable value.
Procedural errors often serve as strong legal leverage points and can lead to a complete dismissal or reduction of the assessed value when properly documented.
Strategic Use of Discovery and Expert Testimony
Litigation allows for discovery — a powerful tool to obtain CAD documents, appraiser reports, and internal valuation models. Effective legal professionals use discovery to uncover:
The basis of the appraisal
Inconsistencies or errors in valuation methodology
How similar properties were treated
Expert witnesses, particularly real estate appraisers, economists, and valuation consultants, are often pivotal. Their testimony can refute CAD’s positions, clarify valuation concepts, and enhance credibility in court.
Negotiation and Mediation as Litigation Tactics
While many cases are filed in court, a large percentage of property tax lawsuits settle out of court, often through informal negotiations or mediation. A skilled attorney can leverage litigation pressure to negotiate favorable settlements.
Negotiation strategy may include:
Bundling multiple properties to gain leverage
Demonstrating legal risk to the CAD if the case proceeds
Using independent appraisals as a negotiation anchor
Settlement is often in the best interest of both parties, but only when the taxpayer has demonstrated that they’re fully prepared to go to trial if necessary.
Appeals and Judicial Review
If a trial court’s ruling is unfavorable, property owners have the right to appeal to the Texas Court of Appeals. This is rare but may be necessary in high-value cases or where there are unresolved questions of law.
Legal strategy at this stage shifts toward issues of statutory interpretation, constitutional claims (e.g., violation of equal protection or due process), and appellate preservation of error.
Special Considerations in Commercial Property Cases
For owners of commercial property, additional complications can arise. Texas courts often scrutinize how income, vacancy rates, market rents, and capitalization rates are applied by the CAD. Making sure that property-specific economic realities are considered — rather than broad market averages — is essential to a successful challenge.
For example:
Retail strip centers: May be affected by local economic downturns not reflected in CAD assumptions
Multifamily properties: Accurate occupancy data and rent concessions can significantly influence valuation
Hotels and hospitality: Pandemic-related revenue losses and tourism trends should be included in income approaches
Legal firms must work closely with industry-specific appraisers and understand the operational realities of these property types.
Common Pitfalls and Mistakes to Avoid
Even sophisticated property owners can fall into common traps that weaken their litigation position:
Missing deadlines: The 60-day limit after ARB order is absolute. No exceptions.
Failing to hire qualified experts: Courts give significant weight to appraisals and testimony. Weak expert support can sink a case.
Not preserving evidence: Detailed financial records, lease agreements, and maintenance data should be preserved early in the process.
Over-relying on informal hearings: While early resolution is desirable, relying solely on informal processes without preparing for litigation can reduce leverage.
Avoiding these mistakes provides a stronger litigation position and maximizes the likelihood of achieving a favorable outcome in court or during settlement talks.
Contact an Experienced Property Tax Attorney
Whether you're dealing with a single commercial property or a portfolio of assets across Texas, our attorney at Michael Saegert, Attorney at Law is here to help you develop and execute a litigation strategy that protects your bottom line. We serve clients throughout Texas, including Houston, Pasadena, Sugar Land, The Woodlands, Beaumont, Corpus Christi, San Antonio, Austin, Dallas, Fort Worth, El Paso, and beyond. Contact us today for more information about our legal services.
