Understanding Binding Arbitration in Texas Property Tax Appeals

Binding arbitration is an alternative dispute resolution process available under Texas Tax Code Chapter 41A for certain property tax disputes. It provides a process through which an independent, neutral arbitrator reviews a dispute and issues a decision that is binding on the parties.

In the Texas property tax system, binding arbitration is administered through the Texas Comptroller of Public Accounts. The Comptroller maintains a registry of qualified arbitrators, processes arbitration requests, and handles applicable arbitrator payments and deposit refunds. Neither the Comptroller nor the appraisal district can provide advice or direction regarding individual pending arbitration cases.

Types of Binding Arbitration

Texas provides two primary types of binding arbitration for property tax matters:

Regular Binding Arbitration (RBA)

Regular Binding Arbitration is an alternative to appealing certain Appraisal Review Board determinations to district court. It generally concerns disputes involving a property's market or appraised value, or unequal appraisal. An independent arbitrator reviews the evidence presented by the parties and determines the property's value.

Under current statutory requirements, RBA is generally available for properties with an ARB-determined value of $5 million or less. Residence homesteads are not subject to this value limit. Other eligibility requirements apply.

Limited Binding Arbitration (LBA)

Limited Binding Arbitration addresses certain procedural matters involving an Appraisal Review Board or chief appraiser. Rather than determining a property's market value, this process addresses specified statutory and procedural requirements, such as certain hearing procedures, scheduling requirements, and property owners' procedural rights during the protest process.

Only arbitrators who are licensed attorneys may be appointed to LBA cases.

The Role of the Arbitrator

An arbitrator serves as an independent and neutral third party. In regular binding arbitration, the arbitrator considers the evidence presented by the property owner or representative and the appraisal district before determining the property's value.

The arbitrator's decision is binding on the parties, subject to the applicable laws and rules governing the arbitration process.

The General Arbitration Process

Regular binding arbitration generally involves several stages:

1. Request processing: The Comptroller processes the arbitration request and applicable deposit.
2. Settlement period: A 45-day settlement period follows processing, during which the parties have an opportunity to resolve the dispute or withdraw the request before an arbitrator is assigned.
3. Arbitrator assignment: If the case has not been withdrawn, an arbitrator is assigned following the settlement period.
4. Hearing: The arbitrator coordinates the hearing and considers the evidence presented by the parties.
5. Decision and deposit resolution: The arbitrator determines the property's value, and the applicable rules govern payment of the arbitrator's fee and any refund of the property owner's deposit.

The process and requirements for limited binding arbitration differ because LBA addresses specified procedural matters rather than a property's value.

Arbitration Deposits and Fees

Binding arbitration involves a deposit toward the arbitrator's fee. The financial outcome depends on the applicable statutory requirements, the stage at which a case is withdrawn or dismissed, and the arbitrator's determination.

For regular binding arbitration, the relationship between the value determined by the arbitrator, the property owner's opinion of value, and the value reflected in the ARB order is relevant to the allocation of the arbitrator's fee. Administrative fees and other applicable rules may also affect the amount refunded.

A deposit does not necessarily represent the final cost of arbitration, and refunds are subject to the governing requirements.

Official Information and Resources

The Texas Comptroller of Public Accounts provides official information regarding binding arbitration, including applicable statutes and rules, arbitrator qualifications, forms, and program procedures.

For additional information, visit the following resources:

• Regular Binding Arbitration: https://comptroller.texas.gov/taxes/property-tax/arbitration/
• Limited Binding Arbitration: https://comptroller.texas.gov/taxes/property-tax/arbitration/limited-binding.php
• Arbitrator Registry and Application: https://comptroller.texas.gov/taxes/property-tax/arbitration/arb-registry.php
• Texas Property Tax Rules: https://comptroller.texas.gov/taxes/property-tax/rules/
• Texas Comptroller Property Tax Assistance Division Phone Number: 800-252-9121

This article is provided for general informational and educational purposes only. It is not legal advice, does not recommend any particular course of action, and should not be relied upon as guidance for an individual property tax dispute. Applicable laws, regulations, and program requirements govern each arbitration proceeding.