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Ad valorem taxes assessed on market value of property in year of a use change are void.

This appeal concerns four parcels in Texas previously used for many years as open space (the Property). To qualify as open-space land under Texas law, the property must be used for agricultural purposes as defined in the statute.

Subsequently the owners decided to develop the Property. A dispute arose involving ad valorem taxes imposed for the year the use changed. When the Bexar Appraisal District (District) learned of the change in use, the District notified the property owners a rollback tax penalty would be imposed. The District also reappraised the Property and assessed taxes on the full market value for the year of the use change. The District claimed the taxes for the year of the use change was authorized by relevant agency rules and was proper.

The Court of Appeals of Texas noted that agency rules authorized the District to assess a rollback penalty and to assess taxes on the market value of the Property for the year the change in use occurred, however, the governing statute did not.

The court found the agency procedure violated the statute, which only authorized the District to assess the rollback penalty. The court held the agency rule authorizing the assessment of taxes on the market value of the Property for the year the change in use occurred violated the statute and was void.

Bexar Appraisal District v.

Sivage Investments, Ltd.

Court of Appeals of Texas, San Antonio

November 19, 2014

2014 WL 6475369

by Alan M. Weinberger, JD, and Megan Murphy, JD

Alan M. Weinberger, JD, has been a professor at Saint Louis University School of Law since 1987. Previously, he practiced for twelve years with law firms in Detroit and Washington, DC, where he specialized in real estate transfer, finance, and development. Weinberger graduated magna cum laude from the University of Michigan Law School. He has published articles and chapters in the fields of real estate finance, partnership, and property law. He Is coauthor of Property Law Cases, Materials and Problems, 3rd ed., published by West Group. His most recent article, "Tools of Ignorance: An Appraisal of Deficiency Judgments," was published in the Spring 2015 issue of the Washington and Lee Law Review. Contact:

Megan Murphy, JD, is an attorney in the Denver law firm of Hackstaff & Snow, LLC. She graduated magna cum laude from Saint Louis University School of Law where she was the Mel Friedman Fellow in Real Estate Law.

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Title Annotation:Recent Court Decisions
Publication:Appraisal Journal
Geographic Code:1U7TX
Date:Mar 22, 2015
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