Ever faced one of those what the heck situations? Here’s an example — long time exemption cancelled, protest deadline has past, and you’ve been sued for delinquent taxes. Truly, what the heck. Most that have seen this are in the camp of, I had no idea that the exemption was cancelled, or the taxes weren’t paid. And the rightful reaction is, how can this happen; shouldn’t I be given an opportunity to challenge this? The 14th Court of Appeals agrees you should. But holds that the opportunity is not directly in district court. Instead, it is initially before the appraisal review board if the claim is a ground of protest authorized by the Texas Property Tax Code.

Brazoria Civic Club v. Brazoria County Appraisal District, No. 14-22-00557-CV, 2024 WL 1774913 (Tex. App.—Houston [14th Dist.] April 25, 2024, no pet.)
In Brazoria Civic Club v. Brazoria County Appraisal District, everything that could have gone wrong appeared to have gone wrong. The Club, who alleged it was established in the 1960s and qualified as a charitable organization, received the Section 11.18 charitable organization exemption since the 1980s until Brazoria CAD cancelled it in 2016, which the Club maintains was done without notice.

The initial spiral of this saga began in 2019. At that time, the taxing units filed a lawsuit for delinquent taxes on the Club’s properties. And the Club did not appear in court during the foreclosure hearings, so the taxing units ultimately obtained an order to foreclose, leading to a public sale of the properties.

To challenge this, the Club skipped the appraisal review board, and went straight to district court making multiple claims, including that Brazoria CAD “denied the Club due process by removing the Club’s property tax exemption without notice or a hearing[.]” In response, Brazoria CAD filed a plea to dismiss the Club’s claims by asserting that the district court lacked jurisdiction to hear the case, arguing that the Club failed to exhaust its administrative remedies under the Texas Property Tax Code by failing to go through the appraisal review board. The district court agreed and partially dismissed the Club’s claims, and the Club appealed.

On appeal, the Club argued that it was not required to exhaust its administrative remedies. It argued that Brazoria CAD removed the exemption without notice to the Club, so the removal is void and can be challenged “at any time without exhausting its administrative remedies[.]” The 14th Court disagreed and reasoned that the exhaustion of administrative remedies is required for claims that are a ground of protest authorized by the Texas Property Tax Code. And here, the Club’s claim of a lack of proper notice is a ground of protest authorized by section 41.411 of the Texas Property Tax Code.

Specifically, section 41.411 provides that a property owner is entitled to protest before the appraisal review board the failure of the chief appraiser to provide or deliver any notice to which the property owner is entitled. And if unsuccessful the property owner may file a petition for review in the district court to appeal the decision of the appraisal review board on a protest under Tax Code section 41.411.

In an attempt avoid this, the Club argued that although the protest may be authorized, it was not entitled to a hearing because section 41.44(c) requires a property owner protesting under section 41.411 to file its notice of protest before the taxes in question become delinquent, and the Club did not learn about the tax assessments until after they had become delinquent.

The 14th Court rejected this. Under Section 41.44(c-3), “a property owner who files a protest under Section 41.411 on or after the date the taxes on the property to which the notice applies become delinquent, but not later than the 125th day after the property owner, in the protest filed, claims to have first received written notice of the taxes in question, is entitled to a hearing.”

The 14th Court further observed that the delinquency restriction to a 41.411 protest applies insofar as to the payment of taxes not in dispute. And because here the Club asserts its properties are exempt from taxation, there is no amount of taxes that is not in dispute. Accordingly, the Club would not have any payment obligation, so its protest pursuant to Section 41.411 would be entitled to a hearing.

In conclusion, the 14th Court held the Club’s claim of a lack of proper notice is a ground of protest authorized by the Texas Property Tax Code and because of that the Club was required to exhaust its administrative remedies before the appraisal review board, so the trial court lacks subject-matter jurisdiction over the Club’s claims asserted without going through the appraisal review board.

The takeaway of this ruling is the importance of compliance with established administrative procedures in property tax disputes, even in those what the heck situations. There is a potential path when the bottom falls out, but the path is first through the appraisal review board if the claim is a ground of protest authorized by the Texas Property Tax Code. Understandably, property tax disputes can be complex, as the Brazoria Civic Club’s case illustrates, so staying in the tune and aware is a must.

Tex. Tax Code § 41.411:
(a) A property owner is entitled to protest before the appraisal review board the failure of the chief appraiser or the appraisal review board to provide or deliver any notice to which the property owner is entitled. (b) If failure to provide or deliver the notice is established, the appraisal review board shall determine a protest made by the property owner on any other grounds of protest authorized by this title relating to the property to which the notice applies. (c) A property owner who protests as provided by this section must comply with the payment requirements of Section 41.4115 or the property owner forfeits the property owner’s right to a final determination of the protest.

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To review the Opinion from Brazoria Civic Club v. Brazoria County Appraisal District, click the following link (or copy and paste): https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=1735fa84-bcbc-409a-9fe5-ccc83e33768f&coa=coa14&DT=Opinion&MediaID=777b08ef-7475-45ef-80da-ea49c74d3adf.

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Key Sections of Texas Property Tax Code: 
§ 41.411, Protest of Failure to Give Notice 

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