Advantages of the Texas “Property Owner Rule”

Property owners often find themselves dissatisfied with the results of an initial protest of their property’s value at the Appraisal District level. It is then necessary to continue the fight and file an appeal in a Texas District Court where the Texas Rules of Evidence kick in.  For many in this boat, it is not cost effective to hire an expert appraiser, even if your property is over-valued by a half million dollars!

Example

Property Value after Initial Protest:  $1,000,000
True Property Value:  $500,000

Approx. Tax Savings if reduced to True Property Value:  $14,000
Cost of Hiring Appraisal Expert to give Trial Testimony:  $15,000-$25,000

In the above example, you may be able to reduce your tax liability by an additional $400,000, but the costs of hiring an expert outweigh the potential tax savings.

What Can You Do About It?

There is an alternative to spending thousands of dollars on an expert appraiser in order to present admissible evidence at trial.

In Texas, the “Property owner rule” creates a rebuttable presumption that a landowner is personally familiar with his property and knows its fair market value, and thus is qualified to express an opinion about that value. I’ve successfully used this rule hundreds of times, saving my clients these expert fees and making cases worth pursuing.

The “property owner rule,” which falls under Texas Rule of Evidence 701, permits a property owner to give opinion testimony about the value of his or her property. Natural Gas Pipeline Co. of America v. Justiss, 397 S.W.3d 150, 155 (Tex.2012); TEX.R.EVID. 701. Such testimony may not be based solely upon the property owner’s ipse dixit, or mere “say-so,” but is instead subject to the same requirements as other opinion testimony. Under Rule 701, lay opinion testimony is “limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness’ testimony or the determination of a fact in issue.” TEX.R.EVID. 701. In line with these principles, the Texas Supreme Court has determined that a property owner’s valuation testimony must have a basis in fact, such as evidence of price paid, nearby sales, tax valuations, or appraisals. Justiss, 397 S.W.3d at 159.

Does a property owner fail these requisites if her valuation opinion is based solely on an appraisal of the property based on objections of hearsay and relevancy? NO.

The objection is correct that the appraisal constituted hearsay, but the property owner is entitled to base her opinion on it nonetheless. Like expert testimony, “landowner valuation testimony may be based on hearsay.” Justiss, 397 S.W.3d at 158.

Relevant evidence is simply that which tends to make the make the existence of any consequential fact more or less probable. TEX.R.EVID. 401. While an appraisal of the property performed closer in time would perhaps be entitled to more weight, we cannot say that one completed four years prior is irrelevant. The appraisal provided a proper factual basis for the property owner’s valuation testimony pursuant to Rule 701 and the property owner rule. See Justiss, 397 S.W.3d at 155; and TEX.R.EVID. 701.

The only time a property owner’s testimony regarding the fair market value of property is not relevant is if it refers to intrinsic or some other value of the property rather than to market value. A property owner’s valuation testimony regarding the market value of the property is not relevant if it is conclusory or speculative.  A property owner’s valuation of the fair market value of the property, may be substantiated with evidence such as price paid, nearby sales, tax valuations, appraisals, online resources, and other relevant factors.