Texas Court of Appeals Dismisses Improperly Pleaded Property Tax Suit

By Paul Masters

In Hartman REIT Operating Partnership III LP v. Harris County Appraisal Dist., the parent entity (“Hartman Parent”)filed a petition to dispute a property tax appraisal by the local taxing authority (“HCAD”). Texas Prop. Code § 42.21(b) mandates that the property owner bring a petition for review. But Hartman Parent had earlier transferred the property to its subsidiary (“Hartment Subsidiary”) via warranty deed.

Ten months later, Hartman Parent amended its pleading naming Hartman Subsidiary as the plaintiff. Five months following the amended pleading, HCAD filed a plea to the jurisidiction on the basis that Hartman Parent was not the property owner. Hartman Parent responded to HCAD’s plea and attempted to use Tex. Prop. Code § 42.21(e)(1) as authority for the amended pleading. The district court disagreed and granted HCAD’s plea to the jurisdiction.

Hartman appealed and the Texas Fourteenth District Court of Appeals affirmed the decision on the basis that the pleading requirements are specific and cannot be enlarged by the courts. Texas Prop. Code § 42.21(e) limits corrections to those made by a proper party. Hartman Parent was never a proper party and thus could not correct the pleading by substituting the proper party’s name.

Similar cases have arisen in other areas of Texas tax law, in which pleadings have been brought by the improper party and the taxpayers sought to amend the pleadings after the time for filing a petition had passsed. While the Texas Attorney General has passed on pressing this issue in the past, recent authority might strengthen the State’s hand in dismissing improperly filed petitions for review.

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