Binding Arbitration: Your Post-Hearing Option
Lost your ARB hearing? You're not done. Binding arbitration gives you one more shot at a fair appraisal.
Educational Information Only
The following is a summary of the Texas binding arbitration process under Tax Code Chapter 41A. This is not legal advice. Consult a licensed attorney for guidance specific to your situation.
What is binding arbitration?
Under Texas Tax Code Chapter 41A, property owners who disagree with their Appraisal Review Board (ARB) decision can request binding arbitration. An independent arbitrator reviews your case and makes a final decision that both you and the appraisal district must accept.
This is available for residential properties with an appraised value of $5 million or less. It's an alternative to filing a lawsuit in district court, and it's faster, cheaper, and simpler.
When to use it
Consider binding arbitration when:
- The ARB ruled against you but you have strong evidence
- The potential savings justify the $500 deposit
- You want a fresh, independent review of your case
- Filing a lawsuit in district court is too expensive or time-consuming
The $500 deposit
You must submit a $500 deposit with your arbitration request. If the arbitrator rules in your favor (reduces your appraised value), the appraisal district refunds your deposit. If the arbitrator upholds the ARB decision, you forfeit the deposit.
Timeline
File within 60 days
You must request arbitration within 60 days of receiving your ARB order. Submit the request and deposit to the Comptroller's office.
45-day settlement period
Before the hearing, there's a 45-day window where you and the appraisal district can negotiate a settlement. Many cases resolve here without going to the arbitrator.
Arbitration hearing
If no settlement is reached, the arbitrator reviews written evidence from both sides and issues a decision. Most hearings are conducted by written submission, not in person.
How the arbitrator decides
The arbitrator must choose either your proposed value or the ARB's determined value — they cannot split the difference. This “baseball-style” format encourages both sides to propose reasonable values. Strong, well-organized evidence matters.
Break-even analysis
Before requesting arbitration, calculate whether the potential tax savings justify the $500 deposit risk. As a rule of thumb: if the disputed value difference would save you more than $500 in taxes, arbitration is worth considering. At a 2% tax rate, that means a value reduction of about $25,000 or more.