Robert Choate of Little Elm received a letter from the government that gave him pause. It was from the Denton Central Appraisal District, and it asked how much he paid for his house this year when he moved from Frisco.
He believed it to be some kind of trap.
He’s right about that.
Unlike most states, Texas, by law, keeps the final sale price of residential, commercial and industrial properties a secret. But if a government can get you to cough it up voluntarily, that’s a whole other thing.
One reason this matters: If your house is appraised at a certain level but you tell the appraisal district that the actual sales price is much higher, then you’ve given the appraisal district the information it needs to increase your property value, which, in turn, will lead to an increase in your property tax.
This is especially important for businesses and industrial plants where the difference can be millions of dollars.
“The letter is clearly a fishing expedition for my home’s sale price so they can reset my appraisal,” Choate wrote The Watchdog.
“I am shocked at the level of deception,” he continued. “The letter looks very official, and nowhere does it state that providing the information is optional.”
Don Spencer, the newly appointed chief appraiser for the Denton Central Appraisal District, which serves Little Elm where Choate lives, told me the survey letters sent to buyers is a “general practice” of appraisal districts across the state. It’s legal.
“We had to get the information somewhere,” he tells me.
The district used to send the survey to both buyers and sellers but stopped sending to sellers because the response rate for them was very low. Now it’s buyers beware.
Sale prices secret, sometimes
For a state that claims sales prices are not disclosed due to privacy concerns, the survey letter is very intrusive. It asks for date of purchase, contract purchase price, whether it was paid in cash or financed. If financed, it asks, what is your loan type and for how much? For businesses it asks the value of office property including furniture, fixtures, equipment and inventory. It also asks for your phone number.
So much for privacy.
Nowhere on the survey does it say the information is voluntary.
Patrick O’Connor, owner of the largest property tax consulting firm in the state (almost a quarter million protests filed this year on behalf of clients), says: “It’s misleading. It doesn’t put on there that it’s voluntary. People moving in from out of state are often not aware that Texas is a non-disclosure state.”
For appraisal districts, it’s an efficient and inexpensive way to get answers, he said.
Kudos to the Tarrant County Appraisal District because its letter clearly states: “We would appreciate your assistance by voluntarily supplying” the information.
Dallas Central Appraisal District couldn’t show me a copy of the form used because the appraisal district’s online presence has been shut down for several weeks due to a ransomware attack. Spokesperson Cheryl Jordan says Dallas sends out surveys.
“You don’t have to give the information,” she says. “There’s no penalty for not giving it.”
The Denton questionnaire specifically exempts properties with deed changes due to bankruptcy, trust, foreclosure, divorce, refinancing, name change, gift or death of a relative. These are exempt because the survey states they do “not reflect an arm’s length market value transaction.”
Not allowing sales prices to be public hurts property owners who try to protest their taxable value. Appraisal districts are more likely to have that information and can use it to find comparable property values to win a protest, but a property owner doesn’t have that access.
Spencer said he’d consider adding language to the Denton letter stating compliance is voluntary.
Texas’ nondisclosure law
How do you change the disclosure law? You get the powerful Texas Realtors association to back down in its opposition. Realtors are in every community, and some make donations to state lawmakers. A spokesperson for the group did not get back to me by deadline.
An association official told me two years ago, “We typically are not interested in compelling disclosure of private databases to government entities. Most Texans really appreciate their privacy.”
But they also appreciate lower taxes. When businesses can avoid paying higher taxes because of the nondisclosure, the tax burden falls more on residential owners.
What should I tell Choate to do with that letter?
“I generally suggest to people to put it in the circular file,” O’Connor says.
Choate told me, “My Realtor confirmed that I can file it in the shredder.”
In Dallas, some property owners even send the survey back to the appraisal district with this message scribbled on it:
None of your business.
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