In Texas, tenants who are obligated to reimburse property owners for property taxes have a right to protest the appraised value of the property if the property owner does not file a protest relating to the property. To facilitate this right, the Texas legislature enacted a law (Section 41.413 of the Tax Code) that requires the property owner to give all such tenants a copy of the notice of appraised value received by the property owner within 10 days of receiving the notice. For multi-tenant landlords, that means keeping an eye out for the notice sometime in April or May and quickly sending a copy to each tenant. Some of those tenants may now have a multitude of tax questions for the property manager or perhaps worse, interpret the notice as an invitation to protest.

For years, landlords and their attorneys have discussed whether the obligation to deliver notice could be waived or whether ambiguities in the statute (e.g. the prior version referred to “theperson leasing property” (emphasis added)) made the requirement inapplicable to multi-tenant properties. Fortunately, the revisions passed by the 2017 Texas Legislature expressly provide for waiver (even as they corrected prior ambiguities—the new version refers to “aperson leasing property” (emphasis added)).

Under the current statute, the requirement to deliver notice does not apply if the landlord and tenant agree in the lease to waive the notice requirements of the statute or the tenant has agreed in the lease not to protest the appraised value of the property.

Needless to say, the landlord’s form of lease should include the waiver of tenant’s right to notice or an agreement not to protest the appraised value of the property and the language should closely follow the express wording of the statute to avoid any confusion as to the breadth of the waiver or agreement. If there are circumstances where a tenant may successfully negotiate for the right to protest the appraised value and in turn, such tenant desires to receive notices of appraised value, the newly revised statute is also helpful in this regard. Under the statute, the appraisal district, upon request of the tenant, is required to deliver notices directly to any tenant that is contractually obligated to reimburse the property owner for taxes. In this manner, the tenant has the ability to obtain notices while the landlord can still insist on including the waiver in the lease.

For more information, please contact the authors of this alert, Andrew Sherwood ([email protected]) and Kelly Depew ([email protected]).