The constitutional and statutory backdrop
Article VIII, § 1 of the Texas Constitution requires that taxation be "equal and uniform." The Legislature implemented that requirement in the modern Tax Code through § 42.26, which gives property owners three distinct unequal-appraisal theories. The decisive one in commercial litigation is § 42.26(a)(3):
The district court shall grant relief on the ground that a property is appraised unequally if … the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.
What the statute actually requires
To prevail on a § 42.26(a)(3) claim the owner must show:
- a reasonable number of comparable properties,
- that those comparables are appropriately adjusted for differences from the subject, and
- that the subject's appraised value exceeds the median of the adjusted comparables.
If the median exceeds the appraised value, the remedy is a reduction of the subject's appraised value to that median — not to market value and not to any number negotiated in mediation. The statute supplies the formula.
Why this matters in practice
Market value cases are battles of appraisers. Unequal appraisal cases are battles of data. A well-constructed sample of comparables, appropriately adjusted for age, class, size, location, and condition, can support a meaningful reduction even when the owner's market-value position is debatable. In many cases the unequal-appraisal calculation is what drives settlement.
Equally important: an unequal-appraisal claim is not capped by the property's actual market value. The Texas Supreme Court has held that a property may be reduced below market value if that is what the median of comparables produces. Matagorda County Appraisal Dist. v. Coastal Liquids Partners, L.P., 165 S.W.3d 329 (Tex. 2005).
Building a defensible sample
The work that wins these cases happens before trial:
- Selection criteria. Comparables must be genuinely comparable — same submarket, same property type, similar age and class. Courts have rejected samples that are simply "everything within five miles."
- Adjustments. Adjustments for differences must be quantified and explained. Bare conclusions ("adjusted for location") do not survive cross-examination.
- Sample size. "Reasonable number" is fact-specific. Larger samples are more defensible when the property type allows them; specialized properties may justify smaller, hand-picked samples.
- Data sources. The appraisal district's own data is usually the starting point, supplemented by CoStar, commercial MLS, and county records.
Pairing market value and unequal appraisal
Sophisticated owners almost always plead both market value and unequal appraisal at the ARB so both grounds survive into the Chapter 42 appeal. The two theories are independent: the court awards relief on whichever produces the lower value. Pleading only one ground is a tactical mistake that the firm almost never recommends.