South ½ Block 8 Venture v. Travis Central Appraisal District

Summary

The Texas Court of Appeals, Third District, held that an equitable owner’s status as a religious organization may support a property-tax exemption under Texas Tax Code section 11.20. The court concluded that the First Church of Christ, Scientist, was the equitable owner of the parcel because it could unilaterally withdraw from the partnership and compel reconveyance of the property. The court reversed the trial court’s summary judgment for Travis Central Appraisal District and rendered judgment that the parcel was exempt from taxation for the relevant years.

Holdings

1. The terms 'owner,' 'owned,' and 'owns' in the Texas Tax Code's property-tax exemption provisions include equitable ownership, consistent with the Texas Supreme Court's holding in AHF-Arbors regarding CHDOs. Therefore, a religious organization that is an equitable owner of property used for religious purposes qualifies for the religious-organizations exemption.
2. As a matter of law, the Church is the equitable owner of the Parcel because it has the present, unqualified power to compel the Venture to convey legal title to it by exercising its unrestricted right to withdraw from the partnership.
3. The Venture is entitled to the exemption. The Church is a religious organization under the Tax Code, it used the Parcel for religious worship, and its equitable ownership and qualifying use entitled it to the exemption, which can be imputed to the Venture as the legal-title holder.

Questions Presented

1. Whether a church's equitable ownership and use of real property can exempt that property from property tax under the religious-organizations exemption when another entity is the legal owner.
2. Whether the trial court erred in granting summary judgment to TCAD and denying summary judgment to the Venture.

Disposition

reversed_and_remanded