Court Opinion

ID: 4130282
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:02:28.774619+00
Date Added: 2024-06-11T14:31:58.254242
License: Public Domain

Honorable Marcus D. Taylor       Opinion No. JM-1187
Criminal District Attorney
Wood County                      Re: Eligibility of a realtor
P. 0. Box 689                    to serve on the board of dir-
Quitman, Texas 75783             ectors of an appraisal dis-
                                 trict (RQ-1880)
Dear Mr. Taylor:
     YOU ask about the following situation involving a
member of the board of directors of an appraisal district:
           The appraisal district signed an earnest
        money contract with an individual to purchase
        z;;;zn   property to house the      appraisal
               . The realtor for the seller iS      a
        member of the appraisal district board of
        directors. That board member   has abstained
        from all votes concerning this matter.
You ask whether the real estate transaction in question
would contravene section 6.036 of the Tax Code,1 the common
law doctrine of incompatibility, or the common law rules
relating to conflicts of interest.
     The common    law   doctrine of    incompatibility  is
inapplicable to the situation you describe since it applies
to incompatibility of two or more public positions.     See
Attorney General Opinions JM-133, JM-129 (1984). The board
member's work as a realtor is in a private capacity, not a
public capacity.
     Section 6.036 of the Tax Code governs conflicts of
interest involving appraisal district board members. That

      1.    Although your   request   letter refers   to   section
6.03 of the Tax Code, we assume you are asking about section
6.036 of the Tax Code, which deals with conflicts of
interest.

                                P. 6259
Honorable Marcus D. Taylor - Page 2    (JM-1187)

section prohibits an appraisal district from entering into a
contract with a member of the board of directors of an
appraisal district. Whether the real estate transaction you
describe violates section 6.036 depends on whether the board
member himself has entered into a contractual relationship
with the board. Your description of the transaction in
question suggests that the board member has a contractual
relationship only with the seller, not with the board.     If
that is the case, there is no violation of section 6.036.
If, however, the board member acted as an agent for the
board as well as the seller, the transaction would be in
violation of section 6.036 and the board member's abstention
would not cure the violation. See uenerallv Janes v.       P
Co;-, ;Z?itS.W.2d733, 740 (Tex. App. - Houston [lst DisE.7
             ref*d n.r.e.)     (real estate commission     is
genekally paid by seller, and broker is generally recognized
as seller's agent); &illiu         Camnbeu    480 S.W.2d 250
(Tex. Civ. App. - Houston ;14% Dist.] '1972 writ ref'd
n.r.e.) (broker may act for both buyer a;d seller with fuli
knowledge and consent of both principals); Chamberlain v.
North Cent. Inv. Corm% 432 S.W.Zd 581 (Tex. Civ. App. -
Amarillo 1968, writ ref :d n.r.e.) (dealing with relationship
between vendor and members of multiple listing service).
     Chapter 171 of the Local Government Code governs
conflicts of interest involving local officials.2 It makes
it an offense'for a local public official to participate in
a vote or decision on a matter involving a business entity
in which the local public official has a substantial
interest if it is reasonably foreseeable that an action on
the matter would confer an economic benefit to the business
entity involved. Local Gov't Code S 171.003(a)(l). A board
member of an appraisal district is a "local public official"
for purposes of chapter 171. &       5 171.001(l); Attorney
General Opinion JM-1060 (1989). A person has a "substantial
interest" in a business entity if he owns "10 percent or
more of the voting stock or shares of the business entity"
or owns either 10 percent or more or $5,000 or more of the

      2. Chapter 171 preempts the common law of conflicts
of interest as applied to local public officials.      Local
Gov't Code 5 171.007(a); see also  Attorney General Opinion
JW-424 (1986). Also, a member of the board of an appraisal
district must comply with both chapter 171 of the Local
Government Code and section 6.036 of the Tax Code. m     Tax
Code 5 6.036(f) (section 6.036 does not limit application of
any other law).

                             P. 6260
Honorable Marcus D. Taylor - Page 3    (JM-1187)

or owns either 10 percent or more or $5,000 or more of the
fair market value of the business entity or if "funds
received by the person from the business entity exceed 10
percent of the person's gross income for the previous year."
Local Gov't Code s 171.002(a)(l).    You have not provided
sufficient information for us to know whether the board
member in question has a substantial interest in a business
entity that is involved in a real estate transaction with
the board.
     If the board member does have such an interest, the
board member must comply with section 171.004,      which
provides:
          (a) If a local public official has a
       substantial interest in a business entity or
       in real property, the official shall file,
       before a vote or decision on any matter
       involving the business entity or the real
       property, an affidavit stating the nature and
       extent of the interest and shall abstain from
       further participation in the matter if:

              (1) in the case of a        substantial
              interest in a business entity       the
              action on the matter will have        a
              special economic effect on the business
              entity that is distinguishable from the
              effect on the public: or
              (2) in the case of a        substantial
              interest in real     property, it    is
              reasonably foreseeable that an action
              on the matter will have a special
              economic effect on the value of the
              prope*y,   distinguishable   from   its
              effect on the public.
           (b) The affidavit must be filed with the
        official record keeper of the governmental
        entity.
           (c) If a local public official is required
        to file and does file an affidavit under
        Subsection (a), the official is not required
        to abstain from further participation in the
        matter requiring the affidavit if a majority
        of the members of the governmental entity of
        which the official is a member is composed of
        persons who are likewise required to file and

                             p. 6261
Honorable Marcus D. Taylor - Page 4     (JM-1187)
                                                               .

       who do file affidavits of similar      interests
       on the same official action.
See also j&     55 171.006 (effect of violation), 171.005
(separate vote required on matter in which member of
governing body has substantial interest).    We note that
Attorney General Opinion JM-379 (1985) indicated       that
t~pa*icipationl~in a matter included deliberation with the
board about the matter.
     Because chapter 171 of the Local Government Code
preempts the common law of conflicts of interest as applied
to local public officials, we need not consider whether the
common law would nrohibit the transaction in cuestion.
Local Gov't Code §-171.007(a): see also Attorney- General
Opinion JM-424 (1986).
                      SUMMARY
            Whether chapter    171 of    the   Local
       Government Code or section 6.036 of the Tax
       Code prohibits a member of the board of
       directors of an appraisal district       from
       acting as a real estate agent for a vendor
       who sells real property to the appraisal
       district depends on the facts of the specific
       transaction.
                                   Very truly yo

                              J         A;,   f*
                                   JIM     MATTOX
                                   Attorney General of Texas
MARYEEJXER
First Assistant Attorney General
IOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Sarah Woelk
Assistant Attorney General

                              P. 6262