When it comes to issues such as property taxes and homestead exemptions, new homeowners can sometimes find themselves overwhelmed or uninformed. So if you have purchased a home recently, be attentive to every piece of mail you get at your new residence. Included among the loads of junk mail could be a letter from the Homestead Recording Service.
The official looking letter is titled, "Homestead Designation Services Form" and its format is rather similar to that of a homestead exemption application. Homeowners who receive it are instructed to complete the form and send it in along with a $45 fee.
What appears to be a letter from a government agency is really a craftily designed solicitation. Homestead Recording Service is not a government agency, nor is it associated with any taxing authority.
It contained an official-looking form titled, "Homestead Designation Services Form". In bold it says:
Property Record Date: 00/00/0000
Our Records Show Filing: Filing None
Now, right away, it seems official, because they know the date I bought my house. But remember, that's public information and anyone can get it.
The bit about "Filing none" is to get you to think that they're the ones who are supposed to keep track of homestead filings, but they're not.
To look even more legitimate, the reverse side of the form is completely filled with the relevant text from the Texas Constitution and the Texas Property Code about homesteads. Scammers aren't usually in the habit of quoting the law, are they? So that seems to add to the credibility. Also, instead of begging, like most sales letters, it does the opposite. The form says, in all caps, "YOU MUST USE THIS FORM OR WE WILL NOT PREPARE YOUR DESIGNATION OF HOMESTEAD."
You're supposed to include a $45 fee to get them to file the paperwork to declare your home a homestead. But this may not even be the same thing as applying for a homestead tax exemption, and in any event, as mentioned, you can do this yourself for free.
Though Texas law requires companies to disclose they are not a government agency, many homeowners who have contacted the BBB say they are confused by these solicitations because disclosures are usually in the small print.
Close inspection of the solicitation does reveal a disclaimer which states, "Recording a 'Designation of Homestead' in public records is optional. To file a designation of homestead, you are not required to use this form or service. But, recipients of the letter frequently allege letters from the Homestead Recording Service are misleading. Many complainants mistakenly assumed they were required to pay a $45 fee and did not realize filing for their homestead exemption was a relatively easy process which could be done for free through their appraisal district.
Homestead exemption filing forms usually are available online and can be filed at no cost. In fact, most appraisal districts will assist taxpayers in the filing process which usually takes about five minutes.
As a new homeowner, you likely will be inundated with mail. Read each letter carefully. Look for disclaimers in the small print.
Inform your spouse of common scams, such as the homestead exemption scheme, which target new homeowners. Tell them to be on the lookout for suspicious looking mail.
Based on BBB files, Homestead Recording Service has a pattern of disputes alleging misrepresentation of services issues. Complainants allege they receive official looking documents from Homestead Recording Service which leads them to believe come from the State for the purpose of filing for Homestead exemptions. Complainants allege they pay for filing fees and learn they are then paying for a different service of ‘Designation of Homestead’ which is an optional filing and the letters did not come from the State. Complainants generally seek a refund.
On October 21, 2016 BBB contacted Homestead Designation Services regarding a mailed advertisement offering document preparation services. The mailer states: “Recording a ‘Designation of Homestead’ in public records is not required by law. ‘Homestead Designation Services’ is a private concern not affiliated with any governmental entity. The use of this form or service are not required by law.” BBB is concerned that this disclosure may not be clear and conspicuous enough to avoid misleading consumers.
BBB Code of Advertising states an advertisement as a whole may be misleading by implication, although every sentence separately considered may be literally true. The Code also states misrepresentation may result not only from direct statements, but by omitting or obscuring a material fact.
Section 41.0051 of the Texas Property Code states: “DISCLAIMER AND DISCLOSURE REQUIRED. (a) A person may not deliver a written advertisement offering, for a fee, to designate property as a homestead as provided by Section 41.005 unless there is a disclaimer on the advertisement that is conspicuous and printed in 14-point boldface type or 14-point uppercase typewritten letters that makes the following statement or a substantially similar statement: ‘THIS DOCUMENT IS AN ADVERTISEMENT OF SERVICES. IT IS NOT AN OFFICIAL DOCUMENT OF THE STATE OF TEXAS.’”
BBB requested the business modify the advertisement to more clearly and conspicuously disclose that the document is an advertisement of services and not an official document of the State of Texas.
On November 21, 2016 the business responded to BBB and indicated it will implement three new disclosures in future mailings:
- "Designation of homestead is not tax exemption."
- "This document is an advertisement for services."
- "This is not an official state of Texas document."
On April 20, 2017 BBB requested the business provide an updated copy of the mailer advertisements for review. As of May 4, 2017 BBB did not receive response to this request
Contact: John Riggins, President CEO
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