Texas Property Tax Liens

Texas property tax liens are an important part of the Texas property tax system. If you don’t pay your property taxes, the county can place a lien on your home. 

Selling a house with a tax lien isn’t the easiest thing to do. Your best bet is to keep your property taxes up to date. If you keep your home free from delinquent tax debt, you will stay out of trouble with both the state of Texas and the IRS.

Keep reading to learn about what happens if you don’t pay your Texas property taxes and how the Texas property tax system works. We’ll also discuss personal liability for Texas property tax liens.

The Texas Property Tax System Overview

The Texas Property Tax System Overview 

Texas has a tax code system of local property taxes, unlike any other state. Texas is one of the few states that doesn’t have a property tax rate. Instead, Texas uses a property tax code assessment ratio. 

The county tax assessor-collector determines the value of the property. They multiply the home’s value by the assessment ratio to determine how much you owe in property taxes. The tax assessor/collector’s office then uses this amount when sending your tax bill.

The Texas Comptroller collects those taxes and distributes them to the appropriate taxing entities: counties, cities, school districts, community colleges, special districts, and more than 200 appraisal districts in Texas. 

The Comptroller also determines taxing units and collects from individuals and businesses that owe sales, franchise, hotel occupancy, cigarette taxes, motor vehicle rental taxes, and more. 

Texas appraisal districts are responsible for assessing the value of Texas property. The Texas Comptroller of Public Accounts distributes state funds to Texas counties based on population and other taxing units criteria. 

Texas appraisal districts have the authority to appoint an appraisal review board (ARB). The ARB meets at least four times a year. These meetings consider protests from taxpayers who disagree with the appraised value determined by the tax office.

Texas property taxes are due once a year on January 31st. If you’re in Texas, you’ll receive a written statement for the current tax year in November or December of the previous year. You can work to reduce your property tax bill by understanding Texas property tax exemptions.

Texas counties also send out renewal notices every October to remind taxpayers to pay their Texas property taxes by January 31st. 

You may be working with cash home buyers in Arlington to sell your home. If you’re accepting a cash offer for your house near the time of paying the property tax bill, contact your lender. Let them know the funds will come from another source other than yourself. 

They may need additional paperwork before they can accept payment from another person or entity on your behalf. If you’re interested in learning more about cash home buyers and their buying process, you don’t have to look far because we buy houses in Fort Worth and other Texas areas.

Texas Property Tax Liens

A Texas tax lien is a legal claim against your real property if you fail to pay your property taxes. Generally speaking, a lien gives creditors legal rights over certain assets until debtors pay their debts – or before a court resolves the issue through an agreement between all parties involved. 

The lien on your home will remain in effect until you pay the debt or the property sells. If you don’t pay your taxes, then the state can file foreclosure proceedings to sell your house at a tax sale.

Texas uses two types of property tax sale auctions. First, an investor specializing in purchasing property can buy the tax lien. Doing so allows them to make a minimum bid and then collect past due taxes. They can also collect the interest on the tax due amount. 

An investor can purchase the property outright at a tax deed sale in some cases. In these situations, you can’t redeem the property. 

Most of the time, you can recoup the property during its redemption period after the state places a lien on your home, it goes to auction, and someone buys it. You’ll need to pay 25% to 50% in penalties to get your home back. 

You can avoid the foreclosure process entirely and redeem the property before it goes to sale at auction by paying the state the amount due. You’ll need to submit a cashier’s check to the county clerk to pay the total amount due. Your costs will typically include the judgment amount, taxes, interest, penalties, and other court costs. 

The Texas redemption period is the time after a property sells at the tax sale but before the new owner takes possession. During this time, you can pay all past-due amounts, plus interest and penalties, to get your home back. 

The Texas redemption period lasts for two years from the date of a tax foreclosure sale. Some types of properties only receive a right of redemption period of 180 days. The two-year redemption period generally applies to agricultural land and residential homestead properties. 

You’ll need to contact your county tax assessor’s office to find out more about the right of redemption period for your real property. 

Personal Liability for Property Tax Liens in Texas 

In Texas, you’re personally liable for any property taxes due. It means that if you end up with delinquent property taxes, the state can come after you to collect what you owe. The state will send you a bill when you’re late on your property tax bill. Do everything you can to pay the bill before Texas moves into the delinquent tax sales process.

Texas can place liens against any of your personal assets for unpaid taxes, including bank accounts and any other real estate that you own. If you don’t pay what’s owed after getting a written statement from your county, it can file foreclosure proceedings and place your home on its tax sale list. 

What Happens If You Don't Pay Property Taxes in Texas

What Happens If You Don’t Pay Property Taxes in Texas

Texas tax law stipulates that counties can post public notices about delinquent tax sales and hold tax lien auctions every first Tuesday of the month. If you don’t pay your delinquent property taxes, your home will go on the county’s list of properties for resale.

At a tax debt auction, a bidder registration process occurs. It’s a buyer beware situation. Investors bid with the intention of either earning money through the redemption fees or eventually taking full control of the property. 

A successful bidder can take control of your property by paying the delinquent tax bill. If an investor does become the highest bidder and purchases your property at the auction, you can redeem the property to get it back. You’ll need to pay the buyer the following amounts. 

  • The home’s auction purchase amount 
  • Deed recording fee
  • All interest, penalties, taxes, and other costs paid by the investor

You’ll also face an additional 25% penalty when paying off the home within one year of the sale date. If you can’t pay it until the second year of the redemption period, you’ll need to pay a 50% penalty. It’s always better to redeem the property before selling at an auction to avoid these additional fees. 

Your home might not sell at the auction. If it doesn’t sell, it gets “struck-off” to the county where you live. The county now owns your property and will try to sell it to a different owner. You can get your home back by paying fair market value for the property or the judgment amount, whichever comes out to the lower amount. 

Conclusion

It’s always best to pay your Texas property taxes before the state takes your home to auction. Some companies that buy houses in Texas will attend the auction. You’ll now owe the additional 25% to 50% redemption fees if they purchase your home. Avoid these extra costs by doing everything in your power to pay your Texas property tax liens before the auction. 

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