Texas does not sell tax liens – it sells redeemable deeds on tax defaulted properties. This means that the former property owner can buy their property back from another by paying the purchaser past-due taxes, plus additional fees and interest within two years from the date the deed is recorded in the county of the property’s location. This is why Texas is often referred to as a "hybrid tax deed state."
What Is a Property Tax Lien?
Anyone who owns real property in the Lone Star State, as in most states, is expected to pay property taxes. If a property owner fails to do so, an assessing agency places a lien on the property, effectively turning it into debt collateral.
The county where the property is located will create a tax lien certificate detailing the amount the homeowner owes and the interest and penalties due.
If the homeowner doesn't pay their taxes, they receive a Notice of State Tax Lien letting them know that they owe money to the state. If they don't pay the lien, they will eventually lose their home in a public sale.
Due Date of Property Taxes in Texas
Property taxes in most Texas jurisdictions are due annually every January 31. Technically, property taxes are due as soon as the homeowner receives their tax bill, but they have until January 31 to pay the full amount without accruing penalties or interest fees.
On February 1, the state considers unpaid taxes to be delinquent and places a lien on the property within 60 to 120 days. A homeowner with delinquent property taxes should pay them as quickly as possible, as tax penalties and fees continue to pile up.
Paying property taxes fully is the only way to release the tax lien on the property. As long as the lien exists, foreclosure is a possibility.
Differences Between a Tax Lien Sale and a Tax Deed Sale
Two types of tax sales can occur in the event of unpaid property taxes: a tax lien sale and a tax deed sale. In a tax lien sale, a property’s liens are auctioned off to the highest bidder. This allows them to legally demand lien collection and interest from the homeowner. If the property owner cannot pay the lien, the bidder who purchased the lien can foreclose on the property.
A tax deed sale sells the entire property, including unpaid tax liens, at public auction. Some jurisdictions offer a right of redemption following a tax deed sale.
This allows the homeowner the opportunity to get their property back within a redemption period by reimbursing the purchaser for what they paid for the property with some interests and additional costs. Texas is one such state that allows a redemption period for the former homeowner.
Who Sells a Home at a Tax Deed Sale?
According to Texas Tax Code Section 34.21, a county commissioner’s court authorizes an officer to sell a property by conducting a public auction via online bidding or a public, in-person sale. The commissioner’s court rules take effect 90 days after the date they are published in the county’s real property records.
The officer selling the property endorses the date and time they received the order and calculates, according to the judgment, the total amount of the property, including taxes, penalties and interest, plus other judgment awards, court costs and sale costs. Sale costs can include those for advertising the property, the auctioneer's commission and fees, and fees to record the deed.
The collector of any taxing unit can give the officer a certified tax statement showing the overdue taxes that are included in the judgment. The officer will rely on this amount, but is not responsible for its accuracy. There is no requirement for a certified tax statement to be sworn to; if the tax collector or their deputy signs the statement, that is sufficient.
Sending a Notice of Sale to the Homeowner
The officer must send a notice of the tax sale to the person whose home is being sold. If, for some reason they don’t send that notice or the homeowner does not receive it, that doesn't invalidate the property’s sale or the title conveyed. The sale, in other words, will continue.
The notice of tax sale must include:
- Sale location, date and time.
- Statement of the authority under which the sale will occur.
- Short property description. (Field notes are not required. It is sufficient if notice states the acreage and identifies the original survey, the property location in a platted addition or subdivision, name of the land with reference to the addition or subdivision, and adopts the property description in the judgment.)
Publishing a Notice of Sale Before Auction
Texas property tax auctions must appear in a local newspaper for three consecutive weeks before the sale date. When publishing a property’s notice of sale, the newspaper’s rate cannot exceed more than two cents per word or an amount equal to the word or line rate a particular newspaper has for the same type of advertisements.
If the county of sale does not have a newspaper or one that can publish the notice for the entire three-week period, the officer must publish the notice in three public places at least 20 days before the sale date, with one of those notices placed on the county courthouse door.
Requirements for Redeeming a Home in Texas
For the former owner to redeem their property in a tax sale, they must meet one of these criteria:
- They must have been the homeowner at the time of sale and it must have been their residence homestead.
- Property has an agricultural use designation.
- Property owner has a mineral interest that was part of the sale.
The homeowner can redeem the property within two years from the date the purchaser records the deed with the county where the property is located.
What the Property Owner Pays to Redeem
When an owner wishes to redeem a property from an investor, they must pay the amount that was paid at the time of sale, plus 25 percent interest and any additional costs of sale during the redemption period’s first year.
During the period’s second year, the former property owner must pay the investor what was paid at the time of sale, plus 50 percent interest and additional costs of sale.
When a home doesn't sell to an investor at the tax sale, it gets "struck-off" or given to the county, which then attempts to sell it. Homeowners can retrieve their home after the county takes it, but before it is sold to another owner. To do this, they must pay the lesser of the property’s fair market value or the judgment amount, in addition to deed filing fees and costs.
Getting Back a Property the County Has Sold
If the county has resold the property, its previous owner can still get it back by paying the new purchaser what they paid for the property, including the recording fee for the deed, penalties, interest, taxes and additional property costs. They’ll need to pay redemption fees of 25 percent in the redemption period’s first year and 50 percent during its second year.
Locating Texas Tax Deed Auctions
Texas allows school districts, cities and counties to hold tax deed auctions. Texas Legal Notices display the tax auctions in the state for the month.
Delinquent tax sales generally occur two to three times a year on the first Tuesday of each month. Some are held online, while others are held in person on the courthouse steps, depending on the county where the property is located.
Searching for a Tax Sale Property in Texas
When a party finds a county where they wish to buy a home, they’ll need to know:
- Size of the property.
- Condition of the property.
- Information on the neighborhood where property is located.
- Minimum bid for the property (local tax office will typically have this information).
The condition of the property is more difficult to determine online, but a purchaser can always view a property in person or, if they’re are not in the area, have someone nearby check it out for them. Google street view and satellite images are another option.
Bidding on Tax Sale Property in Texas
Each county has rules for how public auctions are conducted, which are mostly the same with a few minor exceptions. For example, the process in Collin County is:
- Purchaser must have a written statement, obtained from the county’s property tax office, declaring that they do not owe taxes in Collin County. The cost for a Request for Written Statement is $10. It must be notarized through the tax office. Once filled out, purchaser presents it to sheriff or constable at time of sale. Written statements expire after 90 days.
- Only cash, money orders and cashier’s checks are accepted for payment. Some counties take only cashier’s checks.
- Purchaser should be aware that property has no warranties and is sold "as is and where is.”
- Purchaser receives a deed without warranty from the sheriff or constable after presenting their written statement at the time of sale.
- Purchaser is responsible for title insurance, but this may be hard to obtain for a deed without warranty.
- Purchaser must pay current taxes due if they are not included as part of minimum bid.
Purchasing an Occupied Home
The purchaser can evict a person from the home if it is occupied at the time of sale, but they are discouraged from making property improvements until the passing of the redemption period. In Collin County, all sales are final except those within the redemption period.
Visiting a Purchased Property
If a successful bidder wishes to visit the property before receiving their actual deed, they should have proof of their purchase when they do so. Collin County accepts no liability for accidents or injuries sustained on a purchased property.
- Legal Beagle: How to Waive Right of Redemption After Foreclosure
- Legal Beagle: How Does a Sheriff's Sale Work?
- Texas Tax Code: Property Tax Code Chapter 34 Tax Sales and Redemption Subchapter A. Tax Sales
- Texas Legal Notices: Home
- Orange County: Official Sheriff Auction Site
- Collin County: Properties For Sale
- Collin County: Constable Sale Notices
- Collin County: Sheriff's Sales
- Collin County: Request for Written Statement
- Ted Thomas: Can You Buy Tax Deeds or Tax Liens In Texas?
- Ted Thomas: Texas Property Tax Sales
- TaxEase: When Are Property Taxes Due in Texas?
- Investopedia: Tax Lien Foreclosure: Definition, How It Works, Vs. Tax Deed Sale
- Courthouse Direct: What You Need to Know About State Tax Liens in Texas
- Farah Law Firm: Property Tax Redemption
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.