If your property taxes in Texas are delinquent, you could lose your home through a tax foreclosure—but you’ll get some time to save your property.
Having delinquent property taxes in Texas could lead to the loss of your home through a tax foreclosure and sale process. But Texas law allows you to pay off the delinquent amounts to save your home both before and after the tax sale.
You'll find out about a Texas tax foreclosure sale before it happens. And you'll have the chance to get current on the delinquent amounts, plus interest and costs, to prevent the loss of your home.
Also, even if you let the foreclosure go through to a sale, you'll get some time afterward to reclaim the property by "redeeming" it.
Will I Lose My Home If I Don't Pay the Property Taxes in Texas?
People who own real property must pay property taxes. The government uses the money these taxes generate to pay for schools, public services, libraries, roads, parks, and so on. Typically, the tax amount is based on a property's assessed value.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.
When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.
Accordingly, if you have delinquent property taxes in Texas, you might lose your home to tax foreclosure and sale.
What Are the Consequences of Not Being Able to Pay Taxes in Texas?
Like other states, a delinquent tax amount in Texas, including interest and penalties, becomes a lien on the property. The lien attaches to the property on January 1 of the tax year, awaiting assessment and billing of taxes later in the calendar year. (Tex. Tax Code § 32.01.)
Generally, subject to a couple of exceptions, if the taxes aren't paid before February 1 of the year following the assessment and billing, the taxes are considered delinquent. (Tex. Tax Code § 31.02.)
Again, delinquent property taxes in Texas can lead to a tax foreclosure and sale.
What Are the Penalties for Late Property Tax Payments in Texas?
You'll have to pay certain penalties if you don't pay your property taxes in Texas.
For instance, an immediate penalty of 6% of the tax bill goes into effect on the first business day of February, plus 1% interest per month until June 30. On July 1, the penalty is 12%. You will also owe 1% per month in interest for as long as you remain delinquent on your property taxes in Texas. (Tex. Tax Code § 33.01.)
You might also owe another 20% for attorneys' fees. And, in some cases, like if you lose an exemption, the penalty is 50%. (Tex. Tax Code § 33.01.)
How Long Can You Go Without Paying Property Taxes in Texas?
At any time after the property tax becomes delinquent, the taxing authority may start a foreclosure in court. (Tex. Tax Code § 33.41.)
The court will enter a judgment if you don't pay off the overdue amounts or have a valid defense against the foreclosure. Then, your property will be sold to a new owner at an auction.
But if the home doesn't sell at the tax sale, it will be "struck-off" to the county, which means the county gets the property. The county will then try to sell it at a later date.
Notice of the Tax Sale in Texas
Under Texas law, you must be given written notice of the sale before it takes place. Typically, you'll get the notice by personal delivery or in the mail. The notice will include the sale date, time, and location. (Tex. Tax Code § 34.01.)
The notice is also published in a newspaper or posted publicly if there is no newspaper in your county. (Tex. Tax Code § 34.01.)
How to Stop a Property Tax Sale in Texas
In Texas, you can pay off the overdue amounts to "redeem" the home before the sale. To redeem, you'll have to pay the amount of the judgment, including taxes, interest, penalties, and costs. (Tex. Tax Code § 33.43, § 33.48).
Redeeming will release the tax lien and stop the foreclosure process. (Tex. Tax Code § 33.53).
Property Tax Sale Procedures in Texas
If you don't pay the delinquent amount, your home will be sold at a public auction to the highest bidder. The minimum bid must be at least the lesser of:
- the aggregate amount of the judgments against the property, or
- the home's market value. (Tex. Tax Code § 33.50(b).)
If no bid is sufficient to pay the lesser of the judgment or the property's fair market value, then the taxing unit may terminate the sale. Or the property may be bid off to taxing unit for the lesser of such amounts unless otherwise agreed by other taxing units that are a party to the judgment.
The winning bidder (or the county) then gets a deed (title) to your home, subject to the right of redemption.
Redeeming the Property After a Tax Sale
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home, even after a tax sale happens. This process is called "redeeming" the property.
How the Right to Redeem Usually Works
In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.
In other states, though, the redemption period happens before the sale.
Can I Get My Home Back After a Texas Property Tax Sale?
In Texas, the redemption period is generally two years. This redemption period applies to residential homestead properties and land designated for agricultural use when the suit was filed. Other types of properties have a 180-day redemption period. (Tex. Tax Code § 34.21).
The post-sale redemption period starts when the deed is filed in the county records. (Tex. Tax Code § 34.21).
How to Redeem If Someone Buys the Home at the Tax Sale
To redeem your home from someone who purchases it at the sale, you'll have to pay the amount the purchaser bid for the property, the amount of the deed recording fee, the amount the purchaser paid for taxes, penalties, interest, and costs on the property. You'll also have to pay a redemption premium of:
- 25% if you redeem during the first year of the redemption period or
- 50% if you redeem during the second year of the redemption period. (Tex. Tax Code § 34.21).
So, if you wait until after the sale to redeem, you'll have to pay more than if you redeemed beforehand.
How to Redeem If the County Gets the Property
If the home doesn't sell at the tax sale, it will be "struck-off" to the county, which means the county gets the property. The county will then try to sell the home to a new owner.
To redeem after the county gets the home at the sale—but hasn't yet resold the property to a new owner—you'll have to pay the lesser of the judgment amount or the fair market value of the property (as specified in the judgment), plus the deed filing fee and costs. (Tex. Tax Code § 34.21).
How to Redeem If the County Has Resold the Home
If the county got the home at the sale and has since resold it to a new owner, you must pay the person who purchased the property from the taxing unit the amount paid for the property, the deed recording fee, and the amount the purchaser paid for taxes, penalties, interest, and costs on the property. Again, you'll also have to pay redemption premium of:
- 25% if you redeem during the first year of the redemption period or
- 50% if you redeem during the second year of the redemption period. (Tex. Tax Code § 34.21).
What Options Do I Have If I Can't Afford to Pay My Property Taxes in Texas?
Even though you'll probably get a redemption period after a Texas tax sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable. You could, for example:
- research whether you meet the qualifications for a property tax abatement (like if you're 65 years of age or older or you're a disabled veteran, and you occupy the home as a residence homestead) (Tex. Tax Code § 33.06), or
- challenge the assessed value of your home (if you think it's incorrect) to reduce the amount of taxes you have to pay.
What If I Can't Afford to Redeem the Property?
If you don't have enough money to redeem your home after failing to pay your Texas property taxes, consider contacting your mortgage servicer to find out if it will pay the delinquent taxes and add the balance to your loan.
In fact, if you have a non-escrowed mortgage on your home, the loan servicer might have already advanced funds to pay delinquent taxes and will then bill you for them. (See "Does a Mortgage Survive a Tax Sale in Texas?" below.) If you don't reimburse the servicer, the servicer could foreclose on the property using state procedures.
You could also consider taking out a home equity loan, home equity line of credit (HELOC), or a reverse mortgage (if you qualify) to pay the taxes. Although, these kinds of loans come with risks, especially reverse mortgages. Before pursuing this option, talk to a lawyer or financial advisor about the risks and consequences of getting a reverse mortgage.
Getting Help
If you're already facing a property tax sale in Texas and have questions (or need help redeeming your property), consider talking to a foreclosure, tax, or real estate lawyer.
Further Reading
