If you fail to pay your property taxes, the past-due amount becomes a lien on your home. This type of lien almost always has priority over other liens, including mortgages. Generally, when taxes remain unpaid, the taxing authority will eventually sell the lien (and if you don't pay the past-due amount to the lien purchaser, that party can foreclose or use some other method to get title to the home), or sell the property itself in a tax sale. Though, in some places, a sale isn't held; instead, the taxing authority executes its lien by taking title to the home. State law then generally provides a procedure for the taxing authority to dispose of the property, usually by selling it. In other jurisdictions, the taxing authority uses a foreclosure process before holding a sale.
After you become delinquent on your real property taxes in Texas, the taxing authority gets a lien on your home. It may then initiate a foreclosure by filing a lawsuit in court. The court will enter a judgment, and the property will be sold to a new owner. The proceeds from the sale pay off your tax debt. If no one bids on your property at the sale, or no one bids a sufficient amount, the county generally gets the home.
Under Texas law, you get the opportunity to save the property both before and after the sale by redeeming it. If you don't redeem, though, you'll lose the place permanently.
In most states, delinquent taxpayers get some time during which they can "redeem" the home after a tax sale by paying the buyer the amount paid at the sale or paying the taxes owed, plus interest, penalties, and costs. In some states, the redemption period occurs before the sale. But if you don't redeem, the purchaser can get title to the home free and clear of any liens that existed before the sale.
Usually, the homeowner gets the right to live in the home during the redemption period. Exactly how long the redemption period lasts varies from state to state; one year to three years is typical. In some states, though, the time frame is much shorter.
In Texas, you can pay off the overdue amounts to "redeem" the home before the sale takes place. 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).
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).
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:
So, if you wait until after the sale to redeem, you'll have to pay more than if you redeemed beforehand.
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).
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:
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:
If you want more information about property tax and redemption laws in Texas, consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer who has experience with property tax issues. To learn more about property taxes and other aspects of homeownership in general, get Nolo's Essential Guide to Buying Your First Home by Ilona Bray, J.D., Attorney Ann O'Connell, and Marcia Stewart.