Summary: Summarizing the provided Texas Property Tax Code excerpts, written in an accessible style. Ever wondered what happens when you don’t pay your property taxes in Texas? This blog post breaks down the legal process, focusing on how properties are sold to cover unpaid taxes and what rights you have if your property is sold. It also covers some rules and procedures around these sales, as well as how you might get your property back. While the specifics of tax law can get complicated, we’ll make it easy to grasp the basics.

We’re discussing the legal text outlines of the Texas Property Tax Code’s provisions for tax sales and redemption. It details the process of selling tax-delinquent properties, including notice requirements, auction procedures (including online options), and permissible sale locations and times. The code also addresses distribution of sale proceeds and the rights of property owners to redeem their property after a tax sale, specifying timelines, amounts due, and conditions for redemption. Further provisions cover resale by taxing units, handling of excess proceeds, and the subrogation rights of purchasers at void sales. Finally, it defines procedures for challenging the validity of tax sales.

A Guided Walkthrough

Hey everyone! Let’s talk about property taxes in Texas. It might not be the most exciting topic, but it’s important to understand, especially if you or your family own a home or land. If you don’t pay your property taxes, the government can actually sell your property to get the money they’re owed. This process, called a tax sale, might sound scary, but the law has rules to protect both the government and the property owners.

How a Tax Sale Works:

• Seizure and Sale:  If you don’t pay your property taxes, the county can seize your property and sell it at an auction to collect the unpaid taxes. This process is similar to how properties are sold when someone can’t pay their debts.
• Online Auctions:  Some counties might even use online auctions to sell properties, making it easier for people to bid.
• Notice:  Before a sale happens, the county has to send a written notice to the people who own the property. This is to make sure they know the sale is coming up. Does the owner still live where they mail the notice to? The government office isn’t too worried about that; the sale is still valid even if the owner does Not receive the notice.
• What the Notice Includes:  The notice will include important details like the date, time, and place of the sale, as well as a description of the property. This description doesn’t have to be super detailed.
• Where Sales Take Place:  Usually, sales happen at the county courthouse, but sometimes they can be held in other public places nearby or online.
• Splitting Property:  If you want, you can ask the county to divide your property into smaller pieces to sell, but you can’t specify more than four portions or divide a building. This allows the county to sell only what is needed to cover the taxes owed.
• Bidding:  If no one bids enough to cover what is owed on the property, the county itself will often bid on the property. In this case, the county takes ownership on behalf of all the different government entities that are owed taxes.

What Happens After a Tax Sale?

• Deed:  After the sale, the county will prepare a deed, which is a legal document that proves ownership of the property, for the person or entity that purchased it. This deed transfers all of the previous owner’s rights and interest in the property to the new owner.
• Paying off the debt:  The sale of the property pays off the debt that the owner had with the various taxing authorities. The original owner of the property, however, may still be personally liable for any remaining debt, like post-judgement taxes.
• Special Cases for Certain Types of Properties:
  
  • Small or unusable pieces of land:  If a property is a small, unusable piece of land, the county might sell it privately to a neighbor who owns the land next to it. If there is more than one neighbor, the county will try to get the highest bid. The county is not allowed to sell to a neighbor unless they have already tried to sell at public auction.
  • Land in a flood zone:  If land is in a flood zone or floodway, it can be sold to a neighboring land owner at a private sale if the property has been offered at public auction and no bids were received.

Who Can Buy Property at a Tax Sale?

• Registered Bidders:  To make sure the system is fair, some counties require people to register as bidders before the sale.
• No Back Taxes:  If you want to buy property at a tax sale, you generally can’t owe back taxes to the county or other local entities. You have to show proof of this from the county assessor-collector before the county will give you the deed.

What if a Tax Sale is Flawed?

• Subrogation:  If a tax sale turns out to be invalid, the purchaser has the right to step into the shoes of the taxing entity and be able to recover the value of the sale.
• Lawsuit:  A buyer can also sue the taxing authorities to recover the proceeds they received in a void sale. They have to do this within a year of the sale, though.
• Challenging the sale:  To challenge a tax sale, the original property owner has to deposit with the court an amount equal to the back taxes and costs or file an affidavit that states they can’t pay. They must also do this within a certain time frame, usually two years, depending on whether the buyer is a subsequent purchaser, and whether the owner is challenging based on a forged deed.

Getting Your Property Back: The Right of Redemption

• Redemption Period:  If your property is sold because of unpaid taxes, you might have a chance to get it back. This is called the “right of redemption.” The time you have to do this depends on the type of property.
  • For your home or agricultural land, you have up to two years to redeem the property.
  • For other kinds of property, you generally have 180 days to get it back.
• How to Redeem:  To get your property back, you’ll have to pay the purchaser the amount they paid for the property, plus any costs they incurred, and a “redemption premium.” This is essentially a penalty, usually 25% if you redeem within the first year or 50% if you redeem in the second year for a homestead or agricultural land. The premium is capped at 25% for other kinds of properties.
• Redeeming from the County:  If a taxing unit buys the property at sale, you can redeem it by paying the amount of the judgement plus the cost of the deed and other costs.
• Working with the County:  Sometimes, the original owner of the property can go through the county to redeem the property if they can’t find the purchaser of the property, if the two can’t agree on the amount needed to redeem, or if the purchaser refuses to give the owner a quitclaim deed.

What Happens to Extra Money from a Tax Sale?

• Excess Proceeds:  If the sale of your property brings in more money than what is needed to pay the taxes and fees, that extra money is called “excess proceeds”.
• Notification:  The court clerk will notify the original owner by certified mail of these excess proceeds.
• Claiming Proceeds:  You have two years to claim the excess proceeds. You will need to file a claim with the court.
• How the Money is Distributed:  The extra money is distributed according to a set of priorities. The purchaser of the property gets paid first if the sale was determined to be invalid. Then, any taxes, penalties, or interest owed after the initial judgement are paid. After that, any other lienholders are paid, followed by the original owner.
• Rules for Transfers:  You can’t sell your right to these proceeds to someone else unless it is more than 35 days after the proceeds were deposited with the court and the sale meets other requirements.

What if the County Resells the Property?

• Right to Resell:  After the county takes ownership of a property, it can resell the property publicly or privately.
• Private Sale Requirements:  When selling it privately, the county usually has to get at least the market value or the total amount of the judgements against the property.
• Redevelopment:  Sometimes counties are allowed to resell properties for less if it fits with a redevelopment plan for the city or for affordable housing.
• How the Proceeds are Distributed:  When a county sells a property, the costs incurred by the county to maintain, preserve, and market the property are paid first. After that, any costs of the lawsuit and the sale are paid. The rest is divided between the taxing entities based on their share of the initial judgements.

Final Thoughts

Property tax laws can be complex, but the basic idea is to make sure that everyone pays their fair share. If you ever find yourself in a situation where you can’t pay your property taxes, reach out to your county’s tax office. You can also consult with a legal expert to learn more about the laws and what options might be available to you.

This is just a basic overview, and there are many other details and specifics, but this blog post should help you understand the big picture of Texas tax sales.

Keywords:  Texas, property tax, tax sale, redemption, delinquent taxes, property rights, tax code