Tax Foreclosures

By Author: Curtis Reddehase
Total Articles: 15
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With the economy slowing and more people facing mortgages and property taxes they can't afford, knowing more about buying tax-foreclosed property in Texas may give you and your clients an edge.

Texas laws provide two ways investors can obtain an interest in delinquent tax property. First, when a taxing unit, like a county or school district files suit and receives a judgment foreclosing its tax lien on a property for delinquent taxes, the unit will sell the property at public auction. The law requires the sheriff to sell real property taken under court order at a public auction at the county courthouse, unless the court orders the sale to occur at the property itself. Tax sales take place on the first Tuesday of the month between 10 a.m. and 4 p.m. The officer conducting the sale gives a deed to the person purchasing the property. The purchaser's deed vests good and perfect title in the purchaser, subject only to the owner's right of redemption, recorded restrictive covenants running with the land and valid easements of record as of the date of sale. The law allows the owners of foreclosed homesteads, agricultural ...
... land and mineral interests to redeem their property within two years of the date the purchaser's deed is filed after the auction. All other property may be redeemed within six months of date the deed is filed.

Because each county conducts its own tax sales throughout the year, investors should contact the county tax assessor-collector for a list of tax foreclosed properties. A good Web site to view a list of the county tax assessor-collectors is at the Texas Department of Transportation's Web site.

Second, a delinquent taxpayer can, by agreement, permit another to pay property taxes for the taxpayer. If the agreement provides and meets the requirements of Section 32.06, Property Tax Code, the person who pays the taxes acquires a tax lien against the property. Neither the state nor local taxing units sell tax lien certificates. The law requires a person to file a sworn (notarized) document with the tax collector stating the authorization to pay the property owner's taxes, naming the person to pay the taxes, and describing the property subject to the imposed taxes. Investors might want to consult with an attorney for assistance in preparing this document. The investor may charge the property owner an annual interest rate not greater than 18 percent per year on the taxes, penalties, interest, and recording expenses paid to acquire and record the lien.

Often times, properties do not sell at the initial tax foreclosure auction. Then, one of the taxing units that were owed taxes takes the property in trust. The law allows the taxing unit that holds the foreclosed property to sell the property at any time, subject to any right of redemption by the former owner at the time of sale. The rules for the foreclosed property's resale are the same as the initial public auction - with one difference. The officer conducting the sale has discretion on bids - to reject bids that in his or her judgment are insufficient and to accept any bid that is deemed sufficient. There is no minimum bid as with the initial public auction.

In addition, the law permits a taxing unit to resell foreclosed property at a private sale. Under a private sale, the taxing unit may not sell the property for less than the market value specified in the judgment or the total amount of judgments against the property, whichever is less, without the consent of the other taxing units entitled to proceeds of the sale.