Quick Answer
In Texas, delinquent property taxes result in the property being sold at a tax sale conducted by the county. The buyer receives a tax deed. Texas law provides a redemption period for the property owner to reclaim the property after a tax sale. The title implications of tax sales include complex priority questions and potential defects that affect marketability.
Texas tax sales are one of the most common ways investors acquire distressed property, but they come with significant title considerations.
How Tax Sales Work in Texas
When property taxes in Texas become delinquent, the taxing authority may file suit to foreclose the tax lien. The court orders the property sold at a public sale. The purchaser receives a tax deed. However, unlike many states, Texas does not hold tax lien certificate sales; instead, the entire property is sold through a judicial process.
Redemption Rights After Tax Sales
Texas law provides the property owner with a limited redemption period after a tax sale. For homestead properties, the redemption period is generally 24 months. For non-homestead properties, the period is generally 6 months. During this period, the owner can redeem the property by paying the sale price plus interest and costs. This redemption right is a significant title concern for buyers at tax sales.
Title Insurance After Tax Sales
Obtaining title insurance for a property acquired through a tax sale can be challenging. Most title insurers require evidence that the tax sale was properly conducted, that the redemption period has expired, and that no junior lien holders have superior claims. Additional curative work may be needed.
Property Research Before Buying at Tax Sale
Before buying at a Texas tax sale or purchasing a tax deed property, research the title. 1st Option Title offers free Property DNA Reports that provide comprehensive property research information. A Property DNA Report is not title insurance or a legal opinion. It is an informational research report to help you make informed decisions.
FAQs
Can I get title insurance on a Texas tax deed property?
Possibly, but it depends on the specific circumstances, including whether the sale was properly conducted, whether the redemption period has expired, and whether any superior claims exist. Consult with a title company experienced with tax deed properties.
What happens to existing liens after a tax sale?
A properly conducted Texas tax sale generally extinguishes the tax lien being foreclosed. However, other liens may or may not be extinguished depending on their priority and whether the tax sale was conducted correctly. Junior lien holders may still have claims against the property.