Delinquent Property Taxes: Terminology You Should Know
In times of financial uncertainty, many important payments can get pushed to the side; your property taxes should not be one of them. Unpaid (delinquent) property taxes rapidly accumulate interest, fees, and penalties and, in the worst cases, can even result in foreclosure. Understanding the implications of a delinquent property tax bill is crucial for maintaining your financial stability.
In Texas, property tax revenue is one of the pillars of funding local services like policing, public schools, libraries, fire protection, emergency medical services, and more. With the money from property tax payments being so critical to local school districts, cities, and counties, it is no surprise that the ramifications for non-payment are so severe.
Texas property taxes are considered delinquent if your property tax bill has not been settled in full by the end of January each year. An unrecorded super priority tax lien always exists on all properties with unpaid property taxes to secure payment. From February 1, the tax bill is considered delinquent, so it will start accumulating penalties and interest.
If you are sitting with a delinquent property tax bill and are struggling to navigate the finer points of what specific terms mean, we can help. You can use this glossary of terms and definitions to better understand the terminology you will likely come across while trying to settle your property taxes.
Glossary of Delinquent Property Tax Terminology
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Abstract of Judgment: An Abstract of Judgment is a summary or copy of a court’s judgment. In the case of delinquent property taxes, the Abstract of Judgment is described as a summary of a court judgment which, when recorded in the County Recorder’s Office, creates a lien upon the defendant’s property in that county. In Texas, the abstract creates a lien on nonexempt real property and continues for ten years from the date of recording and indexing with the country.
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Ad Valorem Property Taxation: Ad Valorem is a Latin phrase that means “according to value.” So, ad valorem property taxation refers to the tax amount based on the assessed value of real property.
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Apportionment: Apportionment refers to the distribution of ad valorem taxes to the local taxing agencies by the County Controller or Assessor-Collector.
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Appraisal: A property tax appraisal is the process of determining how much a taxable property is worth (an assessed value). Appraisal values are an estimate of the current fair market value of your property. Appraisers reach this estimate by analyzing various factors, such as property size, usage, construction type, sales of comparable properties, age, location, and individual characteristics of the property. The Uniform Standards of Professional Appraisal Practice ensures that the same methods and techniques are used when appraising similar properties.
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Appraisal District: In Texas, every county has an independent office responsible for determining the taxable value of properties within their districts. Each county appraisal district is a political subdivision of the State of Texas and is responsible for appraising properties for tax purposes for each taxing unit within the district (school districts, cities, local governments, etc.).
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Appraisal Records: Appraisal records are a collection of the appraised property values for the year. These records reflect each taxable property’s identification number, appraised value, exemptions, owner information, and other important property tax information.
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Appraisal Review Board: If property owners do not agree with the appraised value assigned to their home, they can dispute the appraised value with their local Appraisal Review Board (ARB). ARBs will then review the disagreement between the property owner and appraisal district to come to a conclusion on the appraised value. Larger taxing districts typically appoint ARBs through an administrative district judge, whereas the appraisal district’s board of directors establishes the ARB in smaller districts.
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Assessed Value: The assessed value is the dollar amount at which a property is put on the assessment rolls and is used to calculate property taxes which contemplates differences from the appraised value for things like homestead and other exemptions.
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Deferral: Deferral of taxes refers to delaying the payment of taxes until a later date. While some taxes can be deferred indefinitely, others may be taxed at a lower rate in the future. The Texas Property Tax Code, Section 33.06, allows for real estate payments to be deferred for elderly residents (over 65 years), disabled people, or disabled veterans. Property tax deferrals stop the collection efforts on a residence homestead property for as long as the owner continues to own and live in the home. Deferred taxes are not canceled; they are still considered delinquent and continue to accumulate interest.
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Delinquency: It is the responsibility of all property owners to pay their property taxes on time. Property taxes in Taxes are due upon receipt of the property tax bill, with a final date for payment of January 31 annually. An owner who fails to pay on time will be deemed delinquent, and interest and penalties will begin to accrue from 1 February each year.
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Delinquent Tax Amount: The total amount of past-due taxes owed on a property.
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eCheck: An electronic check that can be used to pay property taxes in Texas. Other methods for paying your property taxes online include credit or debit card payments and PayPal.
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Exemption: A property tax exemption refers to either a portion of the property tax bill or the entire tax amount that qualifying property owners will not have to pay. Partial exemptions remove a percentage or dollar amount from the property’s taxation value, while absolute exemptions exclude eligible properties from taxation altogether.
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Foreclosure: Foreclosure refers to the sale of a property at public auction due to unpaid tax liabilities, including the delinquent tax amount and any interest, penalties, and fees that have accumulated.
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Formal Hearing: If property owners are dissatisfied with their home’s appraised value, they can file a protest with the Appraisal Review Board (ARB). After filing the protest, a written notice detailing the time, place, and subject matter of an informal and formal hearing will be sent to the property owner. Should a conclusion not be reached at the informal hearing (see below), a formal hearing will be held. In the formal hearing, the property owner and an appraiser will go before the ARB and a three-panel member board that was chosen to hear the appeal. The ARB will then determine and issue a final, non-negotiable decision on the outcome of the property tax protest.
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Informal Hearing: In the event of a property tax protest, an informal hearing is held first to determine whether a conclusion on the property tax valuation can be reached without a fully-fledged formal hearing (see above). During the informal hearing, property owners meet to present their cases to the ARB to explain and prove why they believe their initial appraisal was incorrect. In many cases, property owners receive an adjustment on the property valuation and subsequent tax bill at the formal hearing, in which case, a formal hearing is not necessary. A formal hearing will be held if an agreement cannot be reached.
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Judicial Appeal: After the full protest process, if a property owner is not satisfied with the appraisal review board’s decision from the formal hearing, they can file a lawsuit or judicial appeal with the State District Court.
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Market Value: The market value of a home (which is used in the appraisal of a home) is the amount for which a property can be sold in the current market in a fair, voluntary sale (meaning neither the buyer nor seller is under pressure to make the transaction).
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Property Tax Lien: A lien is a legal way to use a tax debtor’s property as collateral to collect on a late tax payment. A tax lien is automatically attached to all on January 1 each year. The lien is attached to a property to secure payment of all taxes, penalties, and interest. The lien will remain in place until the debt has been paid or an agreement has been reached. In the event of non-payment, the state then has the right to levy (seize) a property and sell it (foreclosure) to settle the outstanding tax balance.
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Property Tax Loan: If you take out a property tax loan, the lien on your property is transferred to a property tax lender, and all municipal collection actions applicable to your property taxes cease. The lender will pay your property tax obligation (including the tax amount, interest, and penalties) to the applicable county or tax office and work with you to determine an appropriate repayment plan. A property tax loan can give you peace of mind knowing that your property taxes are settled, you will not suffer the consequences of delinquency, and you can pay your obligation in a manner suited to your needs.
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Protest: Among the most important rights of the taxpayer is the right to protest to the appraisal review board. If you disagree with the appraised value or any action taken by the appraisal district concerning your property, you may file a protest.
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Valuation: Property valuation involves estimating a property’s current and future value.
Understanding Your Right to Reclaim Property After a Tax Foreclosure
Facing a tax foreclosure can be overwhelming, but it’s important to remember that there are steps you can take even after the foreclosure has occurred. Many homeowners wonder, can I get my property back after a tax foreclosure sale? In Texas, the answer is yes, through the Right of Redemption. This legal option allows previous homeowners to buy back their property by covering the costs within a set period, giving them a chance to regain ownership and avoid long-term financial setbacks.
Avoid Delinquency with a Property Tax Loan from AFIC
With the Texas tax rate being so high, it is easy for property owners to become delinquent on their tax bills. When you add how quickly the sky-high interest rates and penalties accumulate, a delinquent property tax bill can quickly derail the financial stability of a property owner. Losing your home to foreclosure or becoming financially burdened due to a tax-delinquent property is devastating, both financially and emotionally. There is hope! Property tax loans can help you cover all penalties, interest, and administrative fees that are associated with your property taxes bill, as well as the original amount.
If you find yourself dealing with unpaid taxes, it’s important to understand not only the financial repercussions but also the legal implications. One of the most serious outcomes is a property tax collection lawsuit in Texas, which can be initiated if taxes remain unpaid beyond the delinquency date. Such lawsuits can escalate quickly, potentially leading to foreclosure and additional legal fees. Staying informed about these processes and seeking help, such as a property tax loan, can prevent these severe consequences and help you regain control of your financial situation.
American Finance & Investment Co., Inc. (AFIC) offers our clients an affordable, hassle-free way to manage their Texas property taxes and avoid crippling penalties and interest. We can ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
- Quick and completely online process
- No money down
- No credit check
- Free 30-day rate match
- Match competitors and beat their rate by 1%
- Avoid high penalties and foreclosure
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
