Tax foreclosure sale is the legal process that a lender initiates to attempt to recover the balance of a loan in the case where the borrower has failed to make the scheduled payments. In some situations, it is possible to redeem your homestead from foreclosure. However, there are multiple reasons why your home could be foreclosed, from not paying your mortgage or defaulting on home equity loans.
We shall focus specifically on a property tax foreclosure, where the local government or municipality taxing unit initiates a foreclosure once property taxes have become delinquent. This particular foreclosure is a judicial foreclosure, which is a long process, allowing you opportunities to save your home before, during, and even after the foreclosure sale by “redeeming” your property.
It is best to get your property tax under control before the foreclosure process even begins. For example, suppose you believe you cannot fully pay your annual property tax bill. In that case, you can look into options that your county offers, from half-payment plans available to everyone or deferrals available to those over 65, disabled veterans, or those with a disability.
The right of redemption is limited to (1) sales for unpaid ad valorem taxes, in which case a former owner of residence homestead or agricultural use property has a two-year of redemption.
The Homestead Exemption reduces the taxable portion of your property’s assessed value. With this exemption, the assessed value of the property is reduced.
If you do not qualify for these options or cannot afford the half-payment plans, consider looking into a property tax loan. This option is available to property owners to convert their overdue property tax into an affordable monthly payment that will protect them from foreclosure, assuming you make your loan payments. Property tax loans provide the following benefits to homeowners:
When your property taxes become delinquent, the local taxing authority can begin the foreclosure process by first going to court to get a judgment allowing them to foreclose. Judicial foreclosure will enable you to either pay off the overdue amounts, including penalties and interest or present a valid defense to the court. If you are unable to do this, the court can enter a judgment amount and allow your property to be sold at a tax sale.
Even then, you can still prevent the foreclosure process. Texas law requires that you are provided written notice of the sale before it takes place. If you can pay off the delinquent amount at any time before the sale, using, for example, a property tax loan, you can stop the foreclosure.
After the home is sold in a public auction to the highest bidder or struck off to the county, there is still an opportunity to save your home. In Texas, residential homestead properties have a first year redemption period followed by a second yea redemption period, starting from the date the purchaser files the deed.
Whether sold at a tax sale or resold by the county, you will have to pay the purchaser the amount they bid for the property, the amount of the deed recording fee, amounts paid in taxes, penalties, interest, repairs, attorney fees, and dues on the property. In addition, you will have to pay a 25% redemption premium of the total if you redeem during the first year; this increases to 50% if you redeem during the second year. Allowable costs do not include a general rehab of the property if the repairs and improvements are not required by local ordinance, building code, or lease of the property, which was in effect on the date of sale.
When the property has been struck off to the county but has not yet been sold to a new owner, you must pay the lesser of the judgment amount, or the fair market value of the property, in addition to the deed filing fee and costs.
While there are many opportunities to stop the foreclosure process and even redeem your home after the sale, it is best to avoid foreclosure entirely. American Finance & Investment Co., Inc. (AFIC) offers our clients an affordable, hassle-free way to 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:
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans or homestead forclosure taxes redemption, please contact our experienced team at AFIC today.
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YOUR TAX OFFICE MAY OFFER DELINQUENT TAX INSTALLMENT PLANS THAT MAY BE LESS COSTLY TO YOU. YOU CAN REQUEST INFORMATION ABOUT THE AVAILABILITY OF THESE PLANS FROM THE TAX OFFICE.
If you are over 64 or disabled, don’t get a property tax loan, contact your tax office about a deferral.
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