Types of Property Liens in Texas & What You Should Know

Property%20Liens%20in%20Texas.png With any debt, there are risks for both the lender and the borrower. One of the ways in which lenders protect themselves against potential nonpayment risks is through liens, such as property liens.

A property lien is a legal claim against a piece of personal or real property due to contractual obligations. When someone spends money or incurs expenditure on someone else’s behalf, a lien enables them to hold an interest in that property until the owner compensates them for the expenditure. A lien encumbers a property and prevents it from being sold until the lien is removed. In some cases, liens may even lead to foreclosure.

There are, however, different types of property liens, which we will discuss in this blog to help you better understand the types of property liens in Texas and what you should know about them.

General Liens vs. Specific Liens

General liens can be placed on all property owned by a debtor, not just real estate. For example, if you are going through a divorce, a general lien (attachment lien) can be placed on your property to prevent you from selling anything during the divorce proceedings.

Specific liens only apply to specific assets. A mortgage lien, for example, is specific to the house you took a mortgage loan on. So, if you default on your mortgage payments, the bank could only claim a security interest against that specific property.

Voluntary Liens vs. Involuntary Liens

There is a common misconception that liens are only obtained due to failure or refusal to pay a creditor. However, that is not always the case. In Texas, you may face two primary types of liens: voluntary and involuntary.

  • As the name suggests, a voluntary lien (or consensual lien) is a lien that a debtor willingly agrees to. The most common example of a voluntary lien would be a mortgage lien, so if you financed the purchase of your home through a mortgage lender, you willingly agreed to use your property as collateral to secure the loan. The mortgage lender, therefore, has the right to place a lien on your property, giving them legal rights over the property.
  • An involuntary lien (or non-consensual lien) is levied against your wishes and is the result of not fulfilling your financial obligations. These liens are very serious as they inhibit the sale of your property and could even result in foreclosure. One of the most common examples of an involuntary lien is a property tax lien. The two types of involuntary liens are judicial and statutory.
  • Statutory Lien - A statutory lien is one that is granted by a state or federal law. A mechanic’s lien, an IRS lien, or a property tax lien are the most common types of statutory liens.
  • Judicial Lien - A judicial lien occurs when a court grants a creditor a stake in a debtor’s property after a court judgment. These liens arise from a wide variety of circumstances that could have landed you in court and are not limited to real estate – they could even include money. A judicial lien could be used to collect child support, for example, or to secure compensation for an injured party if you caused him or her harm through negligence.

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What Are the Different Types of Property Liens in Texas

Mechanic’s Lien

A mechanic’s lien can be attached to your property if a contractor or mechanic performs work on your property and is not paid for it. Some examples include a mechanic repairing your car or a contractor installing a furnace in your home. If you do not pay the service provider and you sell the property, the lien serves as a security interest and will allow the creditor to claim a portion of the proceeds from the sale of the property in order to pay off the debt you owe. If a mechanic’s lien is placed on real property, it may delay or inhibit the sale of the property until the debt is paid and the lien is removed.

Mortgage/ Deed of Trust Liens

Mortgage liens are voluntary liens levied for the debt accepted to buy a home or other property and are specific to the mortgaged property. The lender can foreclose on your property if you fall behind on your loan payments or break the loan agreement. In order to remove this lien, the mortgage must be paid off in full.

Judgment Liens

If you are involved in a lawsuit and lose, you receive a judgment from the court outlining what needs to be paid to the person who won the lawsuit. If this court judgment is not paid, the creditor (the winning party) can place a lien on your property. In Texas, judgment liens can remain attached to your property for up to 10 years.

Estate Tax Liens

If the estate taxes are not paid on assets that have been passed down after death, estate tax liens are involuntary, general liens issued by the government to secure payment of the outstanding taxes. Texas does not have a state-wide estate tax. However, you or a family member may still have a federal estate tax liability.

Attachment Liens

An attachment lien is a legal hold that is placed on someone’s property to prevent them from selling it while a legal matter is ongoing. This type of lien is often used in situations such as divorce or bankruptcy proceedings to prevent the sale of the property. Attachment liens are involuntary and can either be general (applying to all of the owner’s property) or specific (applying only to certain items).

Property Tax Liens

On January 1 of each year, a lien is attached to all Texas properties that still have outstanding property tax balances. The lien will be extinguished once the outstanding balance (including all penalties and interest) has been paid in full. However, if you have a property tax debt applicable to your property and still neglect to pay your tax liability, local taxing authorities can choose to foreclose on the property at any point while the lien is attached.

If you are struggling to pay your property taxes, you can settle the balance, remove the property tax lien, and avoid any more expensive penalties and interest with a property tax loan.

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Avoid Property Tax Liens with Help from AFIC

Falling behind on your property taxes is easy to do; however, the sky-high penalties and interest can make your outstanding property tax balance even more expensive, making it that much harder to catch up.

Regaining ownership of your property once the tax lien foreclosure process starts can be highly stressful and challenging. You risk losing your property to someone else at an auction, and even though reversing the sale is possible in some cases, it is a lengthy and expensive process. To avoid losing your home to a tax foreclosure sale or to prevent a lien from being placed on your property in the first place, you need to settle your property tax bill as soon as possible.

A property tax loan from AFIC will help you settle any outstanding property taxes immediately and give you the financial freedom to repay the balance in installments rather than one lump sum. At AFIC, we prioritize our customers and will work with you to find the best property tax loan for your personal and financial situation.

About AFIC

Founded in 1946, American Finance & Investment Co., Inc. (AFIC) started by serving the financial needs of El Paso and has since grown to become one of the top property tax lenders in the state of Texas, with a complaint-free track record for over 65 years with the Better Business Bureau.

We offer 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 property 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.


Ernest Eisenberg

Ernest Eisenberg, President of American Finance & Investment Co., Inc. (AFIC), brings a wealth of expertise in non-traditional financing, including property tax loans and non-bank mortgage solutions. His vision is characterized by a commitment to offering flexible financing solutions to Texas property owners.

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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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