What to Do During a Property Tax Collection Lawsuit in Texas
Are you currently facing a property tax collection lawsuit in Texas? You’re not alone. Texas has some of the highest property tax rates in the nation, and following recent financial uncertainty, many homeowners and business owners are struggling to keep up. Unfortunately, once you miss the delinquency date established by your county’s appraisal district or appraisal review board, your tax obligation becomes classified as delinquent—triggering a chain of escalating legal and financial consequences.
Why Property Tax Lawsuits Happen
When property taxes remain unpaid, your tax assessor-collector or their contracted collection law firm may file a lawsuit to recover the delinquent balance. The taxing entity typically sues for a full financial judgment, which includes:
- The original delinquent taxes
- Penalties and interest
- Collection law firm fees
- Court costs, abstract fees, and attorneys’ fees
For many property owners, especially those already under financial stress, these cumulative charges can feel overwhelming. Understanding the penalties associated with delinquent property taxes in Texas is essential to recognizing the urgency of your situation— and knowing what action to take.
How to Avoid a Property Tax Lawsuit in the First Place
The best way to avoid the stress and cost of a property tax lawsuit is to act before your taxes become delinquent. In Texas, property taxes are due by January 31 each year. Once they’re overdue, interest, penalties, and legal fees can accrue quickly.
If you’re unable to pay by the deadline, consider applying for a payment plan through your county tax office or speak with a property tax lender. American Finance & Investment Co. Inc., a leading Texas property tax lender (AFIC), offers property tax loans that help cover your full tax bill before legal action begins, helping you stay in good standing and avoid additional costs.
What You Should Do Immediately
If your local tax authority has initiated a lawsuit against you, here’s what we recommend:
Stay Calm
Receiving a legal notice from an attorney can be stressful, but it doesn’t mean you’re going to lose your home. In most cases, the initial notice is a final warning— and there’s still time to apply for a property tax loan or explore exemptions that may halt further legal action.
Know Your Rights
If you disagree with your property’s appraised value, you can still challenge it by filing a dispute with your county appraisal district. But remember— once a lawsuit has been filed, it’s typically too late to claim overvaluation as a legal defense.
Respond Quickly
Texas law requires you to respond to a lawsuit within a specific timeframe. If you fail to act, the district court may issue a default judgment, which can include court fees, penalties, and foreclosure risk. Prompt communication can help you avoid costly escalation and preserve your rights.
Understand the Legal Process
Unlike other lawsuits, there’s no partial forgiveness in a property tax case. The law allows full enforcement of all taxes and fees owed— and your property may be sold at a public foreclosure sale to recover those funds.
Pay the Tax Debt as Soon as Possible
The sooner you settle the outstanding balance, the better. If you’re unable to pay in full, AFIC offers fast, compliant property tax loans to help you resolve your debt and avoid legal consequences— with no credit check and a fully online process.
According to the Texas Property Tax Code, a tax lien automatically attaches to your property on January 1 each year. That lien gives taxing authorities the right to enforce payment, and you remain personally liable until the full amount is resolved.
Can You Use a Property Tax Defense in Court?
In most property tax lawsuits, taxing authorities act as the plaintiff, seeking a judgment for taxes owed, penalties, and legal fees. Texas law offers very limited defenses once a lawsuit is filed, but some circumstances may allow a property owner to contest the claim.
Unfortunately, simply saying, “I did not receive my bill or tax statement,” will not exempt you from liability. You will still be responsible for paying your taxes, as well as any interest or penalties that have accrued.
One potential valid defense is proving that the property was significantly overvalued due to an incorrect property assessment. If the assessed value was inflated, your tax bill may be unfairly high. Supporting evidence, such as sales data for comparable properties or an independent appraiser’s report, can help. While there is an opportunity to discuss this, this is typically during prior legal actions, and by this time, it’s too late.
You may also have a case if there were procedural errors, like failure to issue proper notice or filing beyond the statute of limitations. In some cases, alternative dispute resolution methods, such as arbitration, may be available. In arbitration, a neutral third party reviews the case and makes a final, legally enforceable decision outside of court.
Because property tax litigation follows strict rules, we recommend that you consult an expert to go over your options.
How to Respond to a Property Tax Lawsuit
If you receive notice of a property tax lawsuit in Texas, it’s critical to take immediate action to protect your property and financial stability. Start by carefully reviewing the lawsuit notice to understand the amount you owe and any added penalties. Next, respond within the required legal timeframe to avoid a default judgment.
If you believe your property was overvalued, contact the appraisal district as soon as possible, though this may no longer be an option once a lawsuit has been filed. You can explore financial solutions with a property tax lender like AFIC. We can help you pay your balance before the case escalates to judgment or foreclosure.
Can You Settle a Property Tax Lawsuit Out of Court?
A property tax lawsuit doesn’t always have to end in court. In some counties, you may be able to settle directly with the taxing authority or their contracted law firm. Depending on how early the case was filed, you may have options that include entering into a stipulated agreement or paying in full before the court issues a ruling.
Some taxing units are willing to work out payment plans or settlements prior to trial, especially if you act early. These agreements can help avoid mounting legal fees and the risk of foreclosure.
To determine your settlement eligibility, contact your county attorney or tax office. Prompt communication may help you resolve the matter without going through a lengthy legal battle.
Your Legal Rights as a Texas Property Owner
As a property owner facing litigation, it’s critical to understand your rights under the Texas Property Tax Code. These include:
- The right to receive notice of your appraisal and protest deadlines
- The right to present evidence to the appraisal review board
- The ability to appeal an order of the appraisal review through the district court
Partnering with a Property Tax Loan Company Like AFIC
When you fall behind on your property taxes, penalties, late fees, and legal costs can add up quickly. Partnering with a trusted tax loan provider like American Finance & Investment Company, Inc. can help you regain financial control and protect your property.
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 an easy repayment plan for you. AFIC can provide you with an instant quote within a minute 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 tax foreclosure sales
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.
