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What is a Tax Lien Foreclosure?

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The judicial foreclosure process, also known as tax lien foreclosure, is when the local government forecloses on a property because the owner has failed to pay their delinquent taxes. Texas has some of the highest property taxes in the country, resulting in many people not being able to afford to pay. When a property owner in Texas fails to pay what they owe, the government enforces their tax lien. The tax lien certificates serves as a legal claim against the property for the amount unpaid in taxes.

A property with unpaid taxes can’t be refinanced or sold by the owner until the outstanding taxes are paid. If left unpaid, the home could end up in foreclosure, negatively impacting a person’s credit score.

Things you might be surprised to learn about tax lien foreclosures:

  • They can happen over very small amounts of money. When you hear the word “foreclosure” you may think of expensive monthly mortgage payments, but failure to pay your property taxes, even an amount as small as $100, can result in a tax lien foreclosure. As well as keeping up with your property taxes, we recommend ensuring your loved ones are doing the same with their own properties, and everyone should be vigilant about updating their addresses when they move.

  • Once a property owner has a tax lien judgment, the subject property often quickly becomes available for purchase to the highest bidder via public auction. There are investors who spend their careers buying up properties with tax liens because these properties can be bought for much less than the property’s market value, and many public auctions allow online bidding so people from other areas can participate.

  • There is a redemption period. The Texas Tax Code has what’s called the Right of Redemption. Most states give you a chance to buy your property back after a tax lien foreclosure by paying the lien, back taxes, a premium to the buyer, and any other fees. Details vary by property type, so it is always best to check with your attorney.

An owner of real property or a mineral interest sold at tax sale can redeem their property on or before the second anniversary of the date on which the purchaser’s deed was filed for record, provided they meet the following criteria:

  • The property was sold to a purchaser other than a taxing unit
  • The redeemer was the owner of the property at the time of tax sale
  • At the time the suit or application for the warrant was filed, the property was beeing used by the owner as a residence homestead or as land designated for the agricultural use.
  • The purchaser has paid the bid amount for the property, the amount of the deed recording fee, the total amount of taxes paid by the purchaser, as well as any penalties, interests, and costs on the property. In addition, a redemption premium of 25% of the aggregate total of the property is redeemed during the first year of the redemption period, or 50% of the aggregate value if the property is redeemed during the second year of the redemption period

Under Texas Property Tax Code *34.21(g)(2)(A)(i)-(v), “costs” refer to the amount a purchaser reasonably spends to maintain, preserve, and safeguard real property sold at a tax sale, including the expense of:

  • Insurance for property
  • Safekeeping, maintaining or preventing the property
  • Repairs or improvements required by a local ordinance, building code, or a lease in effect at the time of sale
  • The discharge of a lien imposed by a municipality in remedying health or safety hazards
  • An assessment or dues for maintenance collected by a property owners’ association under a recorded restrictive covenant

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How property tax loans can help you

Our state continues to go through difficult economic and financial circumstances as we reckon with the impacts of COVID-19. If you’ve fallen behind on paying your property taxes, then you know that the penalties and late fees can make your bill even more expensive, creating a hole that’s difficult to dig your way out of. We recommend partnering with a property tax loan company that will help you pay your property taxes so you’re not at risk of a tax lien foreclosure.

Once the tax lien foreclosure process starts, it can be difficult and frustrating to get your property back. There’s a risk that your property will go to auction and be bought by someone else, and while in some circumstances it may be possible to reverse the tax lien foreclosure, it can be a lengthy, expensive process. Rather than risk having your property purchased at an auction, it’s much easier to apply for a property tax loan that allows you to keep your home. Many tax loan companies will work with you to create a solution for your circumstances.

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.


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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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