What Is the Property Tax Collection Process After July 1?
Quick Overview
The property tax collection process after July 1 in Texas escalates significantly: an additional penalty of up to 26.6 percent is added to delinquent accounts, and taxing entities transfer outstanding balances to collection law firms authorized to pursue foreclosure lawsuits. Property owners who have not paid by this date incur compounding costs, including attorney, court, and abstract fees, in addition to existing penalties and interest.
Annual property taxes in Texas are some of the highest in the country. With no personal income tax, Texas relies on property taxes to fund essential services for its citizens, including public schools, libraries, emergency services, road maintenance, and community safety measures. Because property tax revenue is so important, the state imposes severe penalties and interest on unpaid property tax bills.
The penalties and interest accumulate steadily for the first few months, but on July 1, an additional penalty fee of up to 26.6 percent is added to the outstanding property tax accounts. Texas law allows tax collectors to sue delinquent account holders to collect unpaid taxes. In this blog, we will discuss the property tax collection process in Texas and what happens when collection firms are involved.
Facing a delinquent property tax bill with July 1 approaching? A property tax loan from AFIC can pay your outstanding balance in full, stopping penalties and collection activity before a law firm gets involved. Get started today.
Texas Property Tax Delinquency Timeline
- January 31 – Last day to pay property taxes without penalty
- February 1 – Property taxes become delinquent, and penalties begin accruing
- February through June – Monthly penalties and interest continue
- July 1 – Collection fees added, and accounts transferred to collection law firms
- After July 1 – Lawsuits and foreclosure actions may begin
- Following judgment – Property may be ordered for tax foreclosure sale
Who Collects Property Taxes in Texas
Texas does not have a state property tax; counties levy property taxes through local taxing units. This means that the local property taxes are assessed, collected, and used locally. More than 4,100 local governments throughout Texas, including school districts, cities, counties, and various special districts, collect and spend these local property taxes.
Depending on the county, responsibility for property tax collection usually falls to the county tax assessor-collector. Once the property tax is collected, it is allocated to each taxing unit in amounts corresponding to its established tax rate.
Bear in mind that even though many taxing units have contracts with assessor collectors to collect their taxes, appraisal districts or assessor collectors do not levy property taxes.
When Do Collection Law Firms Get Involved?
Every year on July 1, almost all taxing entities hand over their delinquent tax roll to the law firms hired to collect outstanding property taxes. This means that, in addition to the 15-20 percent collection fee added to delinquent accounts (depending on the county), delinquent taxpayers will need to deal with a law firm rather than their local taxing entity. Taxpayers who contact the tax assessor’s office regarding a delinquent account may be redirected to the collection law firm handling their case after July 1.
Collection law firms are brought in when standard collection efforts have not resulted in payment. While a transfer to a law firm does not mean foreclosure is immediate, it does indicate that the delinquency has reached a more serious stage and may result in additional fees and legal action if left unresolved.
What Happens After Your Delinquent Property Tax Account Is Sent to Collections?
Although each law firm’s collection office handles delinquencies differently, they will all eventually initiate foreclosure lawsuits against delinquent taxpayers. While some start in July, others may wait a while. Historically, the higher the amount owed, the higher the likelihood of being sued.
The process usually starts with a demand letter being sent to the property. This letter states that, should there be no response from the property owner, the collection firm will proceed with the suit.
If the property owner does not pay their outstanding balance, the collection law firm may file a foreclosure lawsuit in district court and seek a court order to foreclose on the property. The notice of foreclosure is then served, in person, by a county constable. If the property owner cannot be found, the firm may place a notice in the local newspaper and serve a “notice by publication.”
The taxpayers are responsible for all costs related to the cost of sale, which can amount to thousands of dollars. Taxing entities will sue for a full financial judgment, including the original tax amount, law firm collection fees, court costs, abstract fees, attorney fees, interest, and penalties.
After the lawsuit concludes, the court will enter judgment (usually in favor of the taxing entity or entities) and order the property sold to satisfy the judgment amount. Entities can recover only the taxes that are delinquent at the time of judgment (including penalties, interest, and fees). Liens will remain on the property for any subsequent taxes or amounts owed.
Can You Stop a Delinquent Property Tax Lawsuit After It’s Filed?
Yes, you can stop a property tax lawsuit even after it’s been filed by paying the full amount due before the court issues a judgment. Once the taxing district receives full payment of your unpaid balance, including penalty and interest charges, the lawsuit must be dismissed. However, timing is critical. Once a judgment is awarded, the county where the property is located can proceed with a tax foreclosure sale. Many property owners mistakenly believe that a homestead exemption protects them from property tax foreclosure. While homestead exemptions may provide certain tax benefits, they do not prevent taxing entities from pursuing foreclosure for delinquent property taxes.
A property tax loan offers immediate relief by paying off your entire balance due directly to the local officials handling your case. The lender pays the outstanding balance, including accrued penalties and fees, helping property owners resolve the delinquency before judgment is entered. Unlike negotiating directly with a collection law firm, a property tax loan transfers the debt to a lender, replacing the collection process with a manageable repayment plan on your terms.
If you’ve received a first notice or court documents, don’t wait. Property tax lenders can often close loans within days (sometimes on the same day), ensuring your real property tax account is settled before the court moves forward with foreclosure proceedings.
How to Avoid a Foreclosure Lawsuit
Partnering with a trusted property tax lender like American Finance & Investment Co., Inc. (AFIC) is one of the best ways to get back on track if you fall behind on your property taxes. A property tax loan transfers the tax lien to the lender after the delinquent taxes are paid, helping property owners avoid further tax penalties, collection activity, and foreclosure proceedings related to the unpaid taxes. The property tax loan company will pay the outstanding amount and work with you to create a solution that works for your budget and specific circumstances.
Get Support from AFIC
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 percent
- 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.
Frequently Asked Questions
On July 1, an additional collection fee of up to 26.6 percent is added to delinquent property tax accounts in Texas. This is on top of penalties and interest that have already been accumulating since February. The July 1 date also marks when taxing entities hand over delinquent accounts to collection law firms, meaning property owners face both higher costs and legal exposure from this point forward.
Once your account is transferred to a collection law firm on July 1, you will no longer deal directly with your local taxing entity. The firm is authorized to pursue a foreclosure lawsuit against you, and a collection fee of 15 to 20 percent is added to your balance, depending on the county. All communication about your delinquent account is redirected to the law firm from this date.
Yes, but acting quickly is critical. Before a court issues a judgment, paying your balance in full, including all penalties, interest, and fees, will stop the lawsuit and require its dismissal. A property tax loan is one of the most effective ways to settle the full amount owed rapidly. Companies such as AFIC can often finalize a property tax loan within days, helping homeowners resolve delinquent taxes before a case progresses to a foreclosure judgment.
There is no fixed timeline. Some law firms begin pursuing foreclosure lawsuits shortly after July 1, while others wait longer. Larger counties with higher-value delinquent accounts tend to move more aggressively. Because there is no way to predict when a lawsuit will be filed against a specific property, waiting to act after July 1 increases the risk of facing litigation and compounding legal costs.
Property owners are liable for all costs associated with a delinquent tax lawsuit, including the original tax amount, court costs, abstract fees, interest, and penalties. These costs can amount to thousands of dollars on top of the original balance owed. Resolving the delinquency before a judgment is issued is the most effective way to avoid these additional expenses. For some homeowners, a property tax loan from AFIC may help pay the balance in full before legal costs continue to rise.
