Did you know that Texas has some of the strongest homestead laws in the country? If you own a designated homestead in Texas, you have many protections against creditors taking your home. In fact, Texas has more protections against creditors taking your home than any other state in the US! However, there are some taxes that you must pay, or you will face serious consequences. Let’s look at how to stop property tax foreclosure in Texas.

What is a Homestead in Texas?

As a property owner in Texas, you probably know that you can make a filing for homestead protections on your home.

Rural homesteads can be up to two hundred acres of land, which may be in one or more parcels with your home and other improvements on the property. A homestead in a city, town, or village can be up to 10 acres of land, together with any improvements. You may also have a business in your home.

You don’t even need to own the land outright to claim it as your homestead. In fact, you can lease it or even live in a home that you are renting. As long as you designate the property as your homestead, you will be entitled to certain protections under Texas law.

How Do Homestead Protections Work?

Homestead protections work by shielding a portion of your home equity from creditors. In Texas, the equity shield is unlimited for most debts, with a few exceptions.

For example, if you owe money for child support, taxes, or student loans, the creditor may still be able to force a sale of your home to satisfy the debt.

Can I Get a Tax Lien for Unpaid Property Taxes?

If you don’t pay your property taxes in Texas, your local government has the right to foreclose on your property and may send you several bills asking you to pay delinquent property taxes.

At this point, to ensure payment, the tax collector will declare your unpaid taxes delinquent property taxes. The county starts to charge penalties depending on where you live in Texas. The consequences of not paying can be severe.

If the tax assessor sees that you haven’t paid by January, you may accrue the following:

  • Property tax penalties
  • Additional interest
  • Fees such as court costs

However, “You can incur 38% of your tax bill in property tax penalties, interest, and collection fees in just 5 months of nonpayment. Additional penalties include collection and attorney fees that can be as high as 20% of your total property tax bill at the time of collection. On top of all that, you will owe 1% as a monthly penalty in interest (or 12% per year) for as long as your bill is unpaid.” (1)

Given that tax rates and penalties are astronomical in Texas, it’s no wonder properties with delinquent taxes can easily throw their owners off course financially. Not only do the steep penalties and interest continue to proliferate, but they also make the entire bill much harder to pay.

How to Stop Property Tax Foreclosure in Texas

It is possible to mitigate the damage of delinquent property taxes with help. An experienced real estate attorney may assist you to:

  • Set up a repayment plan with the tax office. Payment plans can help you get on top of the accruing penalties based on their interest rates and give you a viable option to remain a homeowner! And with a payment plan, you may not need to pay additional interest.
  • Apply for an exemption if certain factors apply to your situation. If you are over 65 or disabled, you may have a legal right to an automatic stay in your case.
  • Negotiate a settlement with the tax office so you can pay property taxes
  • Property tax deferral if you are facing financial hardship. If your income is below a certain amount, you may get a break on your past-due taxes for some time.
  • Secure a loan to pay your taxes
  • As the property owners, sell your home and use the sale proceeds to pay your tax debt to the county treasurer.
  • As a last resort, file for bankruptcy to stop the tax foreclosure process. However, know that bankruptcy can tank your credit score and remain on your credit report for seven years!

If you are struggling to pay your property taxes, taking action as soon as possible is crucial. The sooner you take steps to mitigate the damage, the better off you’ll be.

If you are facing foreclosure or a tax lien on your property, talk to a real estate attorney to discuss your options and learn how to stop a property tax foreclosure. They may be able to help you negotiate a payment plan or settlement with the taxing authority, or help you apply for an exemption or deferral.

The Tax Foreclosure Process

Tax collectors can place tax liens on your property. The lien means that the tax office can collect the debt from any future sale you make.

If property taxes remain unpaid, a property tax foreclosure sale can sell your real property at a public auction! The county tax office can start the foreclosure proceedings on your home and force a sale of your tax deed to pay off your delinquent taxes.

If the county holds a tax deed sale, they will sell your home at auction. A tax sale to cover a tax lien foreclosure does not sell at market value. The winning bid may be far below what you expect your home to sell for.

After the county runs the property tax foreclosure proceedings, you’ll receive the remaining monies.

After a Tax Foreclosure

In Texas, you can pay overdue property taxes before the foreclosure sale takes place. However, the debt you owe includes all the taxes, interest, penalties, and costs. (Tex. Tax Code § 33.43, § 33.48).

If you redeem your home, the county will release the tax lien and stop the foreclosure process. (Tex. Tax Code § 33.53).

In Texas, you usually have two years of a redemption period if you owned a residential homestead property and agricultural land. Other types of properties have a 180-day redemption period. (Tex. Tax Code § 34.21). (2)

We Can Help

You can keep your home safe from creditors and avoid foreclosure. If you have questions about homestead protections in Texas, please don’t hesitate to contact the experienced real estate attorneys at Jarrett Law Firm. 

We offer a free consultation to help you find breathing room from foreclosure proceedings and bankruptcy. We can handle court hearings and help you prevent foreclosure! Contact us today to get started finding your way out of this tax nightmare!