A tax deed is a legal document granting property ownership to a Texas county if the owner fails to pay the property taxes. For the document to be issued, the county places a tax lien on properties with unpaid taxes on January 1st of each year. Then, the county can foreclose on the property if they do not believe the taxes will be paid. While most counties act slowly, they can start the foreclosure process on January 31. Usually, the county begins selling the home-selling process in July if the owner still has not set up a plan to pay the delinquent taxes.
Tax deed sales
During a tax deed sale held under tax law, an investor purchases the property. Usually, the minimum starting bid is the amount of the past due taxes. An auction format is used, so the winning bid can be much higher than the tax debt.
Buying back your property
After the investor has purchased the property, the original owner has several months to make payments to the investor and buy back the property. On residential property, the previous owner must act within six months. In addition to paying you for the property, they must pay you any fees that you incurred plus 25% of the purchase price. For instance, if the property is sold during a tax sale for $1,000, then the previous owner would need to pay $1,250 to the investor within six months. In Texas, the previous owner can purchase back land used for agricultural purposes anytime during the first two years, but if they do not make payments within 12 months, then the fee increases to 50%.
Tax deeds give counties the right to foreclose on property where the owner has not paid property taxes. Owners can redeem the property by paying the investor who purchased it the auction purchase price plus 25 or 50%.
