Can I Sell a House With a Tax Lien on It?

Can I Sell a House With a Tax Lien on It?

Almost everyone who calls us about back taxes has the same fear: that the lien makes the house unsellable, or that they need to find the money before they can do anything. Neither is true.

A Texas property tax lien attaches to the property on 1 January each year for that year's taxes. It has priority over most other claims, including your mortgage, which is why lenders care about it so much. But it is a lien on the property, and property with a lien on it is sold every single day. The title company runs a search, obtains an exact payoff figure from each taxing unit, and pays them from the sale proceeds at closing. You bring nothing.

What actually matters is timing, because the cost of waiting in Texas is unusually steep. Taxes become delinquent on 1 February, and from that moment penalties and interest begin stacking monthly. By 1 July, if the account has been turned over for collection, an additional attorney collection fee of up to twenty per cent can be added on top of everything else.

Then, if it goes far enough, the taxing units file suit, obtain judgment, and the property is sold at a sheriff's sale on the first Tuesday of the month. That is a real outcome and it happens regularly in Harris County.

How Fast the Number Grows

The escalation is the part people underestimate, so it is worth laying out.

Texas property taxes for a year are due by 31 January of the following year. On 1 February they become delinquent, and a penalty plus interest attaches immediately. Both then increase each month the account stays unpaid. By the time the summer arrives the combined penalty and interest is a substantial percentage of the original bill.

On 1 July, taxing units that have contracted with a law firm for collection, most large ones have, can add an additional collection fee of up to twenty per cent of the taxes, penalties and interest owed. That is a step change, not a gradual increase, and it is the single best reason to deal with delinquency before midsummer rather than after.

After that the account can be referred for a tax suit. Once judgment is taken, court costs and further fees are added and the property can be ordered sold.

None of this is unusual or a sign that something has gone badly wrong with you personally. It is simply how the collection machinery works, and it runs on a schedule regardless of circumstances.

The 1 July collection fee is the sharpest single jump in what you owe. Acting before it applies is worth real money.

Options That Are Not Selling

Selling is not automatically the right answer, and it would be dishonest to present it that way.

Installment agreements. Texas law allows homestead owners who are delinquent to enter an installment plan with the taxing unit, typically spread over twelve to thirty-six months. If your income has recovered and the arrears are manageable, this may resolve it without selling anything.

Tax deferral for over-65 and disabled owners. If you are sixty-five or older, or disabled, and the property is your homestead, you can file a deferral affidavit that stops collection activity and prevents a tax suit for as long as you live there. Be clear about what it does: it defers, it does not forgive. Interest continues to accrue and the whole amount becomes payable when you no longer occupy the property, which usually means it lands on your heirs.

Exemption review. It is worth checking that every exemption you are entitled to is actually applied, homestead, over-65, disability, veteran. Missing exemptions are common and they raise the bill unnecessarily.

Where selling genuinely helps is when the arrears exceed what you can realistically pay, the property is more house than you need, or a tax suit has already been filed.

A deferral stops collection but not the interest, and the balance eventually lands on whoever inherits the house.

If a Tax Suit Has Already Been Filed

Once the taxing units sue, the timeline hardens and the window narrows, but it does not close immediately.

You still own the property until a sale is completed. You can still sell it, and the payoff simply becomes larger because court costs and additional fees are now included. What you cannot do is ignore the deadlines.

If the property does go to a sheriff's tax sale, Texas provides something a mortgage foreclosure does not: a right of redemption. For a residence homestead or agricultural land, you have two years from the date the deed is recorded to redeem, paying the purchaser what they paid plus a premium of twenty-five per cent in the first year or fifty per cent in the second. For other property the redemption period is a hundred and eighty days with a twenty-five per cent premium.

That is a genuine safety net, and it is also an expensive one. Redeeming means finding the full purchase price plus a very large premium in a short period, which most people in this position cannot do.

If a suit has been filed, tell us at the outset and get the cause number. It changes the payoff calculation and it changes how fast we need to move.

Unlike a mortgage foreclosure, a Texas tax sale carries a right of redemption, two years on a homestead, at a 25 to 50 per cent premium.