The Pain of Unpaid Property Taxes

Property taxes are the talk of the town right now. Municipalities all over the Metroplex are proposing tax rate increases on top of the frequent increase in property values. This year’s tax bill may be a double whammy for our already steep homeowner taxes. If you’re thinking of avoiding those taxes, here is your warning. 

“Texas is pretty efficient with collections or foreclosing because our property taxes are high,” says Mary Doggett, VP of National Investors Title Insurance.

Despite our strong homestead rights in Texas, you can lose your home if you don’t pay your property taxes. Rest assured that the taxing authorities will collect their money one way or another. There is no escaping it.

“This a topic we face often in the title industry,” says Doggett. “Property taxes are the No. 1 cause of losses for the title business in Texas.”
That’s why title companies diligently research property tax records and potential tax liens on every sale. Unpaid property taxes collect penalties and fees quickly. And we want to ensure they are paid when the property transfers ownership.

“A property tax lien is a Special Priority Lien. They take priority over almost all other liens,” says Doggett. Whoever owns the property on January 1st of that year, is liable for the taxes for that year.

From a taxing authority prospective, a new owner isn’t responsible for previous years taxes. However, a tax lien runs with the land. That means the tax lien attaches to a property and stays with it – regardless of ownership – until the taxes are paid.

A tax lien can remain on the property even if the ownership changes. That shouldn’t happen if you use a title company to handle the transaction.

If you’re over 65, you may be eligible to defer your property taxes on your homestead. The taxes will show as unpaid and a tax lien will attach to the property. Interest will accrue on the unpaid taxes. Of course, the taxes will have to be paid either when you sell your home, or you die.

It might be painful, but paying your property taxes on time is easier than facing the taxman later.

Take a glance at Doggett’s chart showing the Pain of Unpaid Property Taxes. You can see that a $10,000 property tax bill left unpaid for 1 year increases to $15,000 with penalties and interest. Ouch! 

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal or tax advice. Contact an attorney or accountant to obtain advice for any issue or problem.

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