Tax Sale Property

Properties purchased at tax sales carry particular concern for title companies.  The Texas Tax Code governs the sale of properties pursuant to a court ordered tax sale.  Under the Tax Code, the deed from a tax sale vests good and perfect title in the purchaser to the interest owned by the defendant in the property subject to the foreclosure, including the defendant’s right to the use and possession of the property, subject only to the defendant’s right of redemption, the terms of a recorded restrictive covenant running with the land that was recorded before January 1 of the year in which the tax lien on the property arose, a recorded lien that arose under that restrictive covenant that was not extinguished in the judgment foreclosing the tax lien, and each valid easement of record as of the date of the sale that was recorded before January 1 of the year the tax lien arose. The deed may be impeached only for fraud.

The redemption period for a residential homestead or property designated as agricultural is two years from the date the tax sale deed is recorded.  For other properties, the redemption period is six months from the date the tax sale deed is recorded.  In addition to the statutory redemption periods, there are also statutes governing the time available for the defendants in the tax suit to appeal the underlying judgment or challenge the sufficiency of notice.  The statutory redemption periods, challenges available to defendants in the underlying suit and ability of the deed to be impeached for fraud create a minefield of potential issues for title companies.  Many title company underwriters refuse to be the first to insure following a tax sale, while others require a minimum of four years to pass following the date the deed is recorded before they will insure.  Closing prior to four years following recordation of the deed can be accomplished, but only with underwriting approval.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.  Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.