Texas · Tax Code §32.06Texas property tax loan liens: selling a house when the tax lien was transferred

In Texas, a homeowner who can't pay property taxes can authorize a licensed property tax lender to pay them; the taxing unit's lien is then transferred to that lender under Tax Code §32.06. The owner signs and files a sworn authorization with the tax collector; the collector issues a tax receipt and a certified statement that the taxes were paid and the lien transferred, and the lender must record the transferred lien and the certified statement in the deed records of each county where the property is located (§32.06(a-1), (b), (d)). Within 10 business days after receiving the certified statement, the lender must send a copy of the authorization by certified mail to the mortgage servicer and the holder of a recorded first lien (§32.06(b-1)). Limits: a person 65 or older may not authorize a transfer on a home eligible for the over-65 homestead exemption (§32.06(a-3)); interest may not exceed 18% a year on the funds advanced (§32.06(e)); and the Truth in Lending Act right of rescission applies to a transfer on a home the owner uses for personal, family or household purposes (§32.06(d-1)). For a sale, the transferred tax lien is a recorded lien on the property, so it has to be dealt with at closing. The lender's payoff statement must meet the requirements of a payoff statement under Property Code §12.017, and a later payoff statement may carry a reasonable fee (§32.06(f-3)); for a lender with an existing recorded lien that requests one, finance commission rules must give the tax lender at least seven business days to deliver it (§32.06(a-6)). When the lien is released, the tax lender files a release with the county clerk of each county and sends a copy to the collector, and may charge the owner a reasonable fee for filing it (§32.06(b)). If the loan isn't paid, the lender can foreclose the lien, but not by judicial foreclosure within one year after the lien is recorded unless the contract allows it (§32.06(i)).