I'm curious to hear real life experience/advice from folks who have purchased land at a county tax auction in Texas. Or real estate experts who've handled cases for clients.

Does redemption by original owner happen frequently according to law? Or does it end up getting messy and contested in court? If it's the former, then hurray! that sounds like 25% ROI; but if it's the latter, I want no part. Or perhaps it doesn't happen often at all which is also a favorable outcome.

Also - am I right in reading that you'd have to hold the property for awhile (I've seen 7 years) in order to clear up the title and make it insurable for resale?

Finally, how much over minimum bids will the auction go? Min bids look nice, but if bids get remotely close to appraised value, the whole deal gets a lot riskier for me.

What else has/could go wrong? - beyond the inherent risk of overpaying for garbage property in the auction, of course.

Thanks in advance.

(cross-posted from B&I)

SUBCHAPTER B. REDEMPTION


Sec. 34.21. RIGHT OF REDEMPTION. (a) The owner of real property sold at a tax sale to a purchaser other than a taxing unit that was used as the residence homestead of the owner or that was land designated for agricultural use when the suit or the application for the warrant was filed, or the owner of a mineral interest sold at a tax sale to a purchaser other than a taxing unit, may redeem the property on or before the second anniversary of the date on which the purchaser's deed is filed for record by paying the purchaser the amount the purchaser bid for the property, the amount of the deed recording fee, and the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed during the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed during the second year of the redemption period.
(b) If property that was used as the owner's residence homestead or was land designated for agricultural use when the suit or the application for the warrant was filed, or that is a mineral interest, is bid off to a taxing unit under Section 34.01(j) or (p) and has not been resold by the taxing unit, the owner having a right of redemption may redeem the property on or before the second anniversary of the date on which the deed of the taxing unit is filed for record by paying the taxing unit:
(1) the lesser of the amount of the judgment against the property or the market value of the property as specified in that judgment, plus the amount of the fee for filing the taxing unit's deed and the amount spent by the taxing unit as costs on the property, if the property was judicially foreclosed and bid off to the taxing unit under Section 34.01(j); or
(2) the lesser of the amount of taxes, penalties, interest, and costs for which the warrant was issued or the market value of the property as specified in the warrant, plus the amount of the fee for filing the taxing unit's deed and the amount spent by the taxing unit as costs on the property, if the property was seized under Subchapter E, Chapter 33, and bid off to the taxing unit under Section 34.01(p).
(c) If real property that was used as the owner's residence homestead or was land designated for agricultural use when the suit or the application for the warrant was filed, or that is a mineral interest, has been resold by the taxing unit under Section 34.05, the owner of the property having a right of redemption may redeem the property on or before the second anniversary of the date on which the taxing unit files for record the deed from the sheriff or constable by paying the person who purchased the property from the taxing unit the amount the purchaser paid for the property, the amount of the fee for filing the purchaser's deed for record, the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed in the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed in the second year of the redemption period.
(d) If the amount paid by the owner of the property under Subsection (c) is less than the amount of the judgment under which the property was sold, the owner shall pay to the taxing unit to which the property was bid off under Section 34.01 an amount equal to the difference between the amount paid under Subsection (c) and the amount of the judgment. The taxing unit shall issue a receipt for a payment received under this subsection and shall distribute the amount received to each taxing unit that participated in the judgment and sale in an amount proportional to the unit's share of the total amount of the aggregate judgments of the participating taxing units. The owner of the property shall deliver the receipt received from the taxing unit to the person from whom the property is redeemed.
(e) The owner of real property sold at a tax sale other than property that was used as the residence homestead of the owner or that was land designated for agricultural use when the suit or the application for the warrant was filed, or that is a mineral interest, may redeem the property in the same manner and by paying the same amounts as prescribed by Subsection (a), (b), (c), or (d), as applicable, except that:
(1) the owner's right of redemption may be exercised not later than the 180th day following the date on which the purchaser's or taxing unit's deed is filed for record; and
(2) the redemption premium payable by the owner to a purchaser other than a taxing unit may not exceed 25 percent.
(f) The owner of real property sold at a tax sale may redeem the real property by paying the required amount as prescribed by this section to the assessor-collector for the county in which the property was sold, if the owner of the real property makes an affidavit stating: https://statutes.capitol.texas.gov/Docs/TX/htm/TX.34.htm

I've googled the law. I'm interested in how often that happens.

We were just talking about this yesterday & wonder the same things. I know I've seen some of them that sold boarded up for a few years I guess waiting on heirs to come forward.

How can you know about any other liens & wouldn't you be liable for them as the new owner? If a tax sale, does the county clear that up - probably not in a foreclosure sale?

Long story, short: We once forced a "courthouse steps" sale on a property to recover a legal judgment. We didn't want the house, only the judgment amount. The house sold, we got our money and we later heard there was another lien on it that the buyer had to satisfy.

We've never done it - seems risky, but I guess it works for some.

edit: Just found this - the basics.

3. The minimum bid amount is set out beside each tract on the bid sheet. The minimum bid amount includes taxes which were delinquent at the date of judgment. This does not include the current tax year. Purchasers will be required to pay all taxes which accrued subsequent to the date of judgment.

4. Purchasers at this tax foreclosure sale will receive an ordinary type of Sheriff's Deed which is WITHOUT WARRANTY, express or implied. Title to property is NOT guaranteed. A policy of title insurance may be difficult to obtain.

5. All property purchased at this sale is subject to a statutory right of redemption. This redemption period commences to run from the date the purchaser's deed is filed for record in the deed records. There is a two year right of redemption for homestead property and property appraised as agricultural land. There is a 180 day right of redemption for all other property.

6. Anyone having an ownership interest in the property at the time of the sale may redeem the property from the purchaser during the redemption period. The redemption price is set by the Texas Tax Code as follows: purchase amount, deed recording fee, taxes paid by purchaser after the tax sale, and costs expended on the property, plus a redemption premium of 25 percent of the aggregate total during the first year or 50 percent of the aggregate total during the second year. "Costs" are only the reasonable expenses incurred by the purchaser for the maintenance, preservation, and safekeeping of the property. Do NOT make unnecessary repairs or
renovations during the redemption period.

7. Property is sold by legal description. Bidders must satisfy themselves concerning the location and condition of the property on the ground, including the existence of improvements on the property, prior to this tax sale. Property is sold "AS IS" with all faults. All sales are final. There are no refunds. Deeds, maps and plats of the properties are in the County Clerk's office or the Appraisal District. Lawsuit files on which this sale is based are in the office of the District Clerk. Any property address reflected on the bid sheet is the address on the tax records and may not be accurate.

8. Property purchased at this tax sale may be subject to liens for demolition, mowing, or maintenance fees due to the City or Property Owners Association in which the property is located. Purchasers may have to pay for these liens.

From what I can tell… and that's not saying much… lien holders would be entitled to come redeem the property during the redemption period if the title owner doesn't.

What's really unclear to me and is the risky part is what rights the owner/lien holders have after the redemption period? Can they come out of the woodwork and take you to court 4 years down the road?

And for reference I'm only interested in properties that are unimproved lots or land. I have zero interest in kicking out an owner/renter/squatter. And I'd only be interested if I can get it at a price that's closer to opening bid than appraised value.

So from the info above, this is what I can tell we have collected on this thread (a scenario):

I win at auction a vacant lot that must be mowed for maintenance according to Property Owner's Association. The cost is the bid (likely the back taxes as a minimum plus any additional premium) plus any additional filing fees.

I file the deed immediately (consider average length of time to have it filed).

The redemption period begins the day it is filed + 2 years

Within those two years, any heir to the property can redeem the property. Any lien holder can redeem the property.

To redeem the property, the purchaser at auction must be made whole + 25%. But purchaser will only be reimbursed for reasonable expenses related to the property upkeep (said mowing fees mentioned above).

Do I have anything wrong?

This is something I have been interested in for awhile.

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This is something I have been interested in for awhile.

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Us, too. I think you've got the basics down, but I also think the basics could turn pretty hairy in the details if people come forward later.

deadbq03 said:

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What else has/could go wrong? - beyond the inherent risk of overpaying for garbage property in the auction, of course.

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I've surveyed a number of these and none of them turned out to be on the ground what they sounded like in the legal description. They were all much smaller than called for and in nearly unusable configurations/shapes. Probably a contributing factor to the tax sale in the first place. My favorite was something like 1.15 acres at about 2,000+ feet deep.

These have all been rural raw land, never a home, but could be a similar situation.