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Title 1. Property Tax Code
Subtitle E. Collections and Delinquency

Chapter 34. Tax Sales and Redemption

Subchapter A. Tax Sales

Sec. 34.01. Sale of Property.
Sec. 34.015. Persons Eligible to Purchase Real Property.
Sec. 34.02. Distribution of Proceeds.
Sec. 34.03. Disposition of Excess Proceeds.
Sec. 34.04. Claims for Excess Proceeds.
Sec. 34.05. Resale by Taxing Unit.
Sec. 34.051. Resale by Taxing Unit for Purpose of Urban Development.
Sec. 34.06. Distribution of Proceeds of Resale.
Sec. 34.07. Subrogation of Purchaser at Void Sale.
Sec. 34.08. Challenge to Validity of Tax Sale.

[Sections 34.09 to 34.20 reserved for expansion]

Sec. 34.01. Sale of Property.

(a) Real property seized under a tax warrant issued under Subchapter E, Chapter 33, or ordered sold pursuant to foreclosure of a tax lien shall be sold by the officer charged with selling the property, unless otherwise directed by the taxing unit that requested the warrant or order of sale or by an authorized agent or attorney for that unit. The sale shall be conducted in the manner similar property is sold under execution except as otherwise provided by this subtitle.

(b) On receipt of an order of sale of real property, the officer charged with selling the property shall endorse on the order the date and exact time when the officer received the order. The endorsement is a levy on the property without necessity for going upon the ground. The officer shall calculate the total amount due under the judgment, including all taxes, penalties, and interest, plus any other amount awarded by the judgment, court costs, and the costs of the sale. The costs of a sale include the costs of advertising, and deed recording fees anticipated to be paid in connection with the sale of the property. To assist the officer in making the calculation, the collector of any taxing unit that is party to the judgment may provide the officer with a certified tax statement showing the amount of the taxes included in the judgment that remain due that taxing unit and all penalties, interest, and attorney's fees provided by the judgment as of the date of the proposed sale. If a certified tax statement is provided to the officer, the officer shall rely on the amount included in the statement and is not responsible or liable for the accuracy of the applicable portion of the calculation. A certified tax statement is not required to be sworn to and is sufficient if the tax collector or the collector's deputy signs the statement.

(c) The officer charged with the sale shall give written notice of the sale in the manner prescribed by Rule 21a, Texas Rules of Civil Procedure, as amended, or that rule's successor to each person who was a defendant to the judgment or that person's attorney.

(d) An officer's failure to send the written notice of sale or a defendant's failure to receive that notice is insufficient by itself to invalidate:

(1) the sale of the property; or

(2) the title conveyed by that sale.

(e) A notice of sale under Subsection (c) must substantially comply with this subsection. The notice must include:

(1) a statement of the authority under which the sale is to be made;

(2) the date, time, and location of the sale; and

(3) a brief description of the property to be sold.

(f) A notice of sale is not required to include field notes describing the property. A description of the property is sufficient if the notice:

(1) states the number of acres and identifies the original survey;

(2) as to property located in a platted subdivision or addition, regardless of whether the subdivision or addition is recorded, states the name by which the land is generally known with reference to that subdivision or addition; or

(3) by reference adopts the description of the property contained in the judgment.

(g) For publishing a notice of sale, a newspaper may charge a rate that does not exceed the greater of:

(1) two cents per word; or

(2) an amount equal to the published word or line rate of that newspaper for the same class of advertising.

(h) If there is not a newspaper published in the county of the sale, or a newspaper that will publish the notice of sale for the rate authorized by Subsection (g), the officer shall post the notice in writing in three public places in the county not later than the 20th day before the date of the sale. One of the notices must be posted at the door of the county courthouse.

(i) The owner of real property subject to sale may file with the officer charged with the sale a written request that the property be divided and that only as many portions be sold as necessary to pay the amount due against the property, as calculated under Subsection (b). In the request the owner shall describe the desired portions and shall specify the order in which the portions should be sold. The owner may not specify more than four portions or a portion that divides a building or other contiguous improvement. The request must be delivered to the officer not later than the seventh day before the date of the sale.

(j) If a bid sufficient to pay the lesser of the amount calculated under Subsection (b) or the adjudged value is not received, the taxing unit that requested the order of sale may terminate the sale. If the taxing unit does not terminate the sale, the officer making the sale shall bid the property off to the taxing unit that requested the order of sale, unless otherwise agreed by each other taxing unit that is a party to the judgment, for the aggregate amount of the judgment against the property or for the market value of the property as specified in the judgment, whichever is less. The duty of the officer conducting the sale to bid off the property to a taxing unit under this subsection is self-executing. The actual attendance of a representative of the taxing unit at the sale is not a prerequisite to that duty.

(k) The taxing unit to which the property is bid off takes title to the property for the use and benefit of itself and all other taxing units that established tax liens in the suit. The taxing unit's title includes all the interest owned by the defendant, including the defendant's right to the use and possession of the property, subject only to the defendant's right of redemption. Payments in satisfaction of the judgment and any costs or expenses of the sale may not be required of the purchasing taxing unit until the property is redeemed or resold by the purchasing taxing unit.

(l) Notwithstanding that property is bid off to a taxing unit under this section, a taxing unit that established a tax lien in the suit may continue to enforce collection of any amount for which a former owner of the property is liable to the taxing unit, including any post-judgment taxes, penalties, and interest, in any other manner provided by law.

(m) The officer making the sale shall prepare a deed to the purchaser of real property at the sale, to any other person whom the purchaser may specify, or to the taxing unit to which the property was bid off. The taxing unit that requested the order of sale may elect to prepare a deed for execution by the officer. If the taxing unit prepares the deed, the officer shall execute that deed. An officer who executes a deed prepared by the taxing unit is not responsible or liable for any inconsistency, error, or other defect in the form of the deed. As soon as practicable after a deed is executed by the officer, the officer shall either file the deed for recording with the county clerk or deliver the executed deed to the taxing unit that requested the order of sale, which shall file the deed for recording with the county clerk. The county clerk shall file and record each deed filed under this subsection and after recording shall return the deed to the grantee.

(n) The deed vests good and perfect title in the purchaser or the purchaser's assigns 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.

(o) If a bid sufficient to pay the amount specified by Subsection (p) is not received, the officer making the sale, with the consent of the collector who applied for the tax warrant, may offer property seized under Subchapter E, Chapter 33, to a person described by Section 11.181 or 11.20 for less than that amount. If the property is offered to a person described by Section 11.181 or 11.20, the officer making the sale shall reopen the bidding at the amount of that person's bid and bid off the property to the highest bidder. Consent to the sale by the taxing units entitled to receive proceeds of the sale is not required. The acceptance of a bid by the officer under this subsection is conclusive and binding on the question of its sufficiency. An action to set aside the sale on the grounds that a bid is insufficient may not be sustained, except that a taxing unit that participates in distribution of proceeds of the sale may file an action before the first anniversary of the date of the sale to set aside the sale on the grounds of fraud or collusion between the officer making the sale and the purchaser.

(p) Except as provided by Subsection (o), property seized under Subchapter E, Chapter 33, may not be sold for an amount that is less than the lesser of the market value of the property as specified in the warrant or the total amount of taxes, penalties, interest, costs, and other claims for which the warrant was issued. If a sufficient bid is not received by the officer making the sale, the officer shall bid off the property to a taxing unit in the manner specified by Subsection (j) and subject to the other provisions of that subsection. A taxing unit that takes title to property under this subsection takes title for the use and benefit of that taxing unit and all other taxing units that established tax liens in the suit or that, on the date of the seizure, were owed delinquent taxes on the property.

(q) A sale of property under this section to a purchaser other than a taxing unit:

(1) extinguishes each lien securing payment of the delinquent taxes, penalties, and interest against that property and included in the judgment; and

(2) does not affect the personal liability of any person for those taxes, penalties, and interest included in the judgment that are not satisfied from the proceeds of the sale.

(r) Except as provided by this subsection, a sale of real property under this section must take place at the county courthouse in the county in which the land is located. The commissioners court of the county may designate an area in the county courthouse or another location in the county where sales under this section must take place and shall record any designated area or other location in the real property records of the county. If the commissioners court designates an area in the courthouse or another location in the county for sales, a sale must occur in that area or at that location. If the commissioners court does not designate an area in the courthouse or another location in the county for sales, a sale must occur in the same area in the courthouse that is designated by the commissioners court for the sale of real property under Section 51.002, Property Code.

(s) To the extent of a conflict between this section and a provision of the Texas Rules of Civil Procedure that relates to an execution, this section controls.

Amended by 1989 Tex. Laws, p. 3600, ch. 796, Sec. 32; amended by 1991 Tex. Laws, p. 2953, ch. 854, Sec. 2; amended by 1995 Tex. Laws, p. 5086, ch. 1017, Sec. 2; amended by 1997 Tex. Laws, p. 2900, ch. 914, Sec. 2; amended by 1999 Tex. Laws, p. 3450, ch. 817, Sec. 2, amended by 1999 Tex. Laws, p. 5104, ch. 1481, Sec. 24; amended by 2001 Tex. Laws, p. 4827, ch. 1430, Sec. 26; amended by HB 3419, 78th Tex. Leg., 2003, effective June 18, 2003.

Cross References:

Charitable organization improving property for low-income housing, see Sec. 11.181.
Constitutional authorization, see art. VIII, Sec. 15, Tex. Const.
Tax lien, see Sec. 32.01.
Delinquent tax suits, see Sec. 33.41.

Notes:

A taxing unit obtained a delinquent tax judgment against a property with a market value of more than $1 million. At the foreclosure sale, a third party bid $360 for the property, and the sheriff sold it to him as the highest bidder. The taxing unit then moved to have the sale set aside. The third party bidder challenged this action claiming that a property must be sold for no less than the lower of the delinquency amount or the market value of the property only when the taxpayer or the governmental units were attempting to buy the property. The Supreme Court set aside the sale stating that the restriction applied to all purchasers. Clint Independent School District v. Cash Investments, Inc., 970 S.W.2d 535 (Tex. 1998).

A taxing unit must deposit all the excess proceeds from the sale of a tax foreclosed property into the registry to the court for proper disbursement to the property owner. This is true even if the property was first offered for sale two years (the redemption time period) before the actual sale of the foreclosed land. Syntax, Inc. v. Hall, 899 S.W.2d 189 (Tex. 1995).

Where taxing units acquired title to realty at tax foreclosure sale, no tax lien attached to realty while the property was held by taxing units and during redemption period; hence recovery of such taxes from purchaser from taxing units at a sale after expiration of redemption period was not authorized. State v. Moak, 207 S.W.2d 894 (Tex. 1948).

Taxing units were not entitled to rescission of a deed acquired in full compliance with the Tax Code. Taxing authorities took a judgment on two tracts of land that were ultimately "struck off" to the entities. The owner redeemed the property. Then, it was discovered that an improvement was located on the land, and the taxing units attempted to rescind the redemption deed by claiming mistake. Whitehead v. Jasper County Water Control & Improvement District No. 1, 118 S.W.3d 485 (Tex. App.-Beaumont, 2003, pet. filed).

Taxing units brought suit against a delinquent taxpayer and included as a party a company having a possibility of reverter interest. The reverter interest was not a claim, but a nontaxable interest distinct from the fee simple determinable and not an encumbrance. Thus, the taxing units could not foreclose on that interest and the company was not a proper party to the suit. Cypress-Fairbanks Independent School District v. Glenn W. Loggins, Inc., 115 S.W.3d 67 (Tex. App.-San Antonio 2003, pet. denied).

A taxing unit may bid an amount in excess of both the taxes due and the market value of a property at a tax foreclosure sale. Nothing prevents a taxing unit from bidding an amount higher than the statutory minimum. Bandera Independent School District v. Hamilton, 2 S.W.3d 367 (Tex. App. -- San Antonio 1999).

A delinquent taxpayer's failure to correctly tender a full redemption payment or to even tender such a sum in good faith under the redemption statue bars any court ordered recovery of the foreclosed land. Therefore, the purchaser of the land at the redemption sale is entitled to actual possession of the land during the redemption period. Burkholder v. Klein Independent School District, 897 S.W.2d 417 (Tex. App.-Corpus Christi 1995, no writ).

Party claiming title under a tax deed must prove the validity of the deed by introducing the Decree of Foreclosure and the Order of Sale as well as the deed. Volunteer Council of Denton State School, Inc. v. Berry, 795 S.W.2d 230 (Tex. App.-Dallas 1990, no writ).

Claims arising from acts or omissions regarding tax sales and redemption fall within the exception in Sec. 101.055 (1), Code of Civil Practices and Remedies, to the limited waiver of tort liability created by the Texas Torts Claim Act. Op. Tex. Att'y Gen. No. JM-1261 (1990).

Mere inadequacy of price will not invalidate a foreclosure sale. There must be a showing of some irregularity which caused the property to be sold for a grossly inadequate price. The proper remedy for recovery of delinquent taxes when a mortgage note creates a non-recourse debt and tax payments are treated as part of the mortgage debt is foreclosure against the property. Georgetown Associates v. Home Federal Savings & Loan, 795 S.W.2d 252 (Tex. App.-Houston [14th Dist.] 1990).

In 1983, the legislature repealed Sec. 34.08, which had specified that the state was a taxing unit for purposes of ch. 34 of the code. The real property acquired by the state as the purchasing taxing unit at a tax foreclosure sale does not belong to the Permanent School Fund, and the School Land Board does not have authority to sell such land. Only the purchasing taxing unit is authorized to resell land acquired at a tax foreclosure sale and to receive and distribute the proceeds of a resale of such property. Current statutes do not authorize any official or governmental entity to act for the state in a resale and distribution of proceeds when the state was the purchasing taxing unit at a prior tax foreclosure sale. Op. Tex. Att'y Gen. No. JM-347 (1985).

Sec. 34.015. Persons Eligible to Purchase Real Property.

(a) In this section, "person" does not include a taxing unit or an individual acting on behalf of a taxing unit.

(b) An officer conducting a sale of real property under Section 34.01 may not execute a deed in the name of or deliver a deed to any person other than the person who was the successful bidder. The officer may not execute or deliver a deed to the purchaser of the property unless the purchaser exhibits to the officer an unexpired written statement issued under this section to the person by the county assessor-collector of the county in which the sale is conducted showing that:

(1) there are no delinquent taxes owed by the person to that county; and

(2) for each school district or municipality having territory in the county there are no known or reported delinquent ad valorem taxes owed by the person to that school district or municipality.

(c) On the written request of any person, a county assessor-collector shall issue a written statement stating whether there are any delinquent taxes owed by the person to that county or to a school district or municipality having territory in that county. A request for the issuance of a statement by the county assessor-collector under this subsection must:

(1) sufficiently identify any property subject to taxation by the county or by a school district or municipality having territory in the county, regardless of whether the property is located in the county, that the person owns or formerly owned so that the county assessor-collector and the collector for each school district or municipality having territory in the county may determine whether the property is included on a current or a cumulative delinquent tax roll for the county, the school district, or the municipality under Section 33.03;

(2) specify the address to which the county assessor-collector should send the statement;

(3) include any additional information reasonably required by the county assessor-collector; and

(4) be sworn to and signed by the person requesting the statement.

(d) On receipt of a request under Subsection (c), the county assessor-collector shall send to the collector for each school district and municipality having territory in the county, other than a school district or municipality for which the county assessor-collector is the collector, a request for information as to whether there are any delinquent taxes owed by the person to that school district or municipality. The county assessor-collector shall specify the date by which the collector must respond to the request.

(e) If the county assessor-collector determines that there are delinquent taxes owed to the county, the county assessor-collector shall include in the statement issued under Subsection (c) the amount of delinquent taxes owed by the person to that county. If the county assessor-collector is the collector for a school district or municipality having territory in the county and the county assessor-collector determines that there are delinquent ad valorem taxes owed by the person to the school district or municipality, the assessor-collector shall include in the statement issued under Subsection (c) the amount of delinquent taxes owed by the person to that school district or municipality.

(f) If the county assessor-collector receives a response from the collector for a school district or municipality having territory in the county indicating that there are delinquent taxes owed to that school district or municipality on the person's current or former property for which the person is personally liable, the county assessor-collector shall include in the statement issued under Subsection (c):

(1) the amount of delinquent taxes owed by the person to that school district or municipality; and

(2) the name and address of the collector for that school district or municipality.

(g) If the county assessor-collector determines that there are no delinquent taxes owed by the person to the county or to a school district or municipality for which the county assessor-collector is the collector, the county assessor-collector shall indicate in the statement issued under Subsection (c) that there are no delinquent ad valorem taxes owed by the person to the county or to the school district or municipality.

(h) If the county assessor-collector receives a response from the collector for any school district or municipality having territory in that county indicating that there are no delinquent ad valorem taxes owed by the person to that school district or municipality, the county assessor-collector shall indicate in the statement issued under Subsection (c) that there are no delinquent ad valorem taxes owed by the person to that school district or municipality.

(i) If the county assessor-collector does not receive a response from the collector for any school district or municipality to whom the county assessor-collector sent a request under Subsection (d) as to whether there are delinquent taxes on the person's current or former property owed by the person to that school district or municipality, the county assessor-collector shall indicate in the statement issued under Subsection (c) that there are no reported delinquent taxes owed by the person to that school district or municipality.

(j) To cover the costs associated with the issuance of statements under Subsection (c), a county assessor-collector may charge the person requesting a statement a fee not to exceed $10 for each statement requested.

(k) A statement under Subsection (c) must be issued in the name of the requestor, bear the requestor's name, include the dates of issuance and expiration, and be eligible for recording under Section 12.001(b), Property Code. A statement expires on the 90th day after the date of issuance.

(l) The deed executed by the officer conducting the sale must name the successful bidder as the grantee and recite that the successful bidder exhibited to that officer an unexpired written statement issued to the person in the manner prescribed by this section, showing that the county assessor-collector of the county in which the sale was conducted determined that:

(1) there are no delinquent ad valorem taxes owed by the person to that county; and

(2) for each school district or municipality having territory in the county there are no known or reported delinquent ad valorem taxes owed by the person to that school district or municipality.

(m) If a deed contains the recital required by Subsection (l), it is conclusively presumed that this section was complied with.

(n) A person who knowingly violates this section commits an offense. An offense under this subsection is a Class B misdemeanor.

(o) To the extent of a conflict between this section and any other law, this section controls.

Added by HB 335, 78th Tex. Leg., 2003, effective September 1, 2003.

Cross References:

Person purchasing at tax foreclosure sale, see Sec. 34.0445, Civil Practice and Remedies Code.
Delinquent tax suits, see Sec. 33.41.
Seizure of real property, see Sec. 33.91.
Tax lien, see Sec. 34.01.

Notes:

The change in law made by HB 335, 78th Tex. Leg., 2003, applies only to a public sale of real property conducted on or after October 1, 2003. A public sale of real property conducted before October 1, 2003, is governed by the law in effect on the date the sale was conducted

Sec. 34.02. Distribution of Proceeds.

(a) The proceeds of a tax sale under Section 33.94 or 34.01 shall be applied in the order prescribed by Subsection (b). The amount included under each subdivision of Subsection (b) must be fully paid before any of the proceeds may be applied to the amount included under a subsequent subdivision.

(b) The proceeds shall be applied to:

(1) the costs of advertising the tax sale;

(2) any fees ordered by the judgment to be paid to an appointed attorney ad litem;

(3) the original court costs payable to the clerk of the court;

(4) the fees and commissions payable to the officer conducting the sale;

(5) the expenses incurred by a taxing unit in determining necessary parties and in procuring necessary legal descriptions of the property if those expenses were awarded to the taxing unit by the judgment under Section 33.48(a)(4);

(6) the taxes, penalties, interest, and attorney's fees that are due under the judgment; and

(7) any other amount awarded to a taxing unit under the judgment.

(c) If the proceeds are not sufficient to pay the total amount included under any subdivision of Subsection (b), each participant in the amount included under that subdivision is entitled to a share of the proceeds in an amount equal to the proportion its entitlement bears to the total amount included under that subdivision.

(d) The officer conducting a sale under Section 33.94 or 34.01 shall pay any excess proceeds after payment of all amounts due all participants in the sale as specified by Subsection (b) to the clerk of the court issuing the warrant or order of sale.

(e) In this section, "taxes" includes a charge, fee, or expense that is expressly authorized by Section 32.06 or 32.065.

Amended by 1995 Tex. Laws, p. 959, ch. 131, Sec. 2; amended by 1999 Tex. Laws, p. 5106, ch. 1481, Sec. 25; amended by HB 3419, 78th Tex. Leg., 2003, effective June 18, 2003.

Cross References:

Foreclosure of tax lien, see Sec. 33.41.
Joinder of other taxing units, see Sec. 33.44.
Costs and expenses recoverable in tax suit, see Sec. 33.48.
Seizure of personal property, see Sec. 33.21.
Transfer of tax liens, see Secs. 32.06 and 32.065.

Notes:

A taxing unit must deposit all the excess proceeds from the sale of a tax foreclosed property into the registry to the court for proper disbursement to the property owner. This is true even if the property was first offered for sale two years (the redemption time period) before the actual sale of the foreclosed land. Syntax, Inc. v. Hall, 899 S.W.2d 189 (Tex. 1995).