Delinquent Property Taxes - Posted by John (TX)

Posted by Ben on May 12, 1999 at 12:09:18:

I own some tax certificates and get calls all the time
from people asking if I would sell it at a discount. My answer is “why”? I am getting 18% interest, am in top priority position and have less than 10% LTV. In fact , I tell them, you CAN purchase my certificate from me, at a big premium! The only people who would discount are those getting financially squeezed by not being able to keep up with the current tax payments and are losing their priority position. Also, if the person made a mistake in buying a bad property, contaminated, etc.

Delinquent Property Taxes - Posted by John (TX)

Posted by John (TX) on May 12, 1999 at 10:13:25:

I recently found a potential rehab property. The owner will sell for almost nothing but $30,588.65 is owed in back taxes. Has anyone had any luck in getting a reduced payoff from a county tax authority?


Negotiated Sales Lists - Posted by LIENMAN

Posted by LIENMAN on May 12, 1999 at 19:19:09:

Counties will not reduce or discount the amount of back taxes owed on any property within its` jurisdiction. Though you may be able to work out a payment plan with the Collectors Office.

However, there are states such as Arkansas that offer Negotiated Sales Lists on property owned by the Commisioner of State Owned Lands. These lands have back taxes that may or may not equal the minimum bid on the property. In most cases, the minimum bid is far lower than the amount of back taxes due. You may even bid lower than the minimum bid and have your offer accepted in rare cases.

But (don`t ya always hate the “but” part), upon successful bid approval there may be “delinquent improvement district assessments” levied against the land that you would be immediately responsible for once a Limited Warranty Deed has been issued by the State.

Any way you look at it, you end up paying the State or County what they want for the property.

Hope that this helps.


Re: Delinquent Property Taxes - Posted by Bud Branstetter

Posted by Bud Branstetter on May 12, 1999 at 14:43:14:


I’ve never had any luck with them discounting. However they will work out plans to pay the taxes over a time period. The difficulty is the title company. Will they give you title insurance or exempt only those taxes from the policy. With 30K in taxes the property has to be worth significantly more. There could also be issues of bringing up to code.

Re: Delinquent Property Taxes - Posted by Rob FL

Posted by Rob FL on May 12, 1999 at 11:45:51:

Very doubtful. Normally, properties with delinquent taxes have the taxes paid by investors and the tax collector issues a tax certificate that bears interest. The tax collector more than likely could not discount the tax certificate because it would be against the law. Having bought tax certificates in the past, if someone approached me about discounting my tax certificate, I would tell them to forget it. Why? Because if they don’t pay the full amount plus interest I can foreclose on the property and wipe out all liens including mortgages. The only way to discount it might be for the owner to declare bankruptcy, but the tax certificate would still be a secured creditor and a lien on the property.

Shoot, if the tax collector started discounting back taxes owed. Every tax payer in the area would demand that their taxes be discounted as well. Wouldn’t you?

Re: Delinquent Property Taxes - Posted by John(TX)

Posted by John(TX) on May 12, 1999 at 16:30:09:


Thanks for the reply. However, I am located in Texas and tax certificates are not issued here. When property taxes become delinquent the property is usually sold at a public auction. This auction is conducted by the county sheriff or marshal. (See “Texas Tax Sale Success” in the articles section of this site for more info.)

The result of the auction is similar to buying a tax certificate except that the high bidder gets deed to the property instead of the certificate. The deed is encumbered by a right of redemption period. After the redemption period it becomes a deed absolute and even wipes out all other encumbrances (judgements, liens, etc) except a federal tax lien. The bidder has just obtained a free and clear property for pennies on the dollar.

However, a buyer does have to wait until the auction takes place. In this particular case the property has never gone to auction. (I don’t know why.) Taxes on this property have not been paid for 20 years. If they were going to put it up for auction I think they would have done so before now. This may have something to do with the Texas property tax laws, which state in part:

----- begin quote -----
"If a homeowner is 65 or older, the homeowner may defer or postpone paying any delinquent property taxes on his or her home for as long as the owner lives in it. To postpone tax payments, the owner must file a tax deferral affidavit with the appraisal district. A homeowner may suspend any lawsuit by filing an affidavit with the court. The deferral is for all delinquent property taxes owed taxing units that tax the home.

A tax deferral only postpones paying taxes. It doesn’t cancel them. Interest is added at the rate of 8 percent a year. Once the owner no longer owns the home or lives in it, past taxes and interest become due. Any penalty and interest that was due on the tax bill for the home before the tax deferral will remain on the property and also become due when the tax deferral ends. After the tax deferral ends and the taxes remain unpaid, the taxing units may add attorney fees on the 91st day after the deferral and pursue tax collections."
----- end quote -----

So, my question remains, Can or will the COUNTY reduce the amount of the back taxes. Since the property is in such bad shape maybe we could appeal the valuation of the property for the last several years. The valuation has stayed the same for the last 15 years while the property has continually deteriorated.