What Happens If You Pay Someone Else’s Property Taxes In Texas?

Executive Summary

• You cannot take someone else’s property by simply paying the property taxes for them in Texas. 
• However, if there is a county or city tax lien or a foreclosure sale on a property, an individual may be able to buy the property through a government-regulated auction.
• If you pay taxes for estate property during the probate process, you do not receive ownership of the property, but you may be entitled to reimbursement from estate funds.
• The payment of property taxes can be one of the steps toward establishing ownership through a Chapter 29 proceeding or adverse possession, but Texas restricts these methods of ownership by imposing many additional requirements and allowing many defenses.
• If you do inherit a property, you should consult a lawyer to ensure you become the legal owner of the property and learn more about how to navigate inheritance disputes if they arise.

Introduction

In Texas, you cannot assume ownership of someone else’s property by simply paying the balance of unpaid property taxes. However, you can purchase real estate, often at a discounted rate, at a tax foreclosure sale. Additionally, the payment of another person’s property taxes may accomplish one of the many steps in asserting ownership through adverse possession or a Chapter 29 Proceeding. This guide outlines various circumstances for how property is transferred upon death and what really happens when you pay someone else’s property taxes in Texas.

Does Paying Property Tax Give Ownership In Texas?

No. Simply paying property taxes for a piece of real estate is not enough to establish ownership under Texas law. This is a common myth, but someone cannot take your property by paying the taxes in Texas. Rather, the best indication of ownership is often “clear title,” regardless of who pays the taxes.

The term “clear title” means that only the person listed as the owner in the county deed records is actually claiming to be the lawful owner of the property, and the deed records show that the current owner properly purchased ownership rights from the last rightful owner. Generally, to establish a clear title, you’ll need to be able to show that the ownership history of a property can be traced through property deeds recorded in the county property records.

The issue of clear title commonly arises when children inherit the family home from their parents after they pass away. In some instances, a child might not record their deed, but more often, clear title becomes a problem when the parent dies without a will, and the property is informally passed down to the next generation. 

In addition, the issue of clear title arises when bad actors attempt to pass off an invalid deed as the real thing. In reality, the deed may be invalid for various reasons, for example, the owner didn’t understand what they were doing when they signed the deed, the owner signed only after being improperly pressured and influenced, or the deed was not signed by all required parties. A Texas trust and estate dispute lawyer can help determine whether someone has obtained an invalid deed in a property you were meant to inherit. 

What Is a Tax Lien Foreclosure Sale?

According to Texas Tax Code section 32.01, a tax lien automatically attaches to real estate on January 1 of each year to secure the payment of property taxes. This lien allows the government taxing unit to receive payment for those taxes whenever the property is sold. The city or county can follow additional procedures to force a sale of the property on which taxes are owed. 

Texas Tax Code section 33.91 allows municipalities to issue a tax warrant for seizure of property if each of the following conditions are met: (1) the property is within city limits; (2) the property isn’t larger than one acre; (3) the property has been abandoned for at least one year; (4) property taxes have been delinquent for the last five years (three years for properties with hazardous conditions); and (5) the city’s tax collector determines seizure and sale would be economical for the city. 

Similarly, Texas Tax Code section 33.911 allows counties to issue a tax warrant for seizure of property if each of the following conditions are met: (1) the property is within county limits; (2) the property does not lie within a city; (3) the property has been abandoned for one year; (4) property taxes have been delinquent for the last five years; and (5) the county’s tax assessor determines seizure and sale would be economical for the county. 

A property seized under tax warrant may be sold by a city or county. The city or county must follow numerous notice requirements and procedural steps to complete the sale under the Texas Tax Code. 

If the foreclosure lawsuit is successful, the court will issue an order for the property to be sold to pay the delinquent tax balance, including penalties, interests, and other costs. The property will then be sold to the highest bidder at a public auction, and the winner will become the new owner of the property. 

The rules governing tax warrants and forced sales allow for a city or county to seize property if numerous conditions are met. Yet in probate proceedings, many people think they can gain ownership of a property by taking over the property tax payments. This is not the case, and individuals must instead inherit the property through legal means.

Tax Liens and Foreclosure Sales in Texas

A tax lien is a legal claim placed on a property when the owner fails to pay their property taxes, claiming that the government has a right to automatic repayment when the property is sold. According to Texas tax code 32.01, a tax lien automatically attaches to a property on January 1st of each year based on the taxes outstanding from the previous year.

When a tax lien exists on a property and the owner fails to rectify it within a reasonable amount of time, the property may be eventually seized, foreclosed on. and sold at public auction. The proceeds from the sale are then used to pay the city or county for the former owner’s unpaid taxes and penalties, traditional lienholders like the lender who issued the mortgage, other special lienholders like the IRS, and finally the actual owner of the property if any sales proceeds remain.

The buyer of the property receives a tax deed that designates them as the new owner. However, the original owner of the property still has a “right of redemption” in Texas, which gives them a window of opportunity to buy back the property. The cost, timing, and applicability of redemption rights depend on whether the seized property was the buyer’s homestead and whether the property is currently held by the government or a private buyer. 

If the seized property was the original owner’s homestead, and the property remains in the hands of the government, the original owner may purchase the property back by paying the city or county (1) the market value of the property specified in the foreclosure judgment or seizure warrant plus (2) certain fees and costs. The original owner can exercise this right within two years after the tax deed was filed.

If the seized property was the original owner’s homestead and was sold to a private purchaser at the tax foreclosure sale, the original owner may purchase the property back by paying the new owner an amount equal to (1) the winning bid at auction; plus (2) the deed recording fee; plus (3) an amount equal to the taxes, penalties, interest, and costs paid by the new owner; plus (4) a “redemption premium.” If the original owner exercises these redemption rights within one year after the tax deed was filed, the redemption premium equals 25 percent of the first three categories above. If the original owner exercises redemption rights within two years, the redemption premium increases to 50 percent. After two years, the original owner loses their redemption rights. 

What Happens if You Pay Someone Else’s Property Taxes in Texas?

Although paying someone’s property taxes does not provide you ownership of the property, there are other benefits to paying someone’s property taxes. For example, if you are paying property taxes for a family member who is deceased before the probate process begins, you can protect the property by paying for the taxes. 

Texas law encourages the payment of these property taxes, because loss of property under government tax seizure and sale would not be in the best interest of the estate. Accordingly, the persons who pay property taxes for estate property have special priority to be repaid from estate funds. 

In other situations, it may be simply beneficial to assist a family member or loved one with the payment of their property taxes to offer financial support without any expectation of repayment. In addition, you may lose the right to reimbursement if you were living at the property rent-free when the property taxes accrued. The property owner may be able to prove that the tax payment was purely a gift to the property owner, which would prevent reimbursement. In most scenarios, however, you may seek reimbursement from an estate if you pay the property taxes on estate property.

Redemption rights may be subject to different formulas and time limitations in other scenarios. For example, if the seized property is not the original owner’s homestead or agricultural land, the redemption period may last only six months. A Texas trust and estate lawyer can help determine the appropriate formula and timeline for someone in your circumstances. 

Can Someone Take Your Property by Paying the Taxes in Texas?

No, someone cannot assume ownership or any legal claim to your property simply by paying the property taxes. Even if a property owner fails to pay their taxes, they are still the owner of the property as long as they have a clear title.

However, you can lose the property to the state if you fail to pay your property taxes. If a tax lien is placed on your property by the state and the property is put up for auction, someone can obtain ownership by paying for the tax deed at auction. 

What Happens When Someone Else Pays Your Property Taxes?

If you are the owner of a property and someone else pays your property taxes, you will often experience more benefits than drawbacks. In many cases, all that matters to the city or county is that the property taxes get paid. If someone pays your property taxes as a favor, then the county will consider you up-to-date on your payments. However, if the party is paying your property taxes for their own benefit, you should be aware of the potential consequences. 

As the owner of a property, the property taxes are usually considered your responsibility alone. A person with a “life estate” in the property or with spousal homestead rights may assume or share this tax burden with the title owner. Someone close to you, like a relative, can provide financial assistance by paying for these taxes, but this would not change ownership or liability. 

Depending on the circumstances, there may be some concerns with someone else paying your property taxes. For example, if you use a home equity loan to pay for your property taxes, the lender may retain rights as a lienholder—they may be able to enforce their lien and seize your property if you violate the terms of the loan agreement. In this scenario, however, the property owner should be fully aware of the lienholder’s rights, because the property owner willingly reached an agreement with the lender. 

What happens if an investor pays your property taxes? Unlike the lender in the example above, an investor may pay your property taxes without your knowledge or consent. In some states, private individuals or companies can initiate tax seizures and foreclosure sales after purchasing a “tax lien certificate.” Thankfully, Texas does not recognize tax lien certificates. In other words, the power to seize and foreclose is limited to cities and counties. If you’re concerned that a tax seizure and foreclosure sale against your property may be pending, it’s important to consult an attorney. 

In the event that someone else pays your taxes and then stops without your knowledge, you may be considered delinquent in your payments. When this occurs, the government will send an official notice that the property is behind and owes payments. If you do not pay back this lien, they may initiate tax seizure and foreclosure proceedings.

If I Pay Back Taxes on a Property, Do I Own It?

Paying back taxes on a property does not influence your ownership of the property. If you pay back taxes on someone else’s property and they still hold the clear title, they are still the rightful owner. 

The only case where simply paying back taxes on a property can affect ownership is when the current owner protects and preserves his or her ownership rights by paying back taxes to resolve a tax lien and prevent the property from being sold. Further, if the original owner’s property is purchased at auction, the original owner may exercise redemption rights to reacquire their property. 

Can Someone Force My Property to Be Sold Under Chapter 29 After Paying My Taxes?

Only in rare circumstances. Chapter 29 of the Texas Property Code provides a multi-step legal process for forcing the sale of certain property. The payment of another person’s property taxes is one of those steps.

Texas applies many defenses and exceptions for property owners facing a Chapter 29 legal proceeding. For example, Chapter 29 can only be used to force the sale of inherited property, so if you purchased your property then Chapter 29 will not apply. Additionally, Chapter 29 does not apply if the property is your homestead.

Several other restrictions apply to Chapter 29 proceedings. The taxpayer attempting to force a Chapter 29 sale must already be a co-owner of the property you own before the Chapter 29 proceedings are filed. The taxpayer must have paid your share of the taxes for three years over the course of five years. The taxpayer must present a demand to the property owner for repayment of the owner’s share of property taxes prior to starting a legal proceeding.

The property owner has a silver bullet to defeat a Chapter 29 claim. At any time before the court enters judgment, the property owner can defeat the Chapter 29 claim by reimbursing the taxpayer half the amount the taxpayer paid for the property owner’s share of the taxes.

If the taxpayer successfully completes all the steps above, and the property owner does not effectively assert any of the defenses above, then the taxpayer can force the property owner to sell their interest to the taxpayer. The court would appoint an independent appraiser to determine the fair market value of the property, and the taxpayer could then purchase the property owner’s share of the property for fair market value after subtracting the owner’s share of taxes paid by the taxpayer.

Can Someone Pay My Taxes to Obtain Ownership of My Property by Adverse Possession?

No. The payment of property taxes may be just one of the many steps necessary to establish ownership via adverse possession. There are several ways a person can claim ownership via adverse possession, depending on how long the possession has occurred. Each method has many requirements and may be defeated by many legal defenses. The payment of property taxes alone does not establish adverse possession.

Does a Sibling Paying Property Tax On Our Deceased Parent’s House Give Them Ownership?

No. A sibling cannot obtain ownership of your deceased parent’s home simply by paying the property taxes. Instead, when a property owner passes away, their property must be transferred through specific legal means. By default, the property must be distributed according to the terms of a will approved by a probate court. If no will exists, ownership of the property is determined by an heirship judgment signed by a probate judge. It’s also possible that the property must be sold to pay general creditors of the estate, regardless of whether 

There are several different ways that your parent’s home can be passed on after their death:

• If the home was jointly owned with right of survivorship, the other owner might be entitled to assume full ownership upon your parent’s death. 
• Similarly, your parent may have recorded a Transfer on Death Deed, where the title to the property would automatically transfer to another person upon their death.
• Homes can also be inherited through a will or trust, and if there are no estate planning documents that dispose of the house, default Texas intestacy laws will determine who inherits the home.
• Finally, it’s possible that nobody inherits the home, because it must be sold to pay general creditors of the estate–for example, credit card issuers–regardless of whether the creditors have lienholder status. 

Ultimately, while there are many valid methods by which you can obtain ownership of your deceased parent’s home, paying property taxes is not one of them.

Can I Contest Ownership of a Property?

Yes, in some situations, you can contest ownership of a property.

For instance, when a property is disposed of in a will, you may be able to contest the validity of the will under certain circumstances. Additionally, if an inherited property was not properly recorded, you will likely need to file a case with the probate court to obtain a clear title.

These are just a few of the ways that you can contest ownership of a property or clear your title to a family home. The law creates a variety of potential remedies for these types of disputes, and determining the right one for your situation will require a detailed analysis of the specific facts involved.

Because these issues are confusing and often legally complex, it’s vital that you discuss your circumstances as soon as possible with a Texas probate litigation attorney. An experienced lawyer can review the facts of your case and determine the best course of action to secure a clean title to your property.

Steps To Take if You Inherit a Property

If you are a legal beneficiary or heir to a property and next in line to inherit it, there are specific steps you should take to protect and secure your right to it. If you do inherit a property, it’s crucial that the legal ownership of the property is transferred into your name—this is normally handled by the executor, or personal representative of the estate, who is responsible for facilitating the title transfer.

Disputes are not uncommon in the probate process, as beneficiaries to an estate may raise a dispute in search of a greater share of an inheritance, which can include seeking a share of a property. If disputes do occur, an attorney can represent you in building a defense against other beneficiaries and securing your rightful inheritance to the property. 

It’s a good idea to consult an attorney for support in securing your property inheritance. An attorney can help you verify the transfer of ownership of the property to your name and find your property in local records to ensure that you are the rightful owner of the clear title.

At RMO, our attorneys can help you ensure your rightful ownership of a property. We will help you understand your inheritance rights and the local laws surrounding property tax claims. 

Consult with a Probate Litigation Attorney

Paying someone else’s property taxes does not give you the right to ownership of the property. Even if someone has passed away, you cannot automatically gain ownership of the property by taking on the burden of taxes yourself and instead must inherit the property through legal means. However, if an individual does fail to pay their own property taxes, you have the option to pursue ownership of the property if the city or county seizes and sells the property through an auction. 

Our estate and probate administration attorneys at RMO have considerable experience surrounding the inheritance of property. With extensive knowledge regarding property inheritance laws in Texas and decades of experience navigating these disputes, we’ll help you understand your right to property in Texas. 

Schedule a consultation with one of our attorneys here at RMO to discuss your case.