Avoid Property Tax Surprises With This Document

You know the scenario: You are working with buyers to get a property successfully closed with the best possible outcome. Your clients are excited but also anxious, and they are looking to you as their REALTOR® to be the “knower of all things.” And rightfully so! As a REALTOR®, you are well-trained, ethical, and dedicated to continuing education and professionalism. So, here is a tip that will impress your clients while enabling them to avail themselves of one of the best property tax benefits available to Texas real estate buyers: the tax certificate.

Section 31.08 of the Texas Tax Code enables any person to request a statement of any delinquent taxes, penalties, interest, costs, and expenses currently due for a particular parcel of real estate. In today’s digital age, this sort of information can be relatively easy to find for a savvy buyer. But here is the beauty of the tax certificate: The law says that if a seller sells property accompanied by a statutory tax certificate that erroneously indicates there are no taxes due or that fails to include property because of its omission from an appraisal roll, then any existing tax lien on the property is extinguished, and the buyer is absolved of any liability for omitted balances or for taxes based on omitted property.

But won’t the title company handle this for the buyer? Yes, which makes this tip especially important if your client is not using a title company. At the breakneck speeds the real estate market is moving these days, some buyers are succumbing to the pressure to forgo title insurance in exchange for a quick closing, especially in cash deals and transactions beyond the residential market. However, if there are taxes owed, the buyer is purchasing the property subject to that balance. Furthermore, if there is a pending lawsuit to collect the delinquency, your client is buying subject to that litigation as well. The tax certificate provides protection for your client in situations like these.

Perhaps best of all, tax certificates are easy and inexpensive to obtain. The tax collector for a taxing unit is required to issue a tax certificate for any taxing unit for which the collector collects. For example, in San Antonio, the Bexar County tax assessor-collector collects for Bexar County, the City of San Antonio, the local school and education districts, hospital districts, and smaller utility and improvement districts. All of the information for each of the taxing units in which a property lies would be contained in a single tax certificate issued by the tax collector. If a property lies in an area in which more than one tax collector collects for various taxing units, separate tax certificates would need to be obtained. However, the cost is capped at $10 per certificate, so this would not be prohibitive for the average buyer.

While unpaid taxes are typically not at the forefront of buyers’ and sellers’ imaginings, the possibility of this complication does exist. Hopefully, by using a tax certificate, taxes can remain in the background, so you can keep your clients’ focus where it should be: on the excitement of purchasing that new property.

Source: Texas REALTOR® Magazine