Delinquent Taxes
Property taxes that remain unpaid after their due date. Delinquent taxes accrue penalties and interest, create liens against the property, and can eventually lead to tax sale if not paid.
Understanding Delinquent Taxes
Property taxes become delinquent when not paid by the statutory deadline. From that point, penalties and interest begin accumulating. Most jurisdictions have structured penalty schedules—often starting at a percentage per month and continuing to grow.
The delinquent tax amount creates a lien against the property. This lien has priority over most other claims, including mortgages in many cases. The priority position makes tax liens relatively secure investments and gives taxing authorities strong collection tools.
If taxes remain delinquent for an extended period (typically 1-3 years), the taxing authority can foreclose on its lien and sell the property at tax sale. The time between delinquency and sale provides a window for curative title investors to identify opportunities and potentially reach out to owners.
Delinquent taxes are often a signal of larger financial distress. Properties with unpaid taxes may also have mortgage defaults, heir ownership issues, or other problems. This correlation makes tax delinquency lists a starting point for finding curative title opportunities.
Real-World Example
A property's 2020 taxes of $3,000 went unpaid. By 2024, with accumulated penalties and interest at 12% per year plus fees, the delinquent amount has grown to approximately $5,200. If still unpaid, the property will be included in the next tax sale.
Texas-Specific Information
Texas property taxes are due January 31. Penalties begin February 1 at 6% and increase monthly to a maximum of 12% by July 1. After July 1, additional penalty and interest of 1% per month accrue. Texas taxing units must wait until taxes are delinquent for at least two years before filing suit for tax sale, though most wait longer.
Related Terms
Tax Sale
A public auction where properties with delinquent taxes are sold to recover unpaid taxes. Tax sales are conducted by government authorities and allow investors to purchase properties or tax liens at significant discounts.
Tax Lien Certificate
A certificate issued by a government authority representing unpaid property taxes. The certificate holder earns interest on the delinquent taxes and may eventually foreclose on the property if taxes remain unpaid.
Ad Valorem Tax
A tax based on the assessed value of property, from the Latin meaning 'according to value.' Property taxes are the most common form of ad valorem taxation, calculated as a percentage of the property's appraised value.
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