Discovering a tax lien on your property can feel overwhelming, especially when you need to sell your house. The stress of tax debt combined with the urgency to sell can leave Texas homeowners feeling trapped and uncertain about their options.

Yes, you can sell your house with a tax lien in Texas. The lien must be resolved before or during the sale for a clear title. While this adds complexity, it doesn't make it impossible.

This article will guide you on tax liens, their impact on selling in Texas, and your options, from traditional methods to a fast, direct sale. With the right approach, you can resolve your tax debt, sell your property, and move forward.

What is a Tax Lien and How Does It Work in Texas?

A tax lien is a legal claim on your property by a government entity due to unpaid taxes. It acts as security for the debt, attaching to the property rather than just to you as the owner. The lien "follows" the property, so anyone who buys it becomes responsible for the lien, which is why resolving it is essential for selling.

Common Tax Liens on Texas Properties

• Property Tax Lien: Issued by county or local taxing authorities when you fall behind on property taxes. In Texas, this is a "super-priority" lien, which means it takes precedence over most other liens, including mortgages. This status makes property tax liens important to address quickly, as Texas counties have significant power to enforce collection.
• Federal (IRS) Tax Lien: The Internal Revenue Service issues this lien when federal income taxes remain unpaid. Unlike property tax liens, an IRS lien applies to all a taxpayer's assets, including real estate. To sell a house with an IRS lien in Texas, specific IRS procedures must be followed to obtain a release or discharge.
• State Tax Lien: Issued by the Texas Comptroller of Public Accounts for unpaid state taxes like franchise or state employment taxes. These affect properties owned by small businesses or self-employed individuals, though they are less common for individual homeowners.

Why a "Clear Title" is Essential for Selling Your Home

A clear title (or "marketable title") is one without liens, claims, or encumbrances that could challenge ownership. When selling a house, providing a clear title is not just preferable; it's mandatory in conventional sales.

When someone buys your home, they (and their mortgage lender) want assurance of complete, uncontested ownership. A title company performs a "title search" to uncover issues like liens, judgments, or disputes. The title company then issues title insurance, protecting the buyer and lender against future claims.

When a tax lien is discovered, it raises an immediate red flag. The title company can't issue title insurance until the lien is resolved, and without it, lenders won't finance the purchase. This stops a conventional sale until the lien is cleared.

What are your options if a lien blocks a traditional sale? How can you sell property with a tax lien?

3 Options for Selling a House with a Tax Lien in Texas

When selling property with a tax lien in Texas, you have several practical approaches. The goal is to satisfy the debt to clear the title. Here are your main options:

Option 1: Pay the Lien Before Selling

This is the most straightforward approach if you can afford it.

Pay the full debt amount (including penalties and interest) directly to the taxing authority. Once paid, they will issue a lien release document to file with the county clerk, removing the lien from your property records.

Pros:

• Cleans the title completely for a normal market sale.
• Gives you full control over the selling process.
• Maximizes your profit by appealing to all buyers.

Cons:

• Requires enough cash on hand to pay the full debt amount.
• Many homeowners with tax liens face financial hardship, making this option unrealistic.
• Doesn't address the need for speed if you're in a hurry to sell

Option 2: Pay the Lien at Closing from Sale Proceeds

The most common method used in traditional real estate transactions involving liens is this.

In this scenario, you find a buyer through conventional means with a real estate agent. At closing, the title/escrow company pays off the lien directly from your sale proceeds. You receive whatever remains after the lien, mortgage, and selling costs are paid.

Pros:

• No upfront cash is needed to clear the lien.
• Works well with sufficient equity in your home.
• Lets you market your home to traditional buyers.

Cons:

• Requires enough equity to cover the lien, mortgage balance, realtor commissions (typically 5-6%), and closing costs.
• May involve complex negotiations with the lien holder, delaying closing.
• The uncertainty can scare away some buyers, limiting your prospects.
• Still needs to find a buyer willing to wait.

Option 3: Sell Directly to a Cash Home Buyer

For many Texas homeowners with tax liens, selling to a direct cash buyer specializing in lien property sales offers the easiest path.

Companies like GetHomeCash handle complex title situations and have the resources to close quickly. These buyers purchase properties "as-is" and resolve liens as part of the transaction.

Pros:

• Speed: Close in 7 days, compared to months on the traditional market
• Certainty: No risk of financing falling through or buyers backing out due to the lien.
• Simplicity: The buyer manages the lien payoff logistics at closing.
• No Repairs Needed: Sell the property as-is
• Privacy: Avoid public embarrassment while dealing with tax issues.

Cons:

The offer is below the top market value of a perfect traditional sale. However, this difference can be offset by savings on commissions, repairs, and holding costs.

How GetHomeCash Handles Lien Property Sales

If the options above seem complicated or stressful, there's a more direct path. At GetHomeCash, we've helped countless Texas homeowners sell their houses despite tax liens, and we've streamlined the process.

Here's our process for a tax lien property:

1. We make you a fair, no-obligation cash offer based on your home's current value.
2. Our team works directly with the title company to get the exact lien payoff amount.
3. At closing, we handle the paperwork to ensure the lien is paid and released.
4. You receive the remaining proceeds without managing the complex details.

Our approach offers unique advantages for homeowners facing tax liens:

• Fast, Fair Cash Offer: Get a quick, no-obligation offer to know your position.
• We Handle the Paperwork: Our team manages the lien payoff coordination with the title company.
• Close in 7 Days: We can close on your timeline, providing the speed needed to resolve the tax issue and move on.
• Sell "As-Is": No repairs, cleaning, or staging.
• No Commissions or Closing Costs: The offer we make is the amount you get, minus the lien payoff and mortgage balance. No surprises.

Texas Property Tax Lien and Your "Right of Redemption"

Texas property tax liens deserve special attention because they operate differently from other liens and can lead to quicker foreclosure than many homeowners realize.

In Texas, if property taxes remain unpaid, the county can start foreclosure proceedings and sell the property at a tax sale auction. This can begin after a few months of delinquency, though it takes longer.

Many Texas homeowners don't realize they have a Right of Redemption after a tax foreclosure sale. Texas law provides a two-year period after the tax sale to "redeem" (buy back) your property if the property is your homestead. For non-homestead properties, this period is six months.

Redeeming your property comes at a steep cost. You must pay the auction buyer the amount they paid plus 25% in the first year (or 50% in the second year for homesteads). This makes redemption expensive.

The better option is selling before a tax sale. Selling to a cash buyer like GetHomeCash lets you resolve the debt, avoid foreclosure, and preserve some equity instead of losing everything to the tax sale.

FAQs

Can an IRS lien stop the sale of my house in Texas?

An IRS lien won't stop the sale if there's enough equity to pay it off. The IRS must be paid at closing to clear the title. If there's not enough equity to cover the full lien amount, you need to negotiate a "lien discharge" with the IRS, allowing the property to be sold free of the lien under certain conditions. This process takes time and usually requires professional assistance from a tax attorney.

Will a tax lien hurt my credit?

Since 2018, tax liens no longer appear on credit reports, but the failure to pay taxes can still impact your financial standing, and the lien remains a public record attached to your property. If the tax debt leads to collection actions, those can affect your credit. The best approach for your financial health is to resolve tax debts quickly.

How long does a tax lien stay on your property in Texas?

A tax lien stays on the property until the debt is paid. There are long, complex statutes of limitations for collection. For IRS liens, the general collection period is 10 years, but it can be extended. For Texas property tax liens, they remain indefinitely until paid. The most reliable way to remove a tax lien is to pay the debt or negotiate a settlement with the taxing authority.

Conclusion

In Texas, it is possible and manageable to sell a house with a tax lien with the right approach. A lien complicates the sale by clouding the title, making traditional sales challenging, but you have viable options to move forward.

The important thing is to take action, whether you pay the lien before selling, arrange payment at closing, or work with a direct cash buyer like GetHomeCash. Each day adds penalties and interest to your tax debt, making it harder.

Don't let a tax lien dictate your future. By understanding your options, you can take control, resolve the debt, and move forward confidently. Many Texas homeowners have navigated this situation, and with the right strategy, you can too.