Foreclosure Redemption Period – What to know to not Lose Money!!

A Foreclosure Redemption Period is a period of time in which the original owner of a property that has been sold at a Property Tax Foreclosure Sale may choose to financially redeem (buy back) his or her property as stated in the Texas Property Tax Code, Chapter 34.21) .

A Foreclosure Redemption Period applies to ALL properties sold at Tax Foreclosure Sales to different degrees. There are two major categories of redemption periods in Texas:

  • Properties with Homeowner’s Exemptions or Properties designated as Agricultural Use– This category includes any property where a previous owner had on file a current Homeowner’s Exemption for the purposes of taxes or was agricultural in nature. Properties with this exemption, in the state of Texas, are allowed TWO YEARS after the date that a Sheriff’s deed is filed to redeem their property. It is important to note that this two year time period does not commence until the Sheriff’s deed is actually filed (not on the date of the sale) and in many counties, it is up to the purchaser to file that deed – not the county.
  • Properties without Homeowner’s Exemptions- This category includes any properties that do not have a Home owner’s Exemption on file for the purpose of taxes. Even if a homeowner is using the property as his primary residence,if he or she has not filed an exemption prior to the property being sold, the property falls into this category. Properties in this category carry only a six month exemption period.

What is meant by “able to redeem their property”?

  • the amount the purchaser paid for the property
  • the amount of the fee for filing the purchaser’s deed for record
  • the amount paid by the purchaser as taxes, penalties, interest, and costs on the property
  • plus a redemption premium of 25 percent of the aggregate total if the property is redeemed in the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed in the second year of the redemption period” (as quoted from the Texas Property Tax Code.

Note that this redemption fee DOES NOT include such things as remodeling. In other words, if a new owner has the home painted, carpeted and replaces appliances, these updates will NOT be covered by the redemption fee. Examples of things covered by the redemption fee typically include any items necessary to keep the house up to city inspection standards of safety or repairs needed to avoid additional damage to the property which might include things like replacing broken windows or repairing a leaking roof. In the end, a judge would make the final decision regarding which repairs would be included in a redemption fee if a person chose to redeem their property before the end of a Foreclosure Redemption Period.