The Farah Law Firm

Commercial Property Tax Redemption Texas

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Investing in Commercial Property Tax Redemption in Texas can be a rewarding venture, but it’s crucial to be well-informed before stepping into the courthouse auctions. Texas Property Tax Code §34.21 outlines the guidelines for redeeming properties sold at tax sales, making it essential for investors to understand the legal framework surrounding these transactions. A former owner has the right to redeem their commercial property within a designated period under specific conditions.

According to Texas Property Tax Code §34.21(a):

Commercial properties sold at a tax sale to a buyer other than a taxing unit may be redeemed by the former owner. The redemption period lasts until the second anniversary of the date the purchaser’s deed is recorded, providing a window for the former owner to reclaim the property. To do so, they must repay the purchaser the initial bid amount, the deed recording fee, all taxes, penalties, interest, and costs on the property, with a redemption premium of 25% of the total amount if redeemed within the first year, or 50% if redeemed within the second year. Simplified, the redemption criteria are as follows:

  1. The redeemer was the owner at the time of the tax sale; AND
  2. The property was utilized for commercial purposes.

Upon meeting these conditions, the former owner can initiate the redemption process within two years from the date the purchaser’s deed is recorded in the county where the property is located. For instance, if a commercial property in Tarrant County is sold at a tax sale on January 1, 2016, to Mr. Green for $200,000, and Mr. Green thereafter pays $20,000 in taxes to the taxing authority, the deed is recorded on January 15, 2016. Mr. Green then receives a notice of a city ordinance violation, necessitating $50,000 in repairs to meet code requirements.

Given that the property was commercially used and Mr. Brown was the owner at the time of the sale, he has a right to redeem the property from Mr. Green. To redeem, Mr. Brown must pay Mr. Green the following:

  • Purchase Price: $200,000.00
  • Taxes/Penalties: $20,000.00
  • Deed Filing Fee: $50.00
  • Costs: $50,000.00
  • Aggregate Total: $270,050.00
  • 25% Premium (if redeemed within the first year): $67,512.50
  • Total Due: $337,562.50

The costs incurred by Mr. Green in maintaining the property until redemption include:

  1. Property insurance;
  2. Repairs or enhancements mandated by local ordinances, building codes, or existing leases;
  3. Discharge of any municipal liens for remedying health or safety hazards;
  4. Maintenance dues paid to a property owners’ association under any prevailing restrictive covenant;
  5. Any impact or standby fees under the Local Government Code or Water Code, paid to a political subdivision.

Investors should not overlook the two-year statutory redemption right, as any renovations or improvements made during this period could lead to financial loss if the former owner decides to redeem. Thus, investors are urged to consult with experienced real estate attorneys specializing in tax sale redemptions to safeguard their investments. The Farah Law Firm, P.C. can provide invaluable advice to ensure you’re well-protected in your commercial property tax redemption ventures in Texas.

The Farah Law Firm is Here to Help You

Our law firm is here to take you step by step through the process. Once a contract is signed, it may be too late or very difficult to correct errors, so let us help you now. Our office is conveniently located in Mansfield, right in the middle of the Dallas-Fort Worth Metroplex. Call our real estate lawyers in Texas today and let our experience and vast knowledge of the Texas Property Code give you peace of mind by ensuring your next purchase or sale is properly executed.

What Our Clients Say About Us

“I was referred to The Farah Law Firm by a friend of mine when I was injured in an auto accident. I am so glad that my friend referred me to Michael and his extremely helpful team. They were not only successful in getting my settlement but also helped me find great doctors to aid in my recovery from the accident. I highly recommend The Farah Law Firm.”

    EDDIE G.

    “Michael, I would like to express my thanks to you and your entire team for all your hard work in getting my case to a fair and generous settlement. I could not have asked for better legal representation for the long and nerve-racking process of my case. You are very compassionate, nice, and extremely good at what you do. I respect your dedication representing the victims of a personal injury cases.”

      TINA L.

      “The Farah Law Firm has an extensive knowledge of business entity transactions in Texas and had kept my transaction moving smoothly and in the right direction. Thank you Michael for making the process easy.”

        ESSAM K.

        “Michael drafted the lease that we will use for our commercial building. He had great communication, was readily available to answer any questions we had, and was very professional. He wrote us a lease that fit our need and I will definitely work with The Farah Law Firm again in the future.”

          CHARLES B.

          “I hired The Farah Law Firm for the non-traditional sale of my residential property. The Farah Law Firm’s professionalism and outstanding knowledge of residential transactions made the sale go smoothly. The Attorneys and staff at the Farah Law Firm were understanding and took the time to explain each step of the process. They will be the ones who I will refer to all my friends and family for any future legal endeavors.”

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            *Please note: Due to the costs involved and the favorability of land in Texas per contract and common law, we currently are not accepting residential tenant defense cases.