Tax Deed Sales in Texas: Bidding, Redemption, and Excess Proceeds

Tax deed sales in Texas happen on the first Tuesday of every month at county courthouses (and, increasingly, online), where properties seized through delinquent property tax lawsuits are auctioned to the highest bidder. The winning bidder receives a sheriff’s deed, but that deed comes with strings attached: a redemption period during which the former owner can buy the property back, potential title defects that block resale, and strict same-day payment requirements. If you’re thinking about bidding, the process rewards preparation and punishes anyone who walks in expecting a clean real estate transaction.

Who Can Bid

Before you can buy anything, you need a written statement from the county tax assessor-collector confirming you do not owe delinquent property taxes in that county. Section 34.015 of the Texas Tax Code makes this mandatory for every purchaser, and the officer conducting the sale cannot deliver a deed to you without it.¹

You request the statement in writing from the assessor-collector’s office. The office checks whether you have outstanding taxes owed to the county or to any school district or municipality with territory in that county. Dallas County charges a nonrefundable $10 fee per statement, for example.² The statement expires 90 days after issuance, so timing the request matters.¹

Some counties add a second requirement. Under Section 34.011, a county commissioners court can require bidder registration before the sale begins. This is not statewide; it is a local option. If the county where you plan to bid has adopted it, you will need to register with the assessor-collector in advance, present identification, and sign a certification that you have no delinquent taxes.³

Finding Properties and Reading the Minimum Bid

Upcoming sales are published in local newspapers and posted publicly before the auction. Section 34.01 requires the selling officer to give written notice to each defendant in the judgment (or their attorney) and, if no newspaper is available, to post notices in three public places in the county at least 20 days before the sale, with one posted at the courthouse door.⁴ Most counties also list sales on their tax office websites or through the third-party portals used by their delinquent tax attorneys.

Each listing shows a legal description of the property, the cause number from the tax lawsuit, and the minimum bid. That minimum bid represents the total judgment amount: delinquent taxes, accrued penalties, interest, and legal costs. If the property’s market value stated in the judgment is lower than the total taxes owed, the minimum bid may be set at that lower market value instead.

Do your homework before auction day. You usually cannot inspect the interior of a tax sale property. Drive by, pull county appraisal records, look for environmental red flags, and run a title search to identify any federal tax liens or other issues that could survive the sale. Property tax liens in Texas are automatically superior to virtually every other lien, including mortgages, federal tax liens, and HOA claims, and a tax sale wipes out those junior liens. That priority is what creates the discount, and it is also why the former mortgage holder often pays off delinquent taxes before the sale ever happens. Properties that actually reach auction frequently carry complications worth investigating.

Auction Day

Sales take place on the first Tuesday of every month. If that Tuesday falls on January 1 or July 4, the sale moves to the next day. Bidding starts at 10:00 AM and must wrap up by 4:00 PM.⁵ Traditional sales are live public outcry auctions at the county courthouse, though the commissioners court can designate a different nearby location.⁴

A growing number of counties conduct their auctions online. Section 34.01(a-1) authorizes commissioners courts to approve online bidding and sale, and online auctions can begin at any time but must still close by 4:00 PM on the first Tuesday.⁴ Confirm the format on the specific county’s tax office website before showing up.

At a live sale, you present your written statement from the assessor-collector to the officer conducting the auction. Bidding proceeds in open increments until no one raises the price, and the officer strikes the property to the winner. Payment is due the same day, and most counties accept only cashier’s checks or money orders. Bring multiple checks in different denominations so you can hit the exact total. Once payment clears, the officer prepares a sheriff’s deed and files it with the county clerk.

Redemption Periods

Winning the auction does not give you clear ownership. Texas law gives the former owner a right to buy the property back by paying you what you spent plus a premium. The length of the window and the size of the premium depend on how the property was classified when the foreclosure suit was filed.

Homestead, Agricultural, and Mineral Interest Properties

If the property was the owner’s residence homestead, was designated for agricultural use, or is a mineral interest, the former owner has two years from the date your deed is recorded to redeem. During the first year, the redemption price is everything you paid at auction plus a 25 percent premium on that total. In the second year, the premium rises to 50 percent. Those percentages apply to the aggregate of your bid, the deed recording fee, and any taxes, penalties, and interest you paid on the property after the sale.⁶

All Other Properties

For everything else, including vacant lots and commercial buildings, the redemption period is 180 days from the date the deed is recorded, and the premium is a flat 25 percent of the aggregate total.⁶ The shorter window makes these properties somewhat less risky if you want to gain uncontested ownership faster.

Look at the redemption premium two ways. If the former owner does redeem, 25 to 50 percent in one to two years is a strong yield. If you have already spent money on repairs or improvements you cannot fully recoup, a redemption still stings. This is the central gamble of Texas tax deed investing: you are buying a property someone else may take back.

The IRS Redemption Right

If the property carried an active IRS lien, the federal government has its own separate right to redeem. Under 26 U.S.C. § 7425(d), the IRS can purchase the property within 120 days of the sale or within whatever longer redemption period Texas law provides, whichever gives the government more time.⁷ Even on a non-homestead property with a 180-day state redemption period, the IRS still gets at least 120 days. A bankruptcy filing by the former owner during the redemption period can freeze the process through the automatic stay. A pre-auction title search is the only reliable way to spot these risks.

Taking Possession

After the sheriff’s deed is recorded, you have a legal right to possess the property, but there is a built-in wait. Under Section 33.51, the court’s judgment provides for the clerk to issue a writ of possession no sooner than 20 days after the deed is filed for record.⁸

If a former owner or tenant refuses to leave, the writ directs the sheriff or constable to remove them. Before executing the writ, the officer must post a written warning on the front door giving the occupants at least 10 days’ notice. After that period, the officer physically removes anyone who has not left and places their personal property outside at a nearby location. Tenants are also entitled to any notice to vacate required under Section 24.005(b) of the Texas Property Code.⁸

During the redemption period you can enter and possess the property and collect rents from tenants. Major renovations during that window are a calculated risk, because a redemption returns the property to the former owner and your improvement costs may not be fully reimbursed.

Title Problems and Quiet Title Actions

A sheriff’s deed does not automatically give you marketable title. Most title insurance companies will not insure a tax sale property without a court order confirming your ownership is valid and free of competing claims. Without title insurance, you will struggle to sell to a conventional buyer or use the property as collateral.

The fix is a quiet title action, a lawsuit asking a court to declare your title superior to all other claims. It involves a title search to identify potential claimants, filing the suit, serving all parties who might have an interest (including the former owner and any lienholders), and obtaining a final judgment. The process usually takes several months, and attorney fees vary with the complexity of the title issues. Build this cost into your bid analysis. If you plan to resell or finance the property, it is not optional.

Texas does impose a statute of limitations on challenges to tax sales under Section 33.54, which gives buyers more certainty as time passes. Waiting for the limitations period to run is not a substitute for a quiet title action if you need title insurance sooner.

Struck-Off and Resale Properties

Not every property attracts a bid. When no one bids, the property is “struck off” to the taxing units that brought the foreclosure suit. Those units jointly own the property and can resell it later through either a public or private sale under Section 34.05.⁹

Resale properties often have lower opening bids than they did at the original auction. If the taxing unit has not sold the property within six months after the former owner’s redemption period expires, any taxing unit entitled to sale proceeds can request the sheriff or constable to sell it at a public sale, following similar procedures to the original tax sale.⁹

One trap to watch: the former owner’s redemption period runs from when the original deed to the taxing unit was filed, not from the resale. If you buy a struck-off property, check where the redemption clock stands. The two-year or 180-day window may have been running for months before you entered the picture.⁹

Excess Proceeds for Former Owners

If you are a former owner rather than a bidder, one item is worth knowing. When a property sells for more than the total judgment amount, the surplus does not vanish. Section 34.04 sets a priority system for distributing excess proceeds; after additional taxes that came due after the judgment and other lienholders in priority order are paid, remaining funds go to the former owner if the former owner was a defendant in the original lawsuit. Check with the court that handled the foreclosure; there may be unclaimed funds in the court’s registry. Assignees who buy the right to claim excess proceeds from a former owner are capped by the court at 125 percent of what they actually paid for that assignment.¹⁰

1
State of Texas. Texas Tax Code Section 34.015 – Persons Eligible to Purchase Property
2
Dallas County. Dallas County Tax Office – Certificates
3
State of Texas. Texas Tax Code Section 34.011 – Bidder Registration
4
State of Texas. Texas Tax Code TAX 34.01 – Sale of Property
5
Harris County Tax Assessor & Collector. Tax Sale FAQs
6
State of Texas. Texas Tax Code Section 34.21 – Right of Redemption
7
Office of the Law Revision Counsel. 26 USC 7425 – Discharge of Liens
8
State of Texas. Texas Tax Code TAX 33.51 – Writ of Possession
9
State of Texas. Texas Tax Code Section 34.05 – Resale by Taxing Unit
10
State of Texas. Texas Tax Code TAX 34.04 – Claims for Excess Proceeds