What Is a Tax Lien Transfer and How Does It Work?

What Is a Tax Lien Transfer and How It Works?

Has reading up on property tax loans or delinquent taxes got you wondering, what is a tax lien transfer? Then you’ve come to the right place. We want to help you make sense of this legalese.

If you’ve reached the point where you need assistance on your property tax loans, we’re here to explain your options. We’ll cover tax liens, tax lien transfers, alternative options, and more, so read on.


What Is a Tax Lien?

Before we proceed, it is important to define this first term: tax lien. Consider it collateral for your tax lender. On January 1st of every year, a tax lien is placed on your home.

It grants your taxing unit the right to make a claim on your property if you fail to pay your upcoming property taxes by January 31st of the following year.

This does not mean your taxing unit will foreclose on your home on February 1st if you have not paid. You will first face a lot of penalties, delinquency fees, and interest.

They want their money, not your house. However, if you do not pay up after some time, they can file a claim against your property. This means the taxing unit could sell your property in order to pay your debt.

What do you do if you can’t pay but don’t want to lose your property? Property taxes are high, especially in Texas. Not everyone has a lump sum saved to pay off their taxes all at once.

What are your options? Here’s where tax lien transfers come in.


What Is a Tax Lien Transfer? How Can It Help Me?

Simply put, a tax lien transfer is when your tax lien changes hands. If you apply for a property tax loan, your tax lien transfers to your lender.

Your property tax loan company settles your debt directly with your taxing unit. Now the lending company owns the tax lien on your property, granting them the right to foreclose if you can’t pay.

What’s the difference, then? A property tax lender does what your taxing unit can’t—they work with you to set up a customized repayment plan for your loan.

They don’t want your home, either, but unlike your tax collector, they have the flexibility to give you more time to pay your bill. Pursuing a tax lien transfer with a property tax lender, puts control back in your hands.

Delinquency is expensive. In the first year, the fees, penalties, and interest can increase your bill by 47%. If you did not have the money to pay it before, how are you going to have the money to pay that?

The interest for a property tax loan is much, much lower, and drastically reduces your chance of foreclosure. You can settle your debt on your time, giving you a chance to get back on your feet for the upcoming year.

Utilizing a tax lien transfer helps you avoid the high fees associated with delinquent taxes, and better, prevents your taxing unit from foreclosing.


Do I Have Other Options?

Not sure about taking out a loan? We understand. There are other options than a tax lien transfer. The government does offer payment plans that allow homeowners to pay their property taxes in installments.

Most of these payment plans still include penalty costs and interest, however. Additionally, you may not qualify for a payment plan.

The government is trying to expand their payment plan options to help Texans who can’t make their tax payments, but assistance remains limited. Some restrictions apply. For example:

  • If you’ve utilized a taxing unit’s payment plan within the last two years, you may not qualify for another.
  • While you can get property tax assistance on your personal residence, any commercial property you own and rent out may not qualify.
  • The existing payment plans are fixed and inflexible.
  • Also, each payment must be equal—there is no room for an uneven repayment schedule. If available, this would allow property owners to pay more or less according to their monthly finances.You have between 12 and 36 months to pay the bill—there is no option for a longer repayment period.
  • Most of these options need to be sought pro-actively. If you are already delinquent on your taxes, it may be too late.


If you don’t qualify, or you prefer a more flexible payment plan, or you’re already delinquent on your property taxes, then contact Direct Tax Loan today.

We’ll talk you through your options, and, if it’s the best one for you, start the tax lien transfer process.


Four Reasons to Rest Easy About a Tax Lien Transfer

If you have hesitations about proceeding with a tax lien transfer, consider the following four facts.

Tax lien transfers are more economical than ever. The market for property tax lenders has become more competitive than ever, which is better for you, the borrower. You have many options to find the best deal on your property tax loan.

Property tax loan interest rates are falling. Loan interest rates have dropped significantly in the past few years.

Protections are in place. Texas state law has set a limit on tax rates so lenders can’t overcharge their clients.

Risk of foreclosure is low. Property tax lenders in Texas have foreclosed on just 0.7% of properties. These are much better odds than your taxing unit can offer.

Delinquent taxes are something to worry about—a property tax loan is not.

Property tax lenders give you what your taxing unit can’t: time and a customized plan. No matter what, delinquency is the most expensive option.

The longer you wait to act, the higher the cost. Don’t risk crippling debt and foreclosure—contact Direct Tax Loan today.

About the Author: Direct Tax Loan is the largest online platform in the United States that connects top property tax lenders with residential and commercial borrowers. Regardless of where you are located in the state of Texas or Nevada, we’ll be thrilled to connect you with reputable lenders and help you pay off your property tax bill.

About the Author
Gered Ford
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