Understanding the Right of Redemption in Texas Property Foreclosures

How do I buy back my home or property after a foreclosure?

If you’ve lost your home due to unpaid property taxes or unpaid property owners association or condominium association assessments in Texas, you may still have an opportunity to get the property back. This opportunity is known as the Right of Redemption, a legal protection outlined in Texas law that allows former property owners to reclaim their foreclosed property within a certain time period.

What Is the Right of Redemption?

The Right of Redemption gives a former property owner the legal ability to redeem (buy back) their property after it has been sold at a tax foreclosure sale or HOA foreclosure. This right is designed to provide a safety net for homeowners who may have fallen behind on property taxes but want to keep their property. There are different redemption periods and requirements depending on the type of property. Property owners that wait too long might lose their property forever without the ability to redeem. An experienced real estate attorney will know the time period and the amount that is required to redeem the property.

Why This Matters for Texas Property Owners

Knowing your Right of Redemption under Texas law is crucial if your home is at risk of or has already gone through a tax foreclosure. Acting quickly within the applicable redemption period can mean the difference between permanently losing your property or reclaiming it. Once a former owner is outside the period of redemption, they will loose the right to redeem. Sometimes the properties are sold for more than what is owed in taxes or HOA fees. This money paid over and above the purchase price is called excess proceeds. The excess proceeds may be available for the former owner to use to help redeem the property. When a home is foreclosed by a homeowners association, there is a short redemption window. These situations do occur, so buyers should beware of the possibility of redemption. Our lawyers can advise you on this.

Resolving Legal Problems Beyond Right Of Redemption for Investors

Many potential buyers and investors are leery of buying, fixing up and even occupying these homes because they are afraid the original owners will exercise their legal right of redemption — buying the house back long after they lost it.

There are periods of redemption for both Tax foreclosures and HOA foreclosures.  We recommend, in tax and homeowners association cases, that a buyer of a foreclosed property refrain from investing money in it until any rights of redemption have expired.

Other legal problems may be present when purchasing a foreclosed home at auction. At auction, the seller is not obliged under Texas law to provide the buyer with disclosures about the condition of the property, as are required in other home sales. Buyer do not have leverage to require the seller to make repairs to the property. Foreclosed homes are typically sold on an “as is” basis. Because of this, real estate investors must take care to ensure that the previous homeowners do not damage the property.

Buying a foreclosed home is generally a great investment, but legal dangers may exist in the process. Our real estate lawyers can advise you on how to minimize your risk as you seek bargains in real estate investing.

 

Call our attorneys in Houston at 713-572-4900, or email us your concerns about buying a foreclosed home.