Texas Property Tax Lienholders Government Compliance
The ability to transfer tax liens in Texas was created in 1933, but the tax lien transfer industry did not begin to develop until 1995 when the allowable interest rate was raised to 18%. In 2007, the Texas Legislature began to regulate the industry and created a licensure program at the Office of Consumer Credit Commissioner. Due to market competition, government legislation, and OCCC regulation, in 2020, the industry interest rate averages below 12.5%, making property tax loans a low-cost option for Texans.
PROPERTY TAX LOANS IN 2020
PERCENT OF ALL LOANS ORIGINATED BY TPTLA MEMBERS IN 2020
During the Great Depression, property tax lien transfers were first permitted by law. The statutory framework of the law remained the same and was not revised for forty-six years until 1979 when the Texas Legislature codified the previous law into the Texas Tax Code. From 1933 to 1995, most property tax loans involved transfers from taxing units to the property tax owner’s family members or employers. In 1995, the Texas Legislature made significant changes to the Texas Tax Code to make property tax transfers more viable.
The 80th Texas Legislature enacted the Property Tax Lender License Act that created Chapter 351 of the Texas Finance Code. For the first time, property tax lenders were required to obtain a license from the Office of Consumer Credit Commissioner (OCCC). The Texas Legislature also enacted additional consumer protections as part of Senate Bill 1520.
The 83rd Texas Legislature enacted Senate Bill 247. The TPTLA supported this bill which repeals non-judicial foreclosure, prohibits deceptive advertising, imposes new payoff statement requirements, prohibits transfer of tax liens to persons not licensed under Chapter 351, and several other prohibitions and provisions. However, one unfortunate outcome is that property taxes must be due or delinquent before a loan can be made. This is not consumer-friendly and will cost many property owners an unnecessary 7% tax penalty.
For the first time in five legislative sessions, no bills regarding property tax lenders were passed.
The 87th Texas Legislature enacted House Bill 3510 in response to the Covid pandemic, which allows employees of regulated entities to work from home under certain circumstances. Safeguards were included to protect consumers, while also providing flexibility to industry employees.
Assistance for Property Owners
Office of Consumer Credit Commissioner
OCCC Listing of Licensed Property Tax Lenders
Address:State Finance Commission Building 2601 N. Lamar Boulevard, Austin, TX 78705
Texas Comptroller of Public Accounts
Tax Rates Compiled by the TX Comptroller of Public Accounts
Address:Texas Comptroller of Public Accounts, Lyndon B. Johnson State Office Building, 111 East 17th Street, Austin, Texas 78774
Finance Commission of Texas
Oversight of the Office of the Consumer Credit Commissioner
Address:State Finance Commission Building 2601 N. Lamar Boulevard, Austin, Texas 78705
A favorable report was released in August 2012 from the Texas Finance Commission in which the commission made no additional legislative recommendations for laws governing property tax lending. The study also specifically suggests that market forces and sensible regulation appear to have driven down the interest rates and closing costs of property tax loans.