Two kinds of auction, side by side
| Mortgage foreclosure sale | Tax sale | |
|---|---|---|
| Why it happens | The loan is in default and the lender enforces the deed of trust. | Property taxes are delinquent and a taxing unit sues to collect. |
| Who runs it | The lender's trustee, outside of court (for most home loans). | A constable or other officer, after a court judgment. |
| When | First Tuesday of the month, 10 a.m. to 4 p.m. (first Wednesday if the first Tuesday is January 1 or July 4). | First Tuesday of the month, 10 a.m. to 4 p.m. (same Jan 1 / Jul 4 rule). |
| Where | The area of the courthouse designated by the commissioners court. | The courthouse or another public place the commissioners court designates, or online if authorized. Harris County lists the Bayou City Event Center. |
| Notice | At least 21 days before the sale, posted, filed and mailed by certified mail. | Written notice to each defendant or their attorney. |
| Bidders | Competing bidders. Payment terms are set by the trustee's notice. | Harris County takes only cash or certified checks. Bidders are advised the sale is final. |
| After the sale | No general right to redeem. The lender can seek a deficiency within two years. | Redemption: 180 days, or two years for a homestead, with a premium added. |
| Extra money | The lender applies the price to the debt. | Excess proceeds are held two years and can be claimed through the court. |
Full steps for each: how a Texas foreclosure works and Texas tax sales and delinquent property taxes.
What happens on sale day
The property is read out, a minimum or opening amount is announced, and bidders raise their hands. The highest bid wins. If no one bids enough in a tax sale, the officer can bid the property off to a taxing unit. In a mortgage foreclosure, the lender is usually the opening bidder, and if no third party outbids it, the lender takes the property.
A winning bidder buys what the sale deed conveys, with no inspection and no financing contingency. Harris County tells tax-sale bidders to research a property first, because sales are final.
What an owner can still do before the sale
- Read the notice. It gives the date, the place and the amount. A foreclosure notice names the servicer or trustee to contact. A tax notice names the taxing unit and the court.
- Get the number. What is the home worth, what is owed, and what would be left after a sale? The Seller Net Sheet calculator runs it.
- Talk to the people who decide. The servicer for a mortgage, the tax collector for taxes. A free HUD-approved housing counselor can help with the servicer. HUD's counselor referral line is 800-569-4287, and the CFPB's finder is at consumerfinance.gov/mortgagehelp.
- Consider a sale. A sale that closes before the auction pays the lien from the proceeds, and the owner keeps whatever is left. A short sale needs the lender's approval.
- Get legal advice. Only an attorney can advise on stopping a sale through the courts, or on bankruptcy.
What comes after: redemption, surplus and deficiency
Redemption (tax sales)
A former owner of a tax-sold homestead can redeem within two years, paying the amount the statute sets plus a premium of 25 percent in the first year and 50 percent in the second. Other property has 180 days. A mortgage foreclosure sale does not come with this right. See the table on the tax sale page.
Surplus (tax sales)
If a tax sale brings more than the taxes and costs, the extra is held by the clerk for two years, and the former owner is notified. Claiming it is a court process.
Deficiency (mortgage foreclosures)
If a foreclosure sale brings less than the debt, the lender can sue for the difference within two years. The borrower can ask the court to credit the home's fair market value on the sale date if it exceeds the sale price (Prop. Code § 51.003).
A notice or a deadline can be checked against the official record. A real estate agent who works with these sales, like Allen Markel, can help with that before anyone signs a paper.
Four common mix-ups
- "I can buy it back at the auction." A former owner can bid like anyone else, but pays in full, in cash or certified funds in a tax sale.
- "The 180 days apply to my mortgage foreclosure." The 180-day and two-year windows belong to tax sales.
- "A sale wipes out every debt." A mortgage foreclosure can still leave a deficiency claim, and other liens can survive a sale. An attorney or a title company can explain which.
- "An agent can stop an auction." An agent cannot. An agent can price and sell a home before an auction date.