Texans commonly jest that the only certainties in life are death and taxes, but few ever contemplate what happens to those unable to meet their tax burden due to a financial hardship. Unfortunately, for thousands of Texas property owners each year, not being able to pay their property taxes is a harsh reality that could result in the loss of their home or business.

Despite the state’s reputation for low taxes, Texas has the 15th highest property taxes in the nation, capturing nearly 5 percent (approx. $2,500) of an average household’s earnings each year and that burden has only grown heavier. Over the last two decades, Texas residents have seen local property tax levies jump by 205 percent, almost three-times faster than the median household income. As a consequence, real estate taxes have come to represent a greater percentage of a property owner’s household income, which, in turn, has made property owners much more sensitive to financial bumps and has put a growing strain on their ability to pay their taxes.

Failure to pay property taxes on time triggers a series of severe and progressive penalties that can add as much as 50 percent to a property owner’s tax obligation in just one year of delinquency. These penalties could soon overwhelm property owners’ efforts to pull themselves onto firm financial footing, pushing them farther into debt, if not threatening foreclosure.

For these reasons, there has been a steady demand in Texas for readily available alternatives to delinquency, such as property tax lending. A Texas invention, this competitive industry allows property owners to manage their tax obligation through a third party “lender” that pays the taxes for them. Texas law then allows the lender to acquire the government’s first priority tax lien that was already attached to the property, the transfer of which makes the transaction much less risky for the company and allows the property owner to obtain a much lower interest rate on the “loan.” The property owner then pays off the lien through a payment schedule that was negotiated at the start of the transaction, until the tax obligation is ultimately satisfied. Also termed a ‘tax lien transfer,’ this practice is accredited with saving the homes and businesses of thousands of Texas property owners.