I am evaluating a struck off property (SFR) that has been gutted in Texas (TX has 2 yr redemption period). I know the chances are small (of redemption,) but just wondering after I rehab the property, if the previous owner were to try to redeem, what (if any) portion of the rehab would be considered repairs (reimbursable) vs improvements (not reimbursable). Again, this property is gutted so its a total rehab.
Lender · Hutto, TX · Member since 2017 · 95 posts · 60 votes
6y
In TX, they only have to pay you 25% of the PURCHASE price at auction, so you stand to get cleaned out. Additionally, consider if a hard money lender approached this person after you obtained it. They could give the money to the original home owner and you'd be cooked.
Michael Jones, it is my understanding that the redeemer (previous owner) would be required to reimburse me all associated costs including repairs PLUS 25% of the aggregate costs during the first year, 50% during second year. See Tax Code Section 34.21. Can anyone else weigh in on this?
Do you know if the property was under home owner exemption? If so the owner has two years to redeem. 25% premium the first year and 50% premium the second. You will be reimbursed for any repairs required to stabilize and protect the property. ie New roof to prevent water damage. Any other renovations are non reimbursable.
If the property is non homestead the redemption period is 6 months. I purchased a non homestead property at auction. I waited six months before I made any renovations even though the previous owner was deceased. I didn't want to risk one of his heirs coming back to claim the property. If the property is habitable you can rent it out during the redemption period. That is what I did.