Punctual Leadership Blog

Title and Real Property

Hidden Liens Cost Landowners $200K

by Punctual Abstract

Imagine discovering that a $765 paving bill you knew nothing about had increased to $7,859. This is exactly what happened to Patty and Chris Hanson in Granite Shoals, Texas. When they decided to sell a piece of property, they discovered that landowners in the area had been issued paving bills about 40-years prior. Since the bill was never paid, the city had continued to charge interest for decades.

Lien Dated from 1986

When the couple found a buyer, a land title company informed them they had a lien on their property. According to the city, the bill had been outstanding since 1986 based on a paving assessment. However, the city was unable to offer more information.

The Hansons dug up a picture taken in 1967 providing proof the road was already paved two decades before the lien was placed on the property in 1986. This showed it was a re-pave project and therefore they should not have been charged.

Over $200,000 in Liens

The Granite Shoals city hall conducted an investigation and found there were 190 property owners with paving liens. Together they added up to over $200,000. The investigation also found that between March 1979 and October 1986 ordinances voted on by the city council were responsible for billing properties that touched the repaved streets. However, the costs were forced on owners, which the Hansons argued was like imposing a tax.

The city was charging 8% annual interest, which led to the Hanson’s $7,859 bill. Records show the city made no attempts to collect the outstanding bills for the 40-year period. Instead, they simply waited for property owners to sell before handing them their bills complete with the accrued interest.

Landowner Notification

Meanwhile, interest continued to accrue, and bills grew from hundreds of dollars to thousands. Once the city finally decided to send out letters about the outstanding balances, many landowners were angry, although some also paid the bills. The city allowed some landowners to pay the original bill and waived the interest.The city hired a lawyer back in 2018 to determine if the unrecorded liens were legal. The lawyer advised them to let the property owners know about their decades old liens.

Chapter 33 of the Property Tax Code

According to Texas lawyer Bill Gammon, the city is breaking the law. Chapter 33 of the Texas Property Tax Code cites the city is supposed to remove liens from the books within 20-years of the debts becoming delinquent. The city’s lawyer, meanwhile, disputes Gammon’s argument as he says the bills are not taxes. Yet, each paving assessment ordinance passed by the city between March 1979 and October 1986 described the paving assessments as a tax, using the words “…there shall be and is hereby levied, assessed and taxed against the respective parcels of property…”

According to Gammon, the only recourse left for landowners who have already paid the city for these liens is to sue the title companies involved in the cases, because they should have known about the 20-year statute of limitations.

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