TX SB2173

Amends Section 31.08 of the Texas Tax Code to address situations where a tax certificate erroneously shows no delinquent taxes due because a residence homestead exemption was wrongly allowed and later canceled

Generally, when property transfers with an erroneous tax certificate, the taxing unit's lien is extinguished and the purchaser is absolved of liability for delinquent taxes, penalties, or interest

Creates an exception: erroneous tax certificates do NOT extinguish tax liens when property transfers occur between related parties, including first-degree relatives, employers and employees, parent companies and subsidiaries, or trusts and their beneficiaries

The original property owner who was liable for taxes during the year the exemption was improperly claimed remains personally liable for unpaid taxes, penalties, and interest

Takes effect September 1, 2025, and applies only to tax certificates issued on or after that date