our law: COLUMN
Understanding
Homesteads in
Texas
By Stephanie E. Kaiser
Partner, Puls Haney Kaiser PLLC
W
Texas law recognizes some exceptions to this rule, which
are: purchase money debts; taxes; owelty of partition
in a divorce proceeding; re-finance of an existing lien;
certain improvements; home equity; reverse mortgage; and
conversion and re-finance of a personal property lien on a
manufactured home to a lien on real property. Proceeds
from the sale of a homestead are likewise exempt for six
months after the date of sale.
There are some misconceptions about Texas homestead
law. For example, if an individual lives in a leased apartment in the city but owns a weekend home in the country, then that individual’s homestead interest is his or her
leasehold interest in the apartment and not in the weekend
home, even though the individual only owns one home.
Likewise, if an individual lives in a home in the country
that is owned by a corporation, then the individual does
not have a homestead interest in fee simple in that property. Because the corporation cannot have a homest ead
interest, the lien restrictions, e.g., applicable to homesteads
do not apply to that property.
As a general rule, a homestead property can be
pledged as collateral for the purchase of that property
or for improvements made on that property. And, while
homestead property may not be used to secure non-homestead debt, non-homestead property can be pledged as
collateral for homestead debt (e.g., a commercial office
building may be pledged as collateral for the purchase of
a home). Understanding the limitations on, and exceptions
to, homestead rights, can be important, depending upon
the circumstances presented.
Stephanie E. Kaiser represents clients in various litigation,
corporate, banking, and bankruptcy matters. For additional
information on Stephanie’s practice and Puls Haney Kaiser
PllC, you may visit www.pulshaney.com.
AUGUST 2016 PA R K E R C O U N T Y T O D AY
hat constitutes a homestead in Texas is often misunderstood. In Texas, a rural homestead is 100 acres
for an individual and 200 acres for a family and may be
in one or more, noncontiguous rural parcels. An urban
homestead is a lot or contiguous set of lots that total no
more than 10 acres.
A homestead is considered to be urban if, at the time
the homestead designation is made, the homestead was
located within the limits of a municipality or its extra-territorial jurisdiction or a platted subdivision, is served by
police protection, has paid or volunteer fire protection, and
at least three of the following services are provided by a
municipality or under contract to a municipality: electric,
natural gas, sewer, storm sewer, and water. A homestead
is a rural homestead if it is not an urban homestead. Rural
and urban homestead acreage may not be combined, and
a homestead interest is not limited to a fee of simple interest; it can also include a leasehold or life estate interest, a
beneficial interest in trust, and a spouse’s separate property, as well.
A homestead is freely transferrable and can be abandoned if an individual or family stops using it as a home
with the intent to permanently abandon it as the homestead.
An individual or family cannot own two homesteads
at the same. Therefore, if an individual or family owns
and resides in two different homes, then the individual
or family may designate one home as the homestead and
disclaim any homestead interest in the other under certain
circumstances. A homestead designation must accurately
reflect the use of the home by the individuals and should
not be used to exempt property in which an individual
does not primarily live.
Only an individual or a family can own a homestead;
legal entities, such as limited liability companies and
corporations, cannot. However, property that is transferred
into certain revocable trusts created for estate-planning
purposes can maintain homestead character in some cases.
As a general rule, homesteads are exempt from forced
sale for the payment of debts, which provides a great
deal of protection to those who have homestead interests.
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