1

United States Court of Appeals,

Fifth Circuit.

No. 93-7129.

RESOLUTION TRUST CORPORATION as Receiver for Valley Federal

Savings Association, Plaintiff-Appellee,

v.

Guadalupe OLIVAREZ, Sr., et al., Defendants-Appellants.

Aug. 18, 1994.

Appeal from the United States District Court for the Southern

District of Texas.

Before WISDOM, BARKSDALE and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Defendants, Guadalupe Olivarez, Sr. ("Guadalupe"), Viola B.

Olivarez ("Viola"), and their son, Jesus Olivarez ("Jesus"), appeal

a summary judgment entered in favor of the plaintiff, Resolution

Trust Corporation ("RTC"). The summary judgment declares that the

RTC has a valid lien on certain real property in Alamo, Texas, and

the Olivarezes argue that the real estate in question was the

homestead of Guadalupe and Viola when the lien allegedly attached,

such that the lien is invalid under Tex. Const. art. XVI, § 50. We

affirm.

I

Guadalupe and Viola lived at 814 East Citrus Street in Alamo,

Texas, and owned that property prior to the following transactions.

On 11 September 1981 Guadalupe and Viola executed a Residential

Earnest Money Contract, which provided: "Guadalupe Olivarez and

wife, Viola B. Olivarez (Seller) agrees to sell and convey to their
2

son, Jesus G. Olivarez (Buyer) and Buyer agrees to buy from Seller

the following property situated in Hidalgo County, Texas, known as

814 East Citrus Street, P.O. Box 141 Alamo, Tx. 78516." Both

Guadalupe and Viola signed the contract. Thereafter, on 18

December 1981, Jesus executed a deed of trust conveying to the

trustee, for the benefit of Valley Federal Savings and Loan

Association of McAllen ("Valley Federal"), the property at 814 East

Citrus Street. The deed of trust secured Jesus' debt to Valley

Federal in the amount of $36,000, which is evidenced by a note

executed 18 December 1981. In 1986 Jesus executed a quitclaim

deed, whereby he quitclaimed to Viola and Guadalupe all of his

right, title and interest in the East Citrus Street property. The

Olivarezes contend that at all times relevant to this litigation

Guadalupe and Viola continued to live at 814 East Citrus Street.

Jesus defaulted on the $36,000 note, and the RTC, as receiver

for Valley Federal, brought suit in the district court against

Viola, Guadalupe, and Jesus "for a declaration establishing a lien

against [the East Citrus Street] property ..., for foreclosure of

same, and for declaration that any claims of [Guadalupe, Viola and

Jesus] be adjudged inferior and secondary to the lien of [the

RTC]." The Olivarezes answered, denying that Jesus' note for

$36,000, payable to Valley Federal, was secured by the deed of

trust on the East Citrus Street property: the Olivarezes alleged

that the property purportedly conveyed by Jesus in the deed of

trust had in fact been "the subject of a simulated sale, i.e.,

ownership of the home for all parties concerned remained in the
3

hands of" Guadalupe and Viola at all times. The Olivarezes also

alleged in their Answer that, based on "the defense of homestead,"

the RTC's lien "was not properly attached to said property and is

disallowed."

The RTC moved for summary judgment, arguing that the

Olivarezes' reliance on an alleged simulated sale was barred by

D'Oench Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed.2d

956 (1942), Templin v. Weisgram, 867 F.2d 240 (5th Cir.1989), cert.

denied, 493 U.S. 814, 110 S.Ct. 63, 107 L.Ed.2d 31 (1989), and 12

U.S.C. § 1823(e) (1988), because the simulated sale was not

reflected in Valley Federal's records. In their response to the

motion for summary judgment, the Olivarezes disclaimed any reliance

on the previously alleged simulated sale of the East Citrus Street

property, expressly relying instead on Texas homestead law.

The United States Magistrate Judge recommended that summary

judgment be granted for the RTC, on the grounds that the lien

created by Jesus' deed of trust remained a valid and existing lien

on the property at 814 East Citrus Street. The magistrate held

specifically that "[e]ven if the subject property was the homestead

of [Guadalupe and Viola] prior to December 18, 1981, it ceased to

be their homestead after they transferred all their interest in the

property to [Jesus]," and "Article 16 § 50 of the Texas

Constitution (re: homestead) has no application in this case as

... [Guadalupe and Viola] sold all their interest in the property

and abandoned any homestead claim on or before December 18, 1981."

The magistrate further held that Guadalupe and Viola's homestead
4

claim was untenable because it could "only be established by

proving the existence of an oral agreement contrary to the written

agreement between the parties (the subject Note and Deed of

Trust)," and under D'Oench Duhme, Templin, and § 1823(e) the

Olivarezes were estopped from asserting such a side agreement. The

district court adopted the magistrate's report and recommendation,

and the Olivarezes appeal.

II

The Olivarezes contend that the district court erred by

granting summary judgment in favor of the RTC. We review the

district court's grant of summary judgment de novo. Davis v.

Illinois Cent. R.R., 921 F.2d 616, 617-18 (5th Cir.1991). Summary

judgment is appropriate if the record discloses "that there is no

genuine issue of material fact and that the moving party is

entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

The Olivarezes contend that summary judgment was improper

because, contrary to the magistrate's conclusion, they were not

barred by D'Oench Duhme, Templin, and 12 U.S.C. § 1823(e) from

asserting their claim of a homestead exemption. They argue that

D'Oench Duhme, Templin, and § 1823(e) are inapplicable because

Guadalupe and Viola's homestead claim is not predicated on a side

agreement. The Olivarezes also challenge the district court's

holding that the property at 814 East Citrus "ceased to be

[Guadalupe and Viola's] homestead after they transferred all their

interest in the property to" Jesus. The Olivarezes concede that

the record reflects a sale of the East Citrus Street property to
 

1Counsel for the Olivarezes conceded this at oral argument. 

 

2Guadalupe and Viola's sale of the East Citrus Street

property deprived them of any homestead interest which could

prevent foreclosure of the RTC's lien. See infra. Because

Guadalupe and Viola's homestead claim fails on its merits, we

affirm the judgment of the district court, and we need not decide

the issue of estoppel. The Olivarezes rely heavily on In re

Patterson, 918 F.2d 540 (5th Cir.1990), In re Rubarts, 896 F.2d

107 (5th Cir.1990), In re Niland, 825 F.2d 801 (5th Cir.1987),

and In re Howard, 65 B.R. 498 (Bankr.W.D.Tex.1986), all of which

deal primarily with the issue of when a party is estopped from

claiming a homestead exemption. Because we do not reach the

issue of estoppel, we do not address the Olivarezes' arguments

premised on Patterson, Rubarts, Niland, and Howard. 

5

Jesus,1 but they argue that Guadalupe and Viola's continued

occupancy of the premises is sufficient to sustain their homestead

exemption.

 We assume arguendo that (1) Guadalupe and Viola's homestead

claim is not predicated on a side agreement; (2) the district

court's reliance on D'Oench Duhme, Templin, and § 1823(e) was in

error; and (3) the Olivarezes therefore are not estopped from

claiming a homestead exemption. We decide only whether the

property in Alamo "ceased to be [Guadalupe and Viola's] homestead

after they transferred all their interest in the property" to

Jesus, despite the fact that they allegedly continued to use the

property as their homestead.2 We review de novo the district

court's determination of that state law question. See Matter of

Bradley, 960 F.2d 502, 507 (5th Cir.1992) ("The de novo standard

requires that this Court conduct an independent analysis of Texas

homestead law." (citing Salve Regina College v. Russell, 499 U.S.

225, 230-232, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991))), cert.

denied, --- U.S. ----, 113 S.Ct. 1412, 122 L.Ed.2d 783 (1993).
6

The Constitution of the State of Texas provides:

The homestead of a family, or of a single adult person,

shall be, and is hereby protected from forced sale, for the

payment of all debts except for the purchase money thereof, or

a part of such purchase money, the taxes due thereon, or for

work and material used in constructing improvements thereon,

and in this last case only when the work and material are

contracted for in writing, with the consent of both spouses,

in the case of a family homestead, given in the same manner as

is required in making a sale and conveyance of the homestead;

nor may the owner or claimant of the property claimed as

homestead, if married, sell or abandon the homestead without

the consent of the other spouse, given in such manner as may

be prescribed by law. No mortgage, trust deed, or other lien

on the homestead shall ever be valid, except for the purchase

money therefor, or improvements made thereon, as hereinbefore

provided, whether such mortgage, or trust deed, or other lien,

shall have been created by the owner alone, or together with

his or her spouse, in case the owner is married. All

pretended sales of the homestead involving any condition of

defeasance shall be void. This amendment shall become

effective upon its adoption.

Tex. Const. art. XVI, § 50. "A homestead is the dwelling house

constituting the family residence, together with the land on which

it is situated and the appurtenances connected therewith."

Lifemark Corp. v. Merrit, 655 S.W.2d 310, 314 (Tex.App.—Houston

[14th Dist.] 1983, writ ref'd n.r.e.). "It is well settled in

[Texas] that in order to establish homestead rights, the proof must

show a combination of both overt acts of homestead usage and the

intention on the part of the owner to claim the land as a

homestead." Id.; Sims v. Beeson, 545 S.W.2d 262, 263

(Tex.Civ.App.—Tyler 1976, writ ref'd n.r.e.).

We assume arguendo that Viola and Guadalupe established

homestead rights in the property at 814 East Citrus before selling

the property to Jesus. The important question, however, is whether

the property was the homestead of Guadalupe and Viola on 18
 

3The Olivarezes do not challenge the magistrate's

finding—which was adopted by the district court—that "[o]n

December 18, 1981, JESUS GUADALUPE OLIVAREZ was the record owner

of the property [at 814 East Citrus Street]." 

7

December 1981, when Jesus executed the note and deed of trust in

favor of Valley Federal Savings. See Braden Steel Corp. v.

McClure, 603 S.W.2d 288, 294 (Tex.Civ.App.—Amarillo 1980) ("[T]he

validity of the deed of trust is determined by the conditions that

existed at the time the lien was given...."); see also Inwood

North Homeowners' Ass'n v. Harris, 736 S.W.2d 632, 635 (Tex.1987)

("[W]hen the property has not become a homestead at the execution

of the mortgage, deed of trust or other lien, the homestead

protections have no application even if the property later becomes

a homestead."). On 18 December Guadalupe and Viola did not have

title to the property at 814 East Citrus; title was held by

Jesus.3 Because Guadalupe and Viola occupied the property with

Jesus' permission, but without any title to the property, their

interest in the premises was a tenancy at will. See DeGrassi v.

DeGrassi, 533 S.W.2d 81, 87 (Tex.Civ.App.—Amarillo 1976, writ ref'd

n.r.e.) ("The occupancy of the residence by the grantors after the

conveyance was with the permission of [the grantee] and constituted

a tenancy at will. That the grantors paid no rent for their

occupancy does not affect the existence of the landlord-tenant

relationship.").

Under Texas law a homestead claimant need not hold the

property in fee simple in order to invoke the exemption. "[A]ny

possessory interest in a lot or lots, the fee-simple title not
 

4See also Capitol Aggregates, 448 S.W.2d at 836 (noting that

where "the claimant would not have the right of possession or

title ... there would be nothing to which a claim of homestead

could attach"). 

8

being required to support it, coupled with the requisite occupancy

by the husband and his family, is sufficient to support a homestead

claim." Capitol Aggregates, Inc. v. Walker, 448 S.W.2d 830, 837

(Tex.Civ.App.—Austin 1969, writ ref'd n.r.e.); First Nat'l Bank of

Kaufman v. Dismukes, 241 S.W. 199, 200 (Tex.Civ.App.—Texarkana

1922, no writ). Furthermore, "[i]t has been held that the rural

homestead rights protected by Article 16, Section 50 of the

Constitution of Texas may attach to property held ... at the will

of the record owners." Sullivan v. Barnett, 471 S.W.2d 39, 43

(Tex.1971) (citation omitted) (citing cases).

However, according to the Texas Supreme Court "[i]t is ... a

well-recognized principle of law that one's homestead right in

property can never rise any higher than the right, title, or

interest that he owns in the property attempted to be impressed

with a homestead right." Sayers v. Pyland, 139 Tex. 57, 161 S.W.2d

769, 773 (1942), cited in Inwood North Homeowners' Ass'n, 736

S.W.2d at 636.4 In Shepler v. Kubena, 563 S.W.2d 382

(Tex.Civ.App.—Austin 1978, no writ), that principle was applied to

a homestead claimant who, like Guadalupe and Viola, occupied her

homestead under a tenancy at will. See id. at 386. The Austin

Court of Civil Appeals decided that the homestead claimant's

"exemption from forced sale protect[ed] only such estate as she

[held] in the property," and that the claimant, "having naked
 

5See also Cleveland v. Milner, 141 Tex. 120, 170 S.W.2d 472,

475 (1943) ("Possibly the homestead laws, liberally construed,

would have prohibited interference by judicial process with

Milner's possession of the premises in a contest between him and

his creditor.... Milner had merely permissive and partial

possession....") 

9

possession without any title ... [could] maintain her claim of

homestead against all creditors save the true owner or one having

better title." Id. (citing Sayers).5 It was further held that the

"homestead interest in the possessory estate of a tenancy at will

... [would] survive judicial foreclosure of the deed of trust and

sale of the property," but "the longevity of [that] estate [would]

depend ultimately upon decision of the new fee title owner, at

whose option the tenancy at will [might] be terminated or

extended." Id.

 The foregoing decisions suggest that, because Guadalupe and

Viola occupied the 814 East Citrus residence with the intent that

it would be their homestead, a valid homestead interest attached to

their possessory interest in the property. However, because any

such homestead interest could rise no higher than Guadalupe and

Viola's interest in the property—a tenancy at will—it protects from

foreclosure only their right to remain on the property at the will

of the title holder. Therefore Viola and Guadalupe do not have a

right enforceable against the RTC to possess the East Citrus Street

property, and the district court correctly held that the RTC has a

valid and existing lien on the property.

A number of Texas cases suggest that absence of record title

completely negates any homestead right, despite occupancy of the
 

6See Greene v. White, 137 Tex. 361, 153 S.W.2d 575, 579, 586

(1941) (holding that homestead exemption was unavailable "even

though [claimants] were ... living on the land and claiming it as

homestead" with the "permission or acquiescence" of the owner,

"for they could have no homestead right or interest in land to

which they had no title"); Rettig v. Houston West End Realty

Co., 254 S.W. 765, 767-68 (Tex.Comm'n App.1923, judgm't adopted)

(holding that son had no homestead interest in property, even

though he resided upon it with his father's consent, because son

had neither title, nor a present right to possess land, nor right

to demand partition from father, who was his cotenant); Nash v.

Conatser, 410 S.W.2d 512, 521-22 (Tex.Civ.App.—Dallas 1966, no

writ) ("It is the law of this state that when ... a business

homestead is conveyed to a corporation ... the property is no

longer the homestead of the grantors, even though they may

continue to occupy it."); Sparks v. Robertson, 203 S.W.2d 622,

626 (Tex.Civ.App.—Austin 1947, writ ref'd) ("One can not have a

homestead interest in property the title to which is in neither

spouse nor in the community."); Williams v. Corpus Christi Bank

& Trust Co., 104 S.W.2d 56, 57 (Tex.Civ.App.—San Antonio 1937,

writ ref'd) ("After the Williams had conveyed this tract to the

Townsite Company, it ceased to be their homestead, and ... the

fact that they continued to use the land at the sufferance of the

grantees[ ] did not change the situation."); Hampton v.

Gilliland, 23 Tex.Civ.App. 87, 56 S.W. 572, 573-74 (1900, no

writ) (holding that son, who lived on land entirely by virtue of

his mother's consent, "owned no estate to which the homestead

right could attach," and that "the homestead right cannot be

based on so precarious a tenure" as the son's occupancy at the

will of his mother). 

10

property by the homestead claimant.6 Those decisions provide

additional support for our holding that Texas homestead law does

not invalidate the RTC's lien. We need not decide whether those

cases would defeat Guadalupe and Viola's homestead interest in

their tenancy at will. Even if Guadalupe and Viola's tenancy at

will is protected by the homestead exemption, that tenancy affords

them only the right to remain on the property so long as permitted

to do so by the title holder. See Shepler, 563 S.W.2d at 386.

Therefore neither the validity of the RTC's lien nor its right to

foreclose is compromised by the tenancy at will held by Guadalupe
11

and Viola, and we need not decide whether that tenancy is protected

from foreclosure by Texas homestead law.

The Olivarezes contend, nevertheless, that their homestead

interest in the East Citrus Street property persisted on 18

December 1981—when Jesus executed the note and deed of

trust—because they never abandoned their homestead by discontinuing

its use as such. They cite In re Hunt, 61 B.R. 224

(Bankr.S.D.Tex.1986), where the bankruptcy court stated, "when

there is a home in fact, such home cannot be abandoned while

actually used as the home of the family." Id. at 229. Hunt is

factually distinguishable, because the homestead claimant in that

case had not alienated title to the homestead. See id. at 226.

The claimant purchased a new home in Houston and argued that it

became his homestead immediately upon its purchase, even though he

had not yet sold or vacated his homestead in Midland. See id. at

227-29. The bankruptcy court rejected that argument, holding that

the claimant's homestead interest remained attached to the Midland

property. See id. at 229. Because title to the Midland property

remained with the homestead claimant, Hunt does not stand for the

proposition that a homestead interest persists despite alienation

of title, so long as occupancy continues.

Furthermore, we do not believe that the rule set out in

Sayers, Inwood North, and Shepler—that a homestead interest can

rise no higher than the claimant's interest in the property—is in

conflict with the often cited rule that abandonment occurs only
 

7See, e.g., Franklin v. Woods, 598 S.W.2d 946, 949

(Tex.Civ.App.—Corpus Christi 1980, no writ) ("Abandonment of a

homestead requires both the cessation or discontinuance of use of

the property as a homestead coupled with the intent to

permanently abandon the homestead."). 

12

when use of the homestead is discontinued.7 Abandonment and

alienation of title have frequently been described as distinct

methods of extinguishing a homestead interest. See, e.g., United

States v. Rodgers, 461 U.S. 677, 686, 103 S.Ct. 2132, 2139, 76

L.Ed.2d 236 (1983) (stating that Texas homestead exemption may not

be divested " "except by abandonment or a voluntary conveyance' "

(quoting Paddock v. Seimoneit, 218 S.W.2d 428, 436 (Tex.1949)));

Matter of Bradley, 960 F.2d at 507 n. 8 (" "The only way for

property to lose its homestead, after it has been dedicated as a

homestead, is by death, abandonment or alienation.' " (quoting

Garrard v. Henderson, 209 S.W.2d 225, 229 (Tex.Civ.App.—Dallas

1948, no writ))); Intertex, Inc. v. Kneisley, 837 S.W.2d 136, 138

(Tex.App.—Houston [14th Dist.] 1992, writ denied) ("Th[e]

conveyance was made on May 15, 1985. Upon this date, the property

ceased being the Bealls' homestead.... The Texas case law is clear

that a homestead property loses its homestead protection upon the

death of the claimants, abandonment or alienation by them....");

Hollifield v. Hilton, 515 S.W.2d 717, 721 (Tex.Civ.App.—Fort Worth

1974, writ ref'd n.r.e.) ("It is settled law that once homestead

character has attached to realty and the family relationship

continues to exist, it can be terminated only by sale or actual

permanent abandonment of use as such."); Long Bell Lumber Co. v.

Miller, 240 S.W.2d 405, 406-07 (Tex.Civ.App.—Amarillo 1951, no
13

writ) ("[T]he homestead exemption was not lost by alienation or by

death, so we have only the proposition of whether or not the

homestead was lost by abandonment."). These cases strongly suggest

that alienation of title may result in termination of a homestead

interest, even though abandonment by discontinuation of use is not

shown.

Birdwell v. Burleson, 31 Tex.Civ.App. 31, 72 S.W. 446 (1902,

writ ref'd), at first blush seems to suggest that Texas homestead

law prohibits foreclosure of the RTC's lien even though Guadalupe

and Viola did not hold title to the homestead property when the

lien attached. The Court of Civil Appeals in Birdwell described

the issue before it as follows:

Briefly stated, the question is whether a father, residing

with his minor children upon land, the legal title to which is

entirely in the children, and managing and controlling such

land, and using the proceeds for the support of himself and

the family, has such interest in the land as will form the

basis of a homestead exemption. It is true that he has no

legal title to the land.... Yet, he is in possession, and his

possession is in no wise unlawful or wrongful.... He cannot

be said to be an intruder or bare trespasser.

Id. at 448. The court held that the property was exempt from

foreclosure by a creditor of the father, because "where property is

rightfully and peaceably held in possession, and occupied as the

home of the family, it should be exempt from forced sale, even

though that possession be merely permissive." Id. at 449-50.

Birdwell is distinguishable, however, because in that case the

homestead exemption was not asserted against a creditor of the

title holder. In Birdwell, the homestead exemption was asserted

against a creditor of the father, who held no title to the
14

property. See id. at 447. In this case, on the other hand, the

Olivarezes press their homestead claim against the RTC as a

creditor of Jesus, the title holder to the homestead property.

Shepler recognized this distinction by holding that the homestead

claimant, "having naked possession without any title ... may

maintain her claim of homestead against all creditors save the true

owner or one having better title." Shepler, 563 S.W.2d at 386

(emphasis added). The Court of Civil Appeals in Birdwell

acknowledged the same principle, quoting the following language

from Pendleton v. Hooper, 87 Ga. 108, 13 S.E. 313 (1891): "[A]s

[Hooper] retained possession, he is still the owner against all the

world, except his donees.... Even were he a trespasser relatively

to his donees, he would, whilst in possession, be owner relatively

to his creditors." Birdwell, 72 S.W. at 449. Because Guadalupe

and Viola assert their homestead exemption against a party claiming

under the title holder, Birdwell is not controlling. See 43

Tex.Jur.3d Homesteads § 45 (1985) ("Mere possession is enough to

sustain a claim of homestead and prevent a forced sale against all

the world except the true owner and those claiming under him.").

Because Viola and Guadalupe's homestead interest can rise no

higher than their interest in the homestead—a mere tenancy at

will—the homestead exemption protects, at most, their right to

remain on the land at the will of the title holder. Therefore the

district court correctly held that the RTC's lien is valid. There

is no genuine issue of material fact, and the district court

properly granted summary judgment for the RTC.
 

8The Olivarezes and the RTC agree that the following

conclusion of law in the United States Magistrate Judge's report

and recommendation is erroneous in two respects: "17. In the

case at hand, summary judgment is proper, because when viewing

the evidence in the light most favorable to Plaintiff, there is

no genuine issue as to any material fact and Defendants are

entitled to judgment as a matter of law." The statement that

"Defendants are entitled to judgment as a matter of law" is

erroneous because the plaintiff, RTC, not the Defendants, moved

for summary judgment. The statement that the court viewed the

evidence "in the light most favorable to Plaintiff" was also

erroneous. In ruling on a motion for summary judgment, the

district court views the evidence in the light most favorable to

the party opposing the motion—in this case the defendants, the

Olivarezes. Reversal is not required, as the record reveals that

the foregoing errors were merely clerical and did not result in

prejudice. 

15

III

For the foregoing reasons, we AFFIRM.8